DNI Metals

: S L A T E M I DN

N TECHNOLOGIES A LE C EL FU TO LD O G M IN IN G B LA C K

The European Commission has placed natural graphite on the critical mineral resource (“CRM�) list because of its link to industry, modern technologies and the environment. Similarly, the US and the UK have elevated the status of natural graphite to supply critical, earning it the title of the new black gold. The magnitude of the expansion of the electric vehicle market in the next few years, has made natural graphite supply critical to the development of the automotive industry.

DNI Metals Inc is a mining company that is based in Ontario, Canada. Founded in 1954, the company is listed on the Canadian Stock Exchange in the mining category. DNI owns two commercially permitted, saprolite-hosted graphite deposit in Madagascar. The company has obtained mining permits for 40 years which is renewable. The Company formed DNI Madagascar Sarl, a wholly owned subsidiary in Madagascar, to carry out business in that country.

opex and capex overheads. In addition, Madagascar has a modern and transparent Mining Code. The area where the DNI project is located contains excellent infrastructure and port facilities.

The environmental and cost saving advantages of saprolite-hosted (clay) flake graphite mining compared to hard rock mining operations are significant. The actual mining and processing

The Vohitsara project is located 50 kms from the country’s main seaport.

The deposit is located less than two kms from the paved national highway.

DNI intends to develop the Vohitsara project, should the economic viability and technical feasibility be established.

DNI’s second Madagascar graphite project was secured in July 2017 through a non-binding agreement (“LOI”) to buy a property in Madagascar called the Marafody property. Three holes were drilled by the previous owners, who have also completed over 600 m of trenching in 2016. DNI has two other assets which consists of a Polymetallic deposit in Alberta Canada and Gold Royalty in Utah.

Environmental Sustainability CEO of DNI, Dan Weir said that the company was attracted to Madagascar because of its deposits of large flake, high quality graphite which is hosted within soft 'free-dig' material called saprolite. Commercial extraction and processing is expected to be done with low

cost are low as the material does not have to be crushed and grinded and digging is minimal.

Madagascar has a tropical weather profile and the graphite found there is largely preserved into coarse flakes. Graphite has chemically inert properties that do not alter during the weathering process. Mining in hard rock deposits found in Canada, is energy intensive, due for the need of crushing and grinding circuits.

Graphite mining uses far less energy and extraction of the metal is done through a simple

characteristic. DNI is investigating ways to further reduce their environmental impact and in this regard, they have started discussions with Caterpillar and other suppliers about using solar power to augment their clean energy usage.

Skilled and experienced Board of Directors The DNI team is highly skilled and they have a combined operational experience of mining graphite at hard rock graphite mines in Canada and Australia. Between them, they have built

three processing plants and designed two, all of which were shut down in the 1990,'s due to increased Chinese competition. Their experience with the high production and capital expenditure costs associated with hard rock graphite mining inspired the DNI team to rather invest in low cost saprolite-hosted graphite deposits.

The team is led by Dan Weir, the CEO and Executive Chairman, who has over 20 years’ experience at some of the top financial firms in Canada. Weir is an expert at evaluating and financing mining deals and has managed large

high tech electrical and energy management projects.

Recently, the company appointed two new directors Brian Howlett and John Carter, to help with the development of the Vohitsara and Marafody Graphite Deposits. Carter has over 30 years of experience in the metals and mining industries. He specializes in the engineering design and manufacturing of mineral processing equipment for mining operations and operators such as North American graphite giant, Timcal Inc. Carter has built over 200 mineral processing plants around the world, including three

graphite processing plants. Howlett, a B COMM graduate, is currently the President and CEO of Dundee Sustainable Technologies Inc. and has over 25 years in senior management and financial roles.

Vohitsara Saprolitic Graphite Project The latest drilling results from the Vohitsara Saprolitic Graphite Project in Madagascar was very positive. The drill results comprise of sixteen holes and one trench from the Main Zone which complement the initial results of drilling from three holes released earlier this year. Graphitic zones are reported to be anywhere from 2 to 10s of metres true thickness.

a NI 43-101 PEA (Preliminary Economic Assessment).

Pursuant to the DA, this work should be completed by late 2017. Upon completion of the PEA, a 50/50 Joint Venture will be immediately formed between DNI & Cougar. Once operational, DNI plans an output of 20,000 to 25,000 metric tons per year.

MOU to Supply Large Flake Graphite to Korea DNI has recently signed a nonbinding MOU with ASX listed Peninsula Mines Limited, to form a cooperative joint venture to supply and potentially produce, up to 20,000 tonnes per year of large flake graphite concentrate to Korean endusers from 2018.

To date, 45 air core drill holes and five diamond core drills have been completed, with an average depth of the Saprolite being approximately 28 meters. DNI signed a Definitive Agreement with Australian-based company, Cougar Metals to develop the Vohitsara Graphite Project.

Cougar commenced with a 3,000-meter drilling program, including a 1,000-meter trenching program, a NI 43-101 resource study, and

Dan Weir is excited about this venture and in a press release said: "DNI and PSM have strategically identified Korea as an area of growing demand for large flake graphite. We look forward to working with Peninsula's experienced and established team, and with their Korean partners, to access the large and growing Korean flakegraphite markets."

Peninsula is an Australian listed, exploration/ development company focused on developing opportunities for mineral discovery and production in South Korea. Peninsula is well established in South Korea, having worked in that country for over five years. Peninsula and Graphene Korea are working together to identify supply from

projects that have the potential to produce flake-graphite concentrate that will meet the specifications for production of Graphene Korea's expandable graphite product, which are, specifically >180-micron flake graphite and a >95% concentrate grade of material that shows expandable properties.

Supplying wholesale graphite DNI has a wholesale graphite business, in which it buys and sells high quality natural crystalline flak graphite to North America. DNI Graphite Wholesale delivers graphite from Brazil which is the second largest flake graphite producer in the world with substantial low cost Saprolite (weathered rock) deposits. They have established a distribution network that currently sources graphite material from a private Brazilian company that has an annual production capacity of over 70,000 metric tons.

Clean technologies driving the demand for graphite According to Bloomberg, the global demand for graphite will soar to 852, 000 tons a year in 2030 from 13,000 tons in 2015. The clean technology revolution is fuelling the increase in demand for electricity storage batteries; electric vehicles; new solar and wind technologies; lithium ion batteries and fuel cells for electricity production.

The move from combustion to electric engines has gained momentum and experts forecast that by 2025, new sales of electric cars will exceed combustion engine vehicles. To illustrate why experts predict that the battery market will triple the demand for graphite in

the next few years, consider the 54kg of graphite in every battery Model S (85kWh).

The International Energy Agenc global threshold of 2 million elec million electric two wheelers we year. The quick uptake is faci policies that have been put in pla and cities who want to reap th in the fields of transport de pollution reduction, and ene security. To meet 2030 de sustainability goals countrie cars to be on the road as early costs have decreased signi and the price of electric veh match the combustion vehicl

The future of natu graphite

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e fact that there is y anode of a Tesla

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Asked whether he expects that China will flood the graphite market with cheap stock again Weir replied that the this was highly unlikely. He pointed to the fact that China was consolidating its numerous graphite mines as they were mostly family run and used harsh chemicals which were not environmentally friendly.

Their mines were old and required deep drilling. China has reduced graphite exports reserving same for internal consumption as they have the largest electric vehicle market. This shortage in supply and increased future demand, will benefit the balance sheet of graphite mining companies. DNI is certainly well placed to become a leading supplier due to their low-cost deposits.

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onductive than natural ced by China in the ered to specifications mical process.

w been levelled using hermal and chemical natural graphite to be cifications as synthetic vantage is the fact that processed into other nd expanded graphite hite properties, making ndustry requirements. It e production of natural 7% less energy that

DNI METALS INC. 119 Pinewood Trail Mississauga L5G 2L2 Phone: 416-595-1195 Fax: +1 (868) 679-2384 Email: danweir@dnimetals.com http://dnimetals.com/contact/

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