DEFINITIVE FEASIBILITY STUDY CONFIRMS CHILALO AS A ...

ASX ANNOUNCEMENT29 JANUARY 2020 ASX:GPX

GRAPHEX MINING LIMITED1

DEFINITIVE FEASIBILITY STUDY CONFIRMS CHILALO AS A HIGH MARGIN GRAPHITE PROJECT

Graphex Mining Limited (ASX: GPX) (‘Graphex’ or the ‘Company’) is pleased to announce the results of the Definitive Feasibility Study (‘DFS’) for its Chilalo Graphite Project (‘Chilalo’ or the ‘Project’), located in south-east Tanzania.

The DFS has been prepared to a bankable standard to support a decision to mine and finance. It is underpinned by updated and detailed assumptions including pricing, product qualification timeframes, production and sales ramp-up. The results demonstrate that the Chilalo Project has strong margins with a significant near-term value-add market opportunity. The DFS reflects Graphex positioning itself as a vertically integrated manufacturer of high-value graphite products, as opposed to purely a graphite mining company.

HIGHLIGHTS STRONG PROJECT ECONOMICSڇ Post-tax NPV8 of US$331M and post-tax IRR of 36% on a capital cost of US$87.4M (economics

include cash flows from value-added products)

ڇ Annual improvements in post-tax cash flow until steady state average from year 5 of US$58M per annum

PREMIUM PRODUCTڇ Variability testwork and pilot plant production confirm Chilalo continues to produce one of the

coarsest flake size distributions in the world

ڇ High value concentrate product with 31% larger than 300 microns, delivering attractive weighted average sales price of US$1,534 per tonne over the life of mine

CHILALO PROJECTڇ Annual throughput of 500 ktpa to produce approximately 50,000 tpa over an 18-year mine life

ڇ Feed to the processing plant is derived entirely from the Ore Reserve, which has increased by 52% from the previous Ore Reserve

ڇ High-conviction opportunities for mine life extensions and reductions in operating costs from near-mine exploration upside

ڇ Documentation associated with environmental and community factors aligns with IFC Performance Standards and the Equator Principles

ڇ Permitted to commence development in 2020 – progression to construction is subject to financing which is at an advanced stage

MARKETS FIRSTڇ Market is primed for additional coarse flake supply – unfulfilled demand in graphite foil, gaskets,

seals and fire-retardants

ڇ Continued advancement of value-added strategy, including signing of expandable graphite processing term sheet with China’s leading expandable graphite manufacturer, Yichang Xincheng Graphite Co Ltd

$




Graphex Managing Director, Phil Hoskins commented"The DFS demonstrates that Chilalo will be a robust project based on a Probable Reserve of 9.2 million tonnes, underpinning an estimated 18-year mine life producing approximately 50,000tpa of high-value graphite products.

“The Chilalo Project demonstrates strong margins and cashflow with substantial opportunities for improvement through exploration, production expansion and continued advancements in the Company’s value-added products strategy.

“Since we first discovered Chilalo, we have applied a ‘markets-first’ approach, with a commitment to understanding market requirements and aligning the Company’s production and sales strategy accordingly. The ability to access high-value markets is a result of two key factors – the aforementioned commitment to understanding market requirements and the characteristics of Chilalo graphite with its predominance of coarse flake, superior expandability and ability to reach 99% grade with simple flotation.

“With key approvals in place, including a mining licence, environmental certificate and community relocation arrangements and compensation agreed and approved, we are in a strong position to readily commence development with first production by Q4 2021. We now look forward to finalising the financing arrangements for the development of Chilalo.

“The Graphex team has demonstrated experience in developing and operating mines successfully and is excited about the journey ahead to build the first commercial scale graphite project in Tanzania. We look forward to continuing to work with the Government of Tanzania, the district Government of Ruangwa and the surrounding communities as we advance the project for the benefit of all stakeholders.

“On behalf of the Board, I’d like to thank our staff, study managers, respected consultants and mining contractors who were engaged for the various scopes, and in particular GR Engineering Services Limited, which has done the heavy lifting on the processing plant and cost estimates to bring the DFS together."

GRAPHEX MINING LIMITED

ASX ANNOUNCEMENT9 DECEMBER 2019 ASX:GPX

2



KEY RESULTSProject operations are forecast to commence following a 12-month construction phase. Operations entail open pit mining, with conventional crushing, grinding and flotation processing. Estimated key project outcomes including economics from value-added products are shown in Table 1 with Figure 1 showing the anticipated production and sales profile of concentrate and value-added products.

Table 1: Key project outcomes

PHYSICALS UNIT LIFE OF MINE

Mine life Years 18

Total plant feed Mt 8.9

Annual plant feed ktpa 500

Average head grade TGC % 10.1%

Average graphite concentrate production1 ktpa 50

Steady state expandable graphite sales ktpa 12

Steady state micronised graphite sales ktpa 8

PROJECT FINANCIALS UNIT LIFE OF MINE

NPV8 (Post-tax) US$M 331

NPV8 (Post-tax) – at Year 4 US$M 510

IRR (Post tax) % 36%

Post-tax payback period years 3.5

Pre-production capital cost (incl. 10% contingency and pre-strip) US$M 87.4

Average annual EBITDA US$M 74

PRODUCT SEGMENT FINANCIALS UNIT CONC. EXPANDABLE GRAPHITE

MICRONISED GRAPHITE

CONSOLIDATED PRODUCTION3

Average sales price (FOB) US$/t 1,534 5,690 2,802 2,500

C1 operating costs per tonne (FOB)2 US$/t 778 512 383 905

Operating margin US$/t 756 5,178 2,419 1,595

1. Average graphite concentrate production includes graphite concentrate used as feedstock into both value-added products.2. Operating costs of expandable graphite and micronised graphite excludes the internal transfer price (purchasing feedstock from Chilalo).3. Consolidated Production shows the average sales price, operating costs and margin for the consolidated operation (ie. Inclusive of concentrate, expandable graphite and micronised graphite).

UPDATED ORE RESERVEThe Ore Reserves underpinning the production target have been prepared by a competent person in accordance with the requirements in the JORC Code, the relevant proportions of which are set out in Table 9 of this announcement. The Company has not included exploration targets or Inferred or Indicated Resources in the forecast financial information set out in this announcement.



VERTICALLY INTEGRATED “MARKETS FIRST” GRAPHITE STRATEGYSince discovering the Chilalo Graphite Project in south-east Tanzania, Graphex has adopted a ‘markets-first’ approach to its development. In such an opaque market for graphite, potential graphite suppliers have experienced a steep learning curve to address the knowledge asymmetry that exists between developers and existing market participants. Graphex has always believed that sustained success in the graphite industry would be achieved through a detailed understanding of the graphite market and continued engagement with multiple diversified market participants.

The initial focus of this engagement has been in China and, with the assistance of experienced in-country graphite advisors, the Company developed numerous relationships with potential customers in target markets. This sustained marketing effort commenced in early 2015 and soon resulted in the Company focusing on becoming a supplier of coarse flake graphite, a strategy that is underpinned by the high-value coarse flake product that can be produced at Chilalo, the identified shortfall in coarse flake graphite for expandable graphite and other applications, and the overwhelming macro themes expected to drive growth in expandable graphite products.

This ‘markets-first’ strategy has evolved to include the manufacturing of value-added graphite products in addition to the sale of Chilalo graphite concentrate. As outlined in the ASX announcement dated 30 October 2019, a key development in the Company’s strategy has been the advancement of a low-risk, low capital-intensive, value-added products strategy to enhance the value of its concentrate sales, including:

ڇ Chinese toll-treatment of Chilalo flake graphite concentrate into expandable graphite for qualification and direct sale to fire-retardant customers identified by Graphex; and

ڇ Installation of fine milling equipment to produce micronised graphite for qualification and sale to customers identified by Graphex.

This strategy has received a significant boost with the signing of a term sheet with China’s largest expandable graphite manufacturer, Yichang Xincheng Graphite Co Ltd, to act as the Company’s processing agent, effectively toll-treating Chilalo graphite concentrate into expandable graphite.

Graphex is positioning itself as a vertically integrated manufacturer of high-value graphite products, as opposed to a graphite mining company. Figure 1 below demonstrates the vertically integrated and geographically diversified nature of the Company’s sales and marketing strategy.

Figure 1: Vertically integrated graphite strategy

27,700 500 500 500 500 500

Product Sales (‘000) 1 2 3 4 5 6 7

FLAKE GRAPHITE CONCENTRATE SALES 43 56 50 48 45 39 28

FEEDSTOCK TO MICRONISED GRAPHITE - 1 2 3 5 6 8

FEEDSTOCK TO EXPANDABLE GRAPHITE - - 3 6 9 12 12

ADDITIONS TO INVENTORY 3 2 - - -- -

TOTAL PRODUCTION 46 59 55 57 59 57 48

CHILALOPROJECT

YEAR 3

EXPANDABLE GRAPHITE (EG) SALES

EXPANDABLE GRAPHITE FEEDSTOCK

GRAPHEX PROCESSING AGENT

YEAR 2

MICRONISED SALES COMMENCED

FIRE RETARDANT COMPANIES (EG CUSTOMERS)

MICRONISED & EXPANDABLE GRAPHITE CUSTOMERS

CHILALO MINE (CONCENTRATE & MICRONISED)

YEAR 1

CONCENTRATE SALES COMMENCE

CONCENTRATE CUSTOMERS

CHILALO MINE (PRODUCING CONCENTRATE ONLY)



PRODUCT QUALITY The defining characteristic of the Chilalo project is product quality and consistency. It is product quality and consistency, combined with the Company’s markets-first approach to development, that underpins the opportunity for Graphex to become a supplier of high-value graphite products.

Since 2015, concentrate flotation testwork has occurred at six independent laboratories. Graphex has also conducted downstream testwork and specific analytical tests for target applications at five independent research institutes / laboratories to complement testwork conducted by equipment manufacturers and potential customers in their lab facilities.

Testwork has repeatedly confirmed that Chilalo product:

ڇ Produces a very high proportion of coarse flake graphite at target purity levels;

ڇ Is capable of achieving a purity level of >99% Loss on Ignition (LOI)1 through standard flotation with no chemical intervention (not commercially available in current global graphite market); and

ڇ Is suitable for a multitude of high-value applications.

POISED TO CAPITALISE ON VALUE-ADD OPPORTUNITIES The product quality has been supported by a strong and sustained commitment to customer engagement which has broadened the market focus to include two value-added products; expandable graphite and micronised graphite. Work carried out over the past 12 months has Graphex strongly positioned to capitalise on the opportunities in the expandable graphite and micronised graphite markets, both of which enable enhanced project revenue, as each command materially higher prices than those paid for graphite concentrate. Table 2 below illustrates how Graphex is poised to capitalise on these highly lucrative markets.

Table 2: Value-added strategy - key boxes have been ticked

EXPANDABLE GRAPHITE MICRONISED GRAPHITE

Suitability Several independent labs confirm suitability for foils and fire-retardants

Suitability confirmed by micronisation equipment supplier

MarketingNumerous international fire-retardant companies identified including technical specifications required by each

Numerous international micronised graphite customers identified including technical specifications required by each

Technical Risk

Expandable graphite processing term sheet signed with China’s largest expandable graphite manufacturer – leveraging off existing technology and processing expertise

Micronisation equipment supplier is a respected supplier to the industry

Economics Substantial value-add with no capital investment

Very low capital cost and substantial value-add (low-value -100 mesh feedstock)

TimingSales commence in year 3 following ~24 months qualification timeframe and follow progressive sales ramp-up

Micronisation equipment installed in year 2 with progressive sales ramp-up

1. Please refer to Appendix A for further information on LOI.



The processing and market applications for expandable graphite and micronised graphite are further described in Section 5 and Section 10 below.

Table 3 below shows the DFS production and sales profile assumptions from years 1 to 7 of the various graphite products expected to be produced by Graphex

Table 3: Graphite sales profile – increasing volumes to high-value applications

PRODUCT ('000) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7

Flake graphite concentrate sales 43 56 50 48 45 39 28

Feedstock to Expandable Graphite - - 3 6 9 12 12

Feedstock to Micronised Graphite - 1 2 3 5 6 8

Additions to inventory 3 2 - - - - -

TOTAL PRODUCTION 46 59 55 57 59 57 48

Due to stringent regulatory requirements, it is conservatively assumed to take up to 24 months to qualify Chilalo’s expandable graphite with international fire-retardant customers identified by the Company. These qualification timeframes along with realistic sales ramp-up assumptions have been recommended by the Company’s specialist graphite market advisors who have extensive experience and contacts with these markets.

The fine milling equipment required to produce micronised graphite is expected to be installed at Chilalo at the beginning of the second year of operations. Again, the Company has applied realistic qualification timeframes and sales ramp-up parameters, based on the recommendations of its specialist graphite market advisors.

Table 3 also demonstrates that the Company is forecasting to hold inventory of graphite products to service high-value spot shipments and service stock requirements of higher value customers who request stock be held. This is also a more conservative assumption than selling all products as they are produced and is consistent with industry norms.




THE IMPROVING ECONOMICS OF THE CHILALO GRAPHITE PROJECTAs described in Table 4 below, Graphex expects the price it receives for its flake graphite concentrate to increase during the early years of the Project as the product is progressively qualified into higher value markets / applications where a premium is paid for quality and consistency. The increasing price is not dependent on rising graphite prices more broadly.

Table 4: Life of mine flake size distribution and weighted average sales price

Mesh size Microns Mass

Dist.%Price Year 1

Price Year 2

Price Year 3

Price Year 4

Average (LOM)

+20 >850 0.7 5,000 5,000 5,000 5,000 5,000

+32 500 - 800 9.8 2,359 2,582 2,895 3,031 3,017

+50 300 - 500 20.6 1,745 1,935 2,235 2,357 2,242

+80 180 - 300 26.9 1,057 1,133 1,251 1,299 1,270

+100 150 -180 6.3 794 853 945 983 969

-100 <150 35.8 631 673 735 761 749

Weighted average sales price (US$/t) 1,178 1,303 1,475 1,535 1,534

In addition to discussions with potential customers, Graphex has considered pricing data from numerous independent sources including Roskill, Industrial Minerals, Benchmark Mineral Intelligence, RefWin-China as well as its own expert graphite market consultants.

Complementing the expected improving average sales price for Chilalo’s flake graphite concentrate will be the qualification and growing sales of the Company’s initial value-added products (expandable graphite and micronised graphite). These factors will result in revenue and cash flows increasing during the early years of the Project’s life increasing the project value.

Figure 2 below shows the rolling NPV based on forward-looking discounted cashflows at each year for the initial 12 years of the Project’s life.

Figure 2: Chilalo’s improving NPV demonstrates the value to be added by exploration

YEARS

US$

M

0

100

200

300

400

500

600

0 21 3 4 5 6 7 8 9 10 11 12

QUALIFICATIONS INTO HIGH VALUE APPLICATIONS/MARKETS AND VALUE ADDED PRODUCTS

EXPLORATION UPSIDE/ADDITIONS TO MINE LIFE

US $510M

US $331M



Post-tax cash flow increases to US$69M by year 5. At Year 4, the NPV of the project has increased to US$510M as a result of expensed capital and the higher forward-looking revenue generated from the value-added products. To improve the NPV further, the Company will need to increase the quantity of value-added product sales or increase the economically mineable resource to allow production expansions.

The Opportunities section below highlights the strong potential for an increased mine life

FUNDINGIn October 2018, the Company entered into financing agreements that included a term sheet setting out the proposed terms on which the financier and other market participants (subject to the satisfaction of agreed conditions) would provide up to US$40 million in equity and up to US$40 million from the issue of senior secured loan notes (‘Senior Funding Package’). For further information on financing arrangements, please refer to ASX announcement dated 29 October 2018.

The DFS represents a step toward satisfying a condition to the Senior Funding Package. The Company is confident that the DFS has been prepared to a standard required by project financiers. Financier due diligence on the DFS and other outstanding conditions is ongoing. Graphex is working with the financier on procuring the finance necessary for development of the Project and the financier is open to working with others in this regard.

A key objective in preparing the DFS was to enable it to support a bankable level of due diligence. The Company has worked with specialist consultants and contractors who have experience and demonstrated expertise in graphite mine design, construction and operations. The environmental and social management planning and supporting impact assessments are aligned with applicable Tanzanian legislation, International Finance Corporation (‘IFC’) Performance Standards and the Equator Principles.

OPPORTUNITIESThe DFS has identified a number of opportunities that could improve the project’s economics as follows:

ڇ Exploration upsideAs highlighted further above, the Project’s annual cash flows are forecast to increase as the products are qualified into higher value markets/applications. To ensure this translates into a sustainable,higher project valuation, the Company would need to add economically mineable resources during operations. This is achievable via:

ڇ the conversion of additional Indicated and Inferred Resources to Reserves (high-grade Indicated and Inferred Resources of 11.2Mt are not currently included in the mine plan). These require further infill drilling; and

ڇ additional near-mine exploration targets. The Company has drilled only 10% of the strike length indicated by high-conductance anomalies similar to the main deposit. Figure 3 below shows a significant number of high-conductance targets on the Company’s tenements (see ASX announcement 2 September 2015).




Figure 3: VTEM survey showing near-mine targets

Any additional deposits may also contribute to a reduction in mining operating costs by deferring the need to mine the deepest parts of the main ore body. Some analysis of the impact of exploration on mining costs is provided in Section 4 below, whilst sensitivity analysis of the project economics to a change in mining costs is presented in Section 13.

ڇ Optimisation of flake size distributionGraphex has conducted extensive testwork on Chilalo product including variability testwork at two separate world-class independent laboratories. Following this DFS, Graphex will continue to conduct optimisation testwork aimed at improving the preservation of coarse flake graphite. Initial results appear encouraging and, if successful, could yield an improved flake size distribution, average sales price and therefore revenue.

ڇ Future production expansionExpansions to production in the future can increase the Project’s cash flows and NPV. The DFS assesses a single-stage development whilst the 2018 PFS assessed a two-stage production scenario. Consistent with other assumptions in the DFS, Graphex has chosen a more conservative approach. There remains a clear need for new sources of coarse flake graphite, as highlighted in Figure 4 below. To satisfy the incremental demand of 145,000 tonnes of coarse flake graphite (shown in Figure 4) approximately four mines the size of Chilalo’s planned production would be required by 2021.



Figure 4: Anticipated coarse and fine flake demand growth from 2018 to 2021

The timing and scale of any expansion will be dictated to by market appetite for product and the availability of funding for the expansion.

ڇ Qualification timeframes and sales ramp-up assumptionsGraphex has assumed conservative timeframes for qualifications and sales ramp-up into higher value markets/applications and value-added products. If actual qualification timeframes exceed the DFS assumptions, this can bring forward higher revenues and margins. Graphex has conducted substantial downstream testwork and analytical tests to determine Chilalo product suitability for targeted markets, including graphite foils and fire-retardants. Sales into these applications has great potential to increase the value of the Project.

ڇ Grid power or lower cost power The DFS assumes that power for the Project will be provided by diesel generators at an average cost of US$0.31/kWh. Power costs represent approximately 10% of the life of mine operating costs of the project (US$84 per tonne of product). There are potential grid power opportunities in southern Tanzania that if realised, would reduce the average power generation cost to approximately US$32/t. The Company will also continue to assess alternatives including the use of LPG and heavy fuel oil and solar generation. This saving in operating costs would contribute towards positive, permanent improvements in cash flows.

GRAPHEX MINING LIMITED

541

202

743

306

145

451

2018 Incremental Fines Demand

Incremental Coarse Demand

2021

Source: Benchmark Mineral Intelligence, June 2019

FinesCoarse

NA

TUR

AL

GR

AP

HIT

E D

EM

AN

D (K

T)

10



NEXT STEPSIn the coming months, Graphex will focus on finalising the funding arrangements for Project development, advancing discussions with potential customers as part of the progression towards binding sales agreements and obtaining the necessary local approvals.

The Company is aiming for a final investment decision in the second quarter of 2020, which if achieved, would see commissioning at Chilalo in the third quarter of 2021, as shown in Table 5.

Table 5: Project development schedule

Task

2020 2021

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Project/ Construction Operations

1 Final Investment Decision

2 Relocation and compensation of displaced persons

3 Engineering and design

4 Procurement

5 Enabling Works (Camp, Road, Water supply)

6 Process plant fabrication and delivery

7 Bulk Earthworks

8 Concrete Works

9 Erection of Steel, Mechanical and Platework

10 Piping, Electrical and Instrumentation

11 TSF Construction

12 Mining (establishment and pre-production only)

13 Commissioning (pre and water commissioning)

14 Ramp -up (on ore)

15 Name Plate Production

The Company will also continue to further investigate those opportunities outlined above which have been identified as having the capacity to deliver improved financial outcomes for the Project.

Further details on the DFS are included in the following pages.

By order of the Board.

Phil Hoskins Managing Director

For further information, please contact:

Phil Hoskins Managing Director

Tel: +61 8 9200 4960

Stuart McKenzie Commercial Manager & Company Secretary

Tel: +61 8 9200 4960



1. DFSSCOPE

Graphexhasundertakena12-monthprogramofworktoensuretheDFSmeetsthestandardsrequiredbyinternational resources financiers. The Studyhasbeenpreparedwith an approximate accuracyof ±15%.Potential value-adding opportunities have also been identified and will be incorporated as furtherinvestigationoftheseopportunitiesiscarriedout.

TheDFSwas undertaken by independent expertswith substantial experience in the graphite sector andresourcesprojectsinAfrica.GraphexwouldliketoacknowledgetheDFSteam,whichincluded:

GREngineeringServices Process Plant, Engineering Design, OverallCostEstimationandReportCompilation

BatteryLimits MetallurgyandFlowSheetDevelopment

SGSLakefield MetallurgyandPilotPlantProduction

CSAGlobal Geology,MineralResource,MiningandOreReserve

ATCWilliams TailingsStorageFacility

AQ2 HydrologyandHydrogeology

MineWasteManagement AcidandMetalliferousDrainage

GraphiteMarket Independent expert consultants in ChinaandUSA

FinancialModelling AzureCapital

Warren King was engaged by the Company as the ProjectManager.Mr King has successfully deliveredprojectsinremoteareasofAustralia,AsiaandAfrica.

ThescopeofworkundertakenfortheDFSincluded:

• UpdateandreleaseofaJORCcompliantMineralResourceEstimate.

• Investigatepitslopestability,developamineproductionplan,minedesignanddeliveranupdatedOreReserve.

• Completefurtherlabscalemetallurgicaltestwork(includingvariabilitytestwork).

• Completeabulkrun–processingapproximately30tonnesofoxidematerialatSGSinLakefield.

• Develop a viable and economic process route for producing amarketable graphite product andmaximise+50mesh(+300µm)graphiteflake.

• ProduceaClass3capitalcostestimate(±15%)fortheprojectexecutionphase.

• Developandcostatailingsdamdesign.

• Investigateacidandmetalliferousdrainage,developmethodstomanagetheacidformingmaterialsandincludecostsinbothcapitaland/oroperatingexpenditureestimates.

• Evaluatepitdewatering,minesitesurfacewatermanagement,developasitewidewaterbalance,assessmentofgroundwatersupplypotentialandimpactsofminingonthegroundwater/surfacewatersystem.



• Ensureallregulatoryrequirementshavebeenadequatelyprogressedandwhereapplicable,updatedtoallowasmoothtransitionfromtheDFSthroughdetaileddesign,executionandintooperation.

• Designandcostthenecessarysiteaccessroadupgrades.

• Evaluatetransportandshippingoptionsandcostsforconstructionandoperation.

• Revisedfinancialmodel.

2. PROJECTOVERVIEW

Chilalo is located intheRuangwaDistrictoftheLindiRegion insouth-eastTanzania,100kmnorthoftheborderwithMozambique,approximately180kmwestofthecoastalportcityofMtwaraontheIndianOceanand400kmsouthofTanzania’slargestcity,DaresSalaamasshowninFigure5.

Figure5.ProjectLocation

TheProject issituatedwithintheMozambiquebelt,which iswellknownforsomeoftheworld’shighestgradeandcoarseflakegraphitedeposits.ThroughitswhollyownedUKsubsidiary,GraphexMiningUKNo.1Limited,Graphexowns100%ofNgwenaTanzaniaLimited(‘Ngwena’),acompanyincorporatedunderthelawsofTanzania,whichistheholderoftheChilaloMiningLicenceandvariousProspectingLicences.

Chilaloconsistsoffivetenements:oneMiningLicenceandfourProspectingLicencesthatcoveranareaof170.8squarekilometresasshowninTable6.ThelocationanddetailsoftheProjecttenementsareshowninTable6andFigure6respectively.



Table6.Projecttenements:keydetails

Figure6.LocationofProjecttenements

InJuly2014,Graphex(thenasIMXResourcesLimited),announcedthatareviewofhistoricrockchipsamplesfromtheChilalotenementhadidentifiedasignificantnumberofsampleswithhighTGCgrades.AdrillingprogramcommencedinSeptember2014andamaidenmineralresourceestimatewasannouncedon7April2015.Furtherdrillingin2015deliveredanincreaseinthemineralresourceandupgradeintheclassificationofthemineralresource(ASXannouncement13October2015)thatunderpinnedapre-feasibilitystudy,theresultsofwhichwereannouncedon23November2015.

TenementNumber

TenementName

ExpiryDate

Status PartiesArea(km2)

ML569/2017 ChilaloML 14-Feb-27 Granted–3rdYear

NgwenaTanzaniaLimited

(100%)

9.81

PL9929/2014 Chikwale 07-Jul-21Granted-

FirstRenewal


(100%)24.02

PL9946/2014 Machangaja 07-Jul-21Granted-

FirstRenewal


(100%)48.50

PL11050/2017 ChilaloWest 12-Mar-21 Granted-InitialPeriod


(100%)48.82

PL11034/2017 Chilalo 12-Mar-21Granted-Initial

Period


(100%)39.65

170.80



Followinga1,365mdrillingprogramcarriedoutinthefourthquarterof2016,theCompanyannouncedanincrease in the Chilalomineral resource (ASX announcement 2 February 2017), which together with anincreaseintheorereserve,formedthebasisofthe2018PFS.

The2018PFS,whichalsoincorporateduptodategraphiteprices,additionaltestworkandrevisedprojectparameters, formedthebasis foran interimfinancingdecisionby fundsmanagedby theFinancierunderwhichtheFinancierprovidedtheCompanyaUS$5millionsecuredloanfacility.

3. MINERALRESOURCEESTIMATE

DuringAugust2019,CSAGlobalcompletedanupdatedMineralResourceestimatefortheChilaloMainandNorthEastdepositsofChilalo(‘2019MRE’).

Atotalof30reversecirculation(RC)holesfor2,666mand50diamond(DD)holesfor5,551.35mhavebeendrilledandanalysedforgraphitecontentdirectlycoveringthetwomodelleddeposits.The2019MREisbaseduponthedataobtainedfromthe2,312.08mofDDdrillcoresamplesand1,305mofRCdrillchipsampleswhich lie within the interpreted mineralisation solid wireframes. The mineralisation wireframes weremodelledusinganominallowercut-offgradeof5%totalgraphiticcarbon(TGC)forthehigher-gradecorezonesandanominal2%TGClowercut-offgradeforthelowergradesurroundingzones.

The2019MREisreportedfromallclassifiedandestimatedblocksabovealowercut-offgradeof2%TGCwithinthehighandlow-gradezonesundertheguidelinesofthe2012editionoftheAustralasianCodeforReportingofExplorationResults,MineralResourcesandOreReserves(‘JORC2012’).1

The2019MREispresentedinTable7below.

Table7.ChilaloMineralResourceestimate

Domain Classification Zone MillionTonnes(Mt) TGC(%) ContainedGraphite

(Kt)

HighGrade

IndicatedMain 9.2 10.6 982

NorthEast 1.0 9.5 100All 10.3 10.5 1,082

InferredMain 7.4 9.5 704

NorthEast 2.3 8.8 205All 9.8 9.3 908

Indicated+Inferred All 20.1 9.9 1,991

LowGrade InferredMain 37.8 3.4 1,282

NorthEast 9.5 4.1 394All 47.3 3.5 1,677

HighGrade+LowGrade Indicated+Inferred All 67.3 5.4 3,667

1. TheMineral Resourcewas estimatedwithin constrainingwireframe solids using a core high-grade domain defined above anominal5%TGCcut-offwithinasurroundinglow-gradezonedefinedaboveanominal2%TGCcut-off.Theresourceisquotedfromallclassifiedblocksabovealowercut-offof2%TGCwithinthesewireframesolids.Differencesmayoccurduetorounding.

Themineralisationwireframesweremodelledbyjoiningpolygonsbasedupongeologicalknowledgeofthedeposit, derived from drill hole logs and assay results, surface mapping and downhole and fixed loopelectromagnetic modelling results. Two weathering profile surfaces representing the base of completeoxidationandtopoffreshrockweregeneratedbasedondrillholelithologicallogginginformation,drillcore



photography,petrographyandtotalsulphurassayresults.Anoverburdensurfacewireframewasgeneratedbasedontheaverageoverburdendepthsestablishedfromthelithologicallogs.Atopographicsurfacewasgeneratedfromsurveyeddrillcollarlocations,surveyedtrackpointspotheightsandthesurveyedspotheightgrid.

AblockmodelwasconstructedusingDatamineStudiosoftwarewithaparentcellsizeof25m(E)x10m(N)x5m(RL).Drillholesampleanalyticalresultsweresubjectedtodetailedstatisticalandspatial(variography)analysis.CompositedsamplegradesforTGCwereinterpolatedintotheblockmodelusingordinarykrigingwithaninversedistancetothepoweroftwoweightingcheckestimatecompletedforvalidationpurposes.Density valueswereassigned to theblockmodelbasedonanalysisofmeasurements taken in the threeweatheringstatedomains.Themodelwasvalidatedvisually,graphicallyandstatistically.

Geophysical surveys were carried out using versatile time domain electromagnetics, downholeelectromagneticandfixedloopelectromagneticmethods.CSAGlobalisoftheopinionthatthegeophysicalresults support themodelled extent of graphitemineralisation along strike and down dip at the Chilalodeposit.

PetrographicandextractivemetallurgicaldatasupporttheclassificationoftheChilalodepositasanIndustrialMineralResourceintermsofJORC2012Clause49requirements.

Figures7and8belowshowthegradeandclassificationofthe2019MRE.

Figure7.Imageshowingthegradeofthehigh-graderesource



Figure8.ClassificationofupdatedChilaloMineralResource

4. MINING

Openpitmining

The Chilalo open pit mine is planned as a conventional truck and shovel operation, using 40-50 tonnearticulatedtrucksandmatchingexcavators.Operationsincludedrillandblastactivitiesforthemajorityoftheopenpitmining.Contractormininghasbeenassumedforthelifeofmine.Theequipmentselectionisappropriatefortheproposedscaleandselectivityofthisoperation.Theselectedminingapproachistypicalforasmalltomediumscaleopenpitminingoperation.

The geotechnical parameters utilised in the pit design are as per the recommendations byOpen HouseManagementSolutionsgeotechnicalconsultants.

InitialwastegeneratedfromminingistobeusedforconstructionoftheTailingsStorageFacility(‘TSF’)andthereaftertobedumpedinadesignedlocationoutsideofthepit.

MiningoperatingcostshavebeendevelopedbyCSAGlobalbasedonadetailedminingmodelandbyusingbudget estimates from mining contractors with Tanzanian experience. Mining capital costs have beenestimatedformobilisation,clearingandtopsoilstockpiling,wasteforconstructionpurposes,wastepre-strip,andhaulroadconstruction.

Afixedvalueof10%wasusedforminingdilutioninpitoptimisations,productionschedulingandcashflowmodel. A grade of 0% TGC was assumed for dilution material. Dilution for tonnes and grade was alsocalculatedthroughadilutionskinmethodandconcludedtheselecteddilutionisreasonable.

Afixedvalueof95%wasusedforminingrecoveryinbothoptimisationsandproductionscheduling.



Pitoptimisation

Whittle™softwarehasbeenusedtogenerateaseriesofeconomicpitshellsforthisdepositusingtheMineralResourceblockmodelandinputparametersasagreedbyGraphexandCSAGlobal.

ThepositivenetvaluemethodisappliedforIndicatedore.Usingtheselectedparameters,asetofnestedpitshellswereproducedbytheWhittleoptimisationsoftware.Thepitshellswereusedtodeterminetrendsinmineralisationand/orhigher-gradeareaswhichofferabest-casescenarioforgradeanddiscountedcashflow(DCF).

Miningcostsvsminelife

Graphexhasidentifiednear-mineexplorationupsideasapotentialopportunitytoreduceminingcostsandgrowminelife.Figure9belowplotstheminelifeandminingcostsfromallpitshellsgeneratedbyWhittleanddemonstrateshowsmallerpits(i.e.shownasshorterminelife)couldreduceminingcosts.

Figure9:Miningcostsvsminelife(Whittlepitshells)

UsingWhittlemodelling,therevenuefactorwhichgeneratedthehighestNPVandunderpinnedtheDFS,wasrevenuefactor0.80whichshowsaminelifeof18years,miningtoadepthofapproximately165metreswithLOMminingcostsofUS$262pertonneofproduct.Thiscompareswithrevenuefactor0.54whichshowsaminelifeof9.1yearsminingtoadepthofapproximately115metreswithLOMminingcostsofUS$168pertonneofproduct.Ifadditionaldepositsarediscovered,itwoulddelaytheneedtominetheexistingdeposittothedepthassumedintheDFSandwouldbeexpectedtodeliverreducedminingcostscomparedtothoseintheDFS.

Mineplan

TheWestandNorthpitsarescheduledtobeminedintwostageswhilsttheCentralpitisscheduledtobeminedinfourstagesasshowninFigure10below.



Figure10.Pitdesigninstages

OreReserve

TheOreReserveestimatefortheChilaloGraphiteProjectissummarisedinTable9belowandshouldbereadinconjunctionwiththeinformationrequiredbyASXListingRule5.9.1andsection4ofAppendixDwhichcontainstheJORC2012Table1Reporting.

Table9:ChilaloGraphiteProjectOreReserveEstimate

Deposit JORCclassification Tonnes(Mt) GradeTGC(%) ContainedGraphite(Kt)

ChilaloProved - - -

Probable 9.2 9.9 878

Total 9.2 9.9 878

AsummaryofthekeyDFSinformationincludingmaterialinformationfortheOreReserveisincludedinthebodyofthisannouncement.Additionaldetailsofthematerialassumptionsaresetout inAppendixBandAppendixD(JORC2012Table1).



Sitelayout

ThesitelayoutisshownbelowinFigure11.

Figure11:Sitelayout

5. METALLURGYANDPROCESSING

DFStestwork

Approximately2tofdrillcorewasusedtoformglobalmastercompositesaswellasestablishingvariabilitycompositesfortheDFS.

ThemastercompositeswereeitherFreshorOxideorecompositeswithsamplescomingfromallthreeareasoftheresource(North,CentralandWest).ThesampleswereselectedbasedonconsultationwiththeCSAGlobalgeologicalconsultantandincludedconsiderationofsamplerepresentivity,appropriatecutoffgrades,locationwithinthelikelypitshells,mineralisationcontinuity,miningwidths,lithology,weathering,internalwastedilutionandspatialrepresentivitywithinthepits.

Thevariabilitycompositeswereformedbysplittingthethreeresourceareasintofreshandoxidezonesandpreparingsixindividualcompositesrepresentativeofresourceareaandweathering.

Testworkandoptimisationonmastercompositesandsubsequentvariabilitytestworkindicatedareductionin the flake sizedistribution from the2018PFS.Whilstnumerous testswereperformed,Table10belowshowstheflakesizedistributionresultsforeachfinalvariabilitytestatthetargetedpurityof95%LOI.



Table10:Variabilitytestwork–flakesizedistribution

Meshsize Microns Northoxide

Northfresh

Centraloxide

Centralfresh

Westoxide

Westfresh Weightedaverage1

%ofFeed 2% 7% 9% 62% 5% 15% 100%

+20 >850 2.7 0.6 - 0.6 0.7 1.2 0.7

+32 500–850 12.9 8.8 5.1 10.8 7.0 9.6 9.8

+50 300–500 20.3 18.0 28.3 20.7 18.1 19.9 20.6

+80 180–300 20.9 23.5 30.7 27.7 27.5 27.2 26.9

+100 150–180 4.9 5.6 8.5 6.1 6.3 6.3 6.3

-100 <150 38.3 43.4 27.4 34.1 35.9 35.9 35.8

1. Weightedbycontributiontolifeofminefeedtotheplant.

Optimisation included variations in polishing times and attritioning times, grindingmedia size, reagents,alternativeequipmentandtheuseofChilalositewater.Samplesfromeachvariabilitycompositewerealsotaken for petrographic analysis / investigation. The petrography program was designed to quantify thenumberoflargeflakespresentintheoreforeachofthevariabilitysamplesandtounderstandtheextenttowhichthecoarseflakeswereliberated,split,thinorcomposited.

Graphex also engaged the Beijing General Research Institute of Mining and Metallurgy (BGRIMM) toundertakeapeerreviewofthetestworkandtheflowsheet.BGRIMM’sviewisthattheGraphexflowsheetwaswellsuitedtoflakesizepreservation.BGRIMMmadevariousrecommendationsregardingtheflowsheet,anumberofwhichhavesincebeenincorporated.

ThetestworkprogramincludedapilotplantcampaignconductedbySGSLakefieldon27tofnearsurfaceweatheredmaterialcollectedfromtrenches.Oneofthepurposesofthepilotplantcampaignwastoconfirmwhethertheproposedflowsheetandlabscaleresultswouldbeachievableatpilotscaleandassuchwhatscale-upmightbeachievableinthecommercialoperation.Table11belowshowstheresultsofthepilotplantcampaignalongsidetheSGSlabresultsonthesamematerial.

Table11:SGSLakefieldpilotplantandlabresultsontrenchsample

Meshsize SGS–pilotplant SGS–labtest

+32 16.3 14.5

+50 24.0 21.8

+8018.9 29.4

+100

-100 40.8 34.5

Thepilotplantresultsandthelabresultsareingoodagreement,furthervalidatingestimatedcommercialplantperformance.



Flakesizedistributionandweightedaverageconcentratesalesprice

Followingthepilotplantvalidationoftheproposedflowsheetand laboratoryresults, thefinancialmodelincludedthevariabilitytestworkresultsinTable10foreachlocationwithintheorebody.

Table12belowshowstheaveragesalespriceassumedforChilaloconcentrate.TheincreasingpriceisnotdependentonpricerisesofgraphitemorebroadlybutontheexpectedqualificationofChilalographiteintohighervaluemarkets/applications.

Table12:AveragesalespriceforChilaloflakegraphiteconcentrate

Meshsize Microns MassDist.% Price(Yr1)

Price(Yr2)

Price(Yr3)

Price(Yr4)

Average(LOM)

+20 >850 0.7 5,000 5,000 5,000 5,000 5,000

+32 500–850 9.8 2,359 2,582 2,895 3,031 3,017

+50 300–500 20.6 1,745 1,935 2,235 2,357 2,242

+80 180–300 26.9 1,057 1,133 1,251 1,299 1,270

+100 150–180 6.3 794 853 945 983 969

-100 <150 35.8 631 673 735 761 749

Weightedaveragesalesprice(US$/t)FOB 1,178 1,303 1,475 1,535 1,534

In addition to discussions with potential customers, Graphex has considered pricing from numerousindependentsources includingRoskill, IndustrialMinerals,BenchmarkMineral Intelligence,RefWin-China,GlobalTradeAtlasaswellasitsownexpertgraphitemarketconsultants.

ExpandableGraphite(EG)processing

Overthepastfouryears,GraphexhasengagednumerousendusersaswellasthreeindependentlaboratoriestoevaluatetheuseofChilaloflakegraphite(invariousmeshsizes)fortheproductionofexpandablegraphiteandtodeterminehowGraphexexpandablegraphitewouldperformwhencomparedtootherexpandablegraphiteproducersandproducts.EvaluationshaveconsistentlyconcludedthatChilaloflakegraphite,usingtwo different intercalation / oxidation compound formulas, meets the performance characteristics forgraphitefoilsandfire-retardants.Duetoitsuniquechemistrymarkers,Chilaloflakegraphitemeetscriticalparametersthatarerequiredforfire-retardantmanufacturers.

Figure12belowdemonstratestheflowfromflakegraphiteconcentratetoexpandablegraphitetoexpandedgraphite.



Figure12:Processflowchartforexpandablegraphiteandexpandedgraphite

The Company has identified numerous international companies with demand for multiple grades ofexpandablegraphite(shownas‘Fire-RetardantCustomers’inFigure12).

GraphexhassignedatermsheetwithChina’slargestexpandablegraphitemanufacturer,YichangXinchengGraphite Co Ltd to act as the Company’s processing agent, effectively toll-treating Chilalo graphiteconcentrate into the desired expandable graphite specifications for a processing fee. Importantly, thisopportunityrequiresnocapitalinvestment,carrieslowtechnicalriskasitleveragesfromexistingprocessingexpertiseandprovidestheCompanywithimmediateaccesstotherapidlygrowingfire-retardantmarket.Itshould be noted that Chilalo graphite will likely follow the path from Chinese expandable graphitemanufacturertowesternfire-retardantcustomerswithouttheCompany’sintervention.

MicronisedGraphiteprocessing

Micronisedgraphite isaprocessed formofnaturalor syntheticgraphite,producedby finegrinding flakegraphiteconcentrateintospecificmicronparticlesizedistributions.Thisprocessallowssmallermeshsizes(-100meshor-200mesh)tobeusedasrawmaterialfeedstock,creatingahighpotentialmarginforproducers.Thekeyrequirementsofmicronisedgraphiteareachievingarangeofmicronparticlesizedistributions(PSD)andPSDaxisvariancestomeetthevariousspecificationsandperformancemetricsfortargetedapplications.

Graphex has identified a large number of micronised graphite customers and the detailed technicalspecificationsoffivestandardproductsrequiredbythosecustomers.Whilstcontractsizescanberelativelysmall,thesubstantialupliftinvaluehasthepotentialtosignificantlyincreasemargins.

Graphex has conducted micronisation equipment product trials with a milling equipment supplier thatprovidesafullyautomated,programmableprocessingsystemthatcanachieveuptoa~1.5%improvementinfinishedproductpurity.Thepreferredmillingsystemachievesayieldof~95%onaveragefromtheoriginalfeedstockwiththeabilitytoproducefiveindustry-standardmicronisedgradestomeetmarketspecifications.Figure13belowdemonstratestheflowfromflakegraphiteconcentratetomicronisedgraphiteandalsolistssomeofthekeyapplicationsusingmicronisedgraphite.



Figure13:Processflowchartformicronisedgraphite

6. PROCESSPLANTANDON-SITEINFRASTRUCTURE

Flowsheet

SetoutbelowinFigure14isasimplifiedflowsheetfortheChilaloprocessplant.

Figure14.Simplifiedflowsheet

Two stage crushing Rod milling

Rougher flotation

Ball milling

Rougher scavengers

Pebble milling

Coarse cleaner

Coarse screening

Coarse product filter

and dryer

Coarse dry product Coarse product

bagging and weighing

Regrind milling Cleaner 1 Cleaner 2 Regrind

millingCleaner 3 & 4

Regrind milling

Cleaner 5

Fine product filter and dryer Fine screens Fine product

bagging and weighing

Fine screening



Processplant

TheChilaloprocessingplanthasadesignthroughputrateof500,000tonnesperyear.Theprocessingplantdesign for the Project has been based on the process design criteria which has been derived from thetestworkandconfirmedwithpilotplantwork(seeSection5,MetallurgyandProcessing).

Theflowsheetusesprovenmetallurgicalprocessesbasedonindustrynormsorspecificvendortestworkthatwill optimise recovery and minimise operating costs. Equipment selections have been based on fit forpurposeduties,reliabilityandeaseofmaintenance.Toensureconfidenceintheprocessplantequipmentselection,allmajorequipmentenquirieswereissuedtothreedifferentvendorsandtechnicaladjudicationscompletedontheequipmentsizinginformationprovided.

The layout of the plant has been optimised to improve operability, ease ofmaintenance access and tominimisecapitalcosts.

• Crushingandscreening

Thecrushingcircuitwillbeaconventionaltwostagecrushingcircuitwithajawcrusherastheprimarycrusherandaconecrusherasthesecondarycrusher.Thesecondarycrusherwillbeinclosedcircuitwithadoubledeckvibratingscreen.Thesizereductionwillbefromapproximately500mmto25mmthroughthecrushingandscreeningcircuit.ComminutiontestworkwascompletedbyALSPerth.

• Grindingandclassification

Primarygrindingwillbecarriedoutinarodmill,whichwilloperateinclosedcircuitwitharodmillscreen.Theundersizefromtherodmillscreenwillfeedaflashflotationrougherflotationcell,whilethescreenoversizewillberegroundintheprimarymill.Theroughercellwillrecoverfastfloatingcoarsegraphitewhichwillreporttotheflotationcircuit.Theroughertailwillgravitatetotheballmilldischargehopperwhereitwillbepumpedtotheballmillcyclones.TestworkonwetscreenswasperformedbyNAGROM.ComminutiontestworkwascompletedbyALS.

• Flotation

Aconventionalflotationprocesswillbeusedtorecovergraphiteconcentrate.Theflotationcircuitwill consist of rougher scavenger flotationwith regrind followedbymultiple stagesof screening,cleaning and attrition grinding. The rougher scavenger and themajority of the cleaning cellswillconsistofconventionalrectangularcells.AJamesoncellwillbeinstalledinthefinalcleaningdutytorecoverthefinegraphite.

The coarse cleaning circuit will consist of a regrind mill, two banks of coarse cleaners (coarsecleaner1)andacoarsegraphiteseparationscreen.Thecleaningcircuitwillconsistofthreeregrindmills,fivebanksofcleanercellsandtwocoarsegraphiteseparationscreens.

Samplepointswillbeprovidedtoassistensuringthemetallurgicaltargetsfortheflotationcircuitaremet.

• Filtrationanddrying

Thefinalconcentrateisthenfiltered,driedandclassifiedintoeightproductbinsthatallowdifferentproductgrades.FiltrationtestworkwascarriedoutbyOutotec.

Theprocessingplantincludesacoarsefilterfeedtankandafinefilterfeedtank.Moistconcentratecakedischargedfromtherespectivefilterswillfeedseparatefineandcoarsedryers.Thefiltratefrom



eachfilterwillgravitatetotheirrespectivefiltratetanksfromwhereitwillbepumpedtotheprocesswaterpond.Theconcentratedischargedfromeachfilterwillbefedintoseparatecoarseandfinerotarydryers,whichwillreducethemoisturecontentoftheconcentratetolessthan0.5%.

Coarseconcentratefromthecoarsedryerwillbeconveyedfromthecoarsedryerproductbinanddistributedbetweentwooffprimaryproductscreens,whichwillseparatethecoarseflakeintothreestreams,a+850µmfraction,a-850µm+500µmfraction,anda+300µmfraction.Fineconcentratewillbeconveyedfromthefinedryerproductbinanddistributedbetweensixtertiaryproductsizingscreensrangingfrom-75µmto+180µm.

Shoulddifferentgraphiteconcentrateproductsizesberequired,screendeckscanbechangedtosuitspecificcustomerrequirements.

• Flexibilityinpackaging

Graphexbelievesthatprovidingflexibilityinpackagingoptionsisimportanttoensureitcanmeettheneedsofcustomers’producthandlingequipment.Theplanthasbeendesignedtocaterfordiversepackagingrequirements.

Processplantcommissioning

TheCompanyintendstoinvolveexperiencedgraphiteoperatorsinthecommissioningoftheprocessplant.SetoutinFigure15belowaretheprocessingplantcommissioningassumptionsregarding:

• Plantfeedrate(asapercentageofdesignedfeedrate);and

• Graphiterecovery(asapercentageofexpectedrecovery).

Figure15.Chilaloprocessingplantcommissioningassumptions

Theorangecolouredlinerepresentstheramp-uptoplantcapacitywhilstthedifferencebetweentheorangeand the grey coloured lines represents graphite not recovered or recovered but not within targetedspecifications.



On-siteinfrastructure

• Power

TheProjectisestimatedtohaveamaximumdemandof2.8MW,withanaverageloadof2.4MWandanenergyconsumptionof20.8GWh/yr,mostofwhichisneededtosupplytheprocessingplant.

Thepower requirementwill bemet by utilising a specialist powerproviderwhowill provide theapplicablepowergeneratingequipmentandassociateddieselstoragefacilitiestoprovidepoweronaBuildOwnOperateandMaintain(BOOM)arrangement.

• PlantPowerStation

Theplantpower stationwill consist of anumberof independent generating sets connected to acommon 415 V busbar and will be positioned next to the process plant. The total number ofgeneratorswillbegovernedbyaminimumoperatingphilosophyofN+1,whereNequalsthenumberofgeneratorsrequiredtobeinoperationatanyonetimetocopewithmaximumdemand.Thiswillensuremaximumreliabilityofthepowersupply.Theinstallationofconcretepadstoaccommodatethegeneratorsetshasbeenallowedforinthecapitalcost.

Other areas that require power, including the accommodation village and the bores and tailingsreturnpumpswillhavededicatedgeneratorswithstandbycapacity.

• SitePowerDistribution

Processingplantpowerat415Vwillbedistributedthroughoutthesitetoplantmotorcontrolcentresandplantinfrastructurefacilitiesviaburiedcable.Accommodationpowerat415Vwillfeedthemaincampdistributionboardsuppliedbythecampprovider.Remotepumpswillbepoweredbygensetsconnectedtotheirrespectivecontrolpanels.

• FuelStorageandDispensing

Themajorsitefuelstoragewillbelocatedadjacenttothepowerstation.Itwillbeconstructedusingahorizontalfueltankcontainedwithinabundedareaandsupplied,installedandmaintainedbythepowerstationprovider.Dieselfuelwillbedeliveredtositebyroadtankerswherethefuelwillbedischarged into the storage tanks. There will be a single point loading facility with reticulatedpipeworktotransferdieselfueltothetanks.

Fuelfortheplantgeneratorsandplantdryerswillbepumpedfromthetanksusingdedicatedpumps.Fuelsupplytotheremotegeneratorswillbedoneusingatrailermountedfueltankandbowser.Fuelmeterswillbeinstalledonfillingandfeedpointstoaccountforfuelusage.Thestoragetankswillhaveafuellingpointthatwillserviceplantandlightvehiclesoperatingintheprocessplantfacility.

Theinstallationofconcretepadstoaccommodatethefuelstoragetankshasbeenallowedforinthecapitalcost.

Theminingcontractorwillestablishaseparatefuelstoragefacilitytoservicetheminingfleetandpitdewateringpumps.Thisfacilitywillbelocatedintheminecontractor’scompound.

• Watersupply

Thewaterbalancestudyhasshownthatthemine’sdemand(maximumof26L/sforprocessanddustsuppression)canbemetbysuppliesfrom:



o Openpitdewateringbores;

o In-pitdewateringsumpstoremovesurfaceandrainfallingress;

o Returnflowfromtailings;and

o AborefieldinstalledintotheMbwemkurupalaeochannel.

To reduce surfacewater inflowandpotential for flooding, allworks fordiversionof surface flowaround the open pits is planned to be in place from start of mining. Significant inflow fromsurroundingcatchmentswillstilloccuruntilendofyear7whenNorthPitisminingiscomplete.AtthistimeNorthPitwillbecomestorageforsurfaceinflow,reducingsurfacewatercontributiontotheoverallwatersupply.

During periods of low rainfall, the Mbwemkuru borefield will be equipped to make up supplyshortfall. The borefield has been shown to produce sufficient yield to replace other sources forextendedperiodsifrequired.

• Concentratestorage

The concentrate storage shed at site, which will abut the bagging plant, is a dome shapedconstructionwithdimensionsof24metreslongby30metreswideby9.4metreshigh(domeheight)capableofholdingapproximatelytwoweeksofproduction.

Graphex will be allocated 3,000m2 of undercover storage area within the logistics contractor’sbondedwarehousewhich is sufficient tostoreapproximately5,000tof finishedproducts (10%ofannualproduction)iftheyarestackedtoaheightofthreebags.ThisallowstheCompanytoretaina‘safetystock’ofpackagedproductacrossallflakesizes,inordertobepositionedtoreadilyrespondtounplannedcustomerordersthatrequireimmediatedelivery.

• Miningfacilities

The mining facilities comprise the mining contractor’s compound. The buildings, workshop,washdown andmining equipment associatedwith these facilitieswill be supplied by theminingcontractor.Theminingcontractor’s facilities (office,workshopsandablutions)willbeplaced inasecurityfencedcompoundlocatednorthwestoftheprocessingplant.

• Accommodation

Thepermanentcampaccommodationwill initiallybeusedforconstructionpersonnelto limittheimpactoftheinfluxofpeopleintothearea.Generallabourwillbelocatedinthesurroundingtownsand villages. Allowances for accommodation andmessing have been included in the build-up ofconstructionlabourrates.

The180-personaccommodationcapacityofthecamphasbeendeterminedasthatrequiredfortheestimatedoperationsworkforce.Theestimatecoversvariabilityinestimatesofworkforcenumbers,staff turnover, the requirements for visitors and the need to accommodate extra personnel formaintenanceshutdowns.

7. TAILINGSSTORAGEFACILITY

TheTSFatChilalohasbeendesignedtostorethequantityoftailingsthatwillbeproducedoverthelifeofmine.



Theinitialembankmentwillbeamaximumof12mhighandapproximately700minlength.Itisanticipatedthat by the end of mine life, the main containment embankment will have a maximum height ofapproximately24mandwillbe1550mlongwithatotalimpoundmentvolumeofapproximately9Mm3.TheupstreamembankmentfacewillbelinedwithabituminousgeomembraneandtheTSFimpoundmentwillbelinedwithahigh-densitypolyethylene(‘HDPE’)membrane.

Sixstagesofraisinghavebeenallowedfor.Materialsforembankmentraisingwillbeobtainedpredominantlyfromminingoperations,withthelowpermeabilityzonematerialrecoveredfromnearsurfaceborrowpits.

Tailingspropertieshavebeendeterminedonthebasisoflaboratorytestingconductedonsamplesofoxideandfreshtailingsproducedduringpilotplantoperation.Geotechnicaldesignparametershavebeenassignedon the basis of available geotechnical investigation data from drilling of three boreholes on the mainembankment alignment and excavation of 29 test pits in the TSF impoundment, waste dump, and pitfootprintareas.

DesignoftheTSFhastakenintoaccountthefollowingguidelines:

• TheUnitedRepublicofTanzaniaMinistryofWater,“TheWaterResourcesManagementAct(DamSafety)”;and

• The Australian National Committee on Large Dams – Guidelines on Tailings Dams – Planning,Design,ConstructionandClosure.

8. HYDROLOGYANDHYDROGEOLOGY

Theminesiteislocatedinanareaofrelativelyhigh,butveryseasonalrainfall(thewetseasonrunsfromtheendofNovembertoApril)andanareaoflowgroundwaterpotentialinandaroundtheorebody.Asaresult,groundwaterinflowintotheopenpitsislow(<3.5L/s),althoughwetseasonpumpingofrainfallandsurfacewaterinflow(fromlocalizedpitareacatchments)islikelytobenecessary.

Minedewatering

Pitdewateringisproposedby:

• Pumpingofthreelowyieldingdewateringboresalreadyinstalledoutsideoftheproposedopenpits(estimatedmaximumof2.4L/s);and

• Sumppumping,fromthebaseofthethreedifferentsub-pits(average28L/sduringthewettestmonthofJanuaryforanaveragerainfallyear).

Yield fromdewateringboreswillbedirectedtotheprocessplant. Impactedyield fromsumppumpingofopenpitswillbedirectedtotheTSF.ThiswillpermitsettlingofsedimentfromstormwaterbeforeTSFbleedispumpedtoprocessplantstorage.

Bothgroundwater inflowandpitstormwaterdewatering infrastructurewillberequiredtomanagewaterenteringthepit.Threedewateringboresareproposedtobelocatedjustoutsideofthepitfootprint,fittedwithpumpsandassociatedpipelineinfrastructure.Theseboresservetoassistinmaintainingwaterlevelswithin the pit below thewater table to allowmining to occur. Dewatering from inflow to boreswill betransferredviapipelinetotheprocessplantforuseintheprocesswatercircuit.

Additionally, runoffwillenter thepitviadirect rainfalland thedrainingofexternalcatchments followingrainfallevents.Thisrunoffisproposedtoberemovedviamultiplepipelinesandpumpsystemslocatedinthe



pitsumpsandwillbedirectedtotheTSFforsettlingofsediment,whereitwillcontributetotheTSFbleedandprocesswatersupply.

Surfacewatermanagement

Surfacewatermanagementmeasuresincludingdiversiondrains,floodbundingandsedimentbasins,havebeendesignedtopreventfloodingofmineoperationsfollowingalargerainfallevent.Wherepossible,cleanwaterwillbedivertedaroundmininginfrastructureandreleasedtoadownstreamchannel.Sediment-ladenwaterwithsimilarqualitytostreams(includingrunofffromcappedwasterockdumps)willbedivertedtosedimentbasins,ultimatelybeingreleasedtotheenvironmentoncesedimenthasbeenremoved.

The primary diversion drain is proposed to be implemented at project initiation to divert an upstreamcatchmentof4.4km2(fromthesouth)aroundthepitfootprintandreleaseittoadrainagepathtothewestoftheprojectsite.Thedrainisexpectedtobeapproximately1.7kminlengthwithflowdepthsnotexceeding1m.Additionalsmallerdiversionsareproposedtodivertexternalrunoffalongthewastedump’seastandwestboundariestowardssedimentbasins,withcatchmentareasof20and70ha,respectively.

Floodbundingisproposedtobeimplementedaroundthecampfootprint,whilenodiversionsarerequiredfortheplantinfrastructure.

9. OFFSITEINFRASTRUCTUREANDLOGISTICS

Roadaccess

AccesstotheProjectfromthecityofMtwara(approximately240km),isviaabitumenroadtoNanganga(148km), fromwhichthere isanunsealedroadofapproximately60kmfromNangangatothevillageofRuangwa.AGovernmentapprovedprojecttoupgradetheroadfromNangangatoRuangwaiscontinuing,with the road initially upgraded to a high-quality gravel road and now being progressively sealed withbitumen.FromRuangwa,thereisanunsealedroadof32kmtotheProject.

AccesstotheProjectfromDaresSalaam(approximately638km)usestheexistingnationalroadnetworkwhichpassesthroughthetownsofNangurukuru,LindiandMingoyobeforeconnectingwithNanganga.Withtheexceptionoftwosectionsoftheroad–NangangatoRuangwa(60km)andRuangwatoChilalo(32km)–theentireroadfromDaresSalaamisbitumenised.Asnotedabove,theNangangatoRuangwaportionoftheroadiscurrentlybeingprogressivelysealedwithbitumen.TheGovernmentisconsideringupgradingtheroadfromRuangwatoKiranjeranje(Figure16),whichwouldallowforChilaloproducttobetruckedfromsitetoDaresSalaamviaKiranjeranje.ThiswouldreducethedistancefromChilalototheDaresSalaamPort toapproximately400kmandresultinmaterialsavingsinbothtruckingtimeandcost(approximatelyUS$20/t).



Figure16.ChilaloGraphiteProject:Existingandproposedroadupgrades

Design of the road from Ruangwa to the mine has been completed. This road has been designed inaccordancewith the standards of the Tanzanian Rural andUrban Roads Agency andwill be suitable forregulartrafficoftrucksandforlargelow-bedsemi-trailertrucks.

Amajor intersectionwill be constructed at the intersection of themine access road and the road fromRuangwatoensureaclearviewofactivitiesforvehiclesandpedestrians.Amajorroadwillbeconstructedfromthisintersectiontotheminesitewhichwillbeusedtoaccesstheplantsiteforconstructionandtheninoperations to transportbaggedgraphiteproduct fromsiteandtobring in reagents, spares,dieselandotherconsumables.Thisroad,whichissituatedwithintheareaoftheMiningLicence,willbe9mwidetoaccommodatetwo-waytraffic,unsealedandhaveadesignspeedof60km/h.

Airaccess

AtMtwarathereisacommercialairportfromwhichdailypassengerflightstoandfromDaresSalaamtakeplace. TheMtwara Airport has two runways, the longest of which is asphalt surfaced and is capable ofreceivingcommercialaircraft.AprivateairstripatNachingwea,locatedapproximately50kmfromChilalo,andaccessiblebyagoodqualitygravelroad,isalsoavailableforairfreightandcharteredpassengeraircraft.

Producttransportandshipping

GraphiteconcentrateproducedatChilalowillbe transportedby truck to the internationalportofDaresSalaam,adistanceofapproximately638km,whichispredominantlybysealedbitumenroad.TheCompanyhadpreviouslyplannedtotruckChilaloproduct totheMtwaraPort, fromwhereshippingwasproposed,



however,havingconductedadetailedinvestigationoftheshippingalternatives,Chilalographitewillnowbetruckedto,andshippedfrom,theDaresSalaamPort.

In2017,TanzaniaPortsAuthoritycommencedanexpansionprojecttoincreasethecapacityoftheMtwaraportfrom400,000tonnesperannumto750,000tonnesperannumwiththeprojectforecasttobecompletedwithin21months.Therearenoofficialreportsastowhentheexpansionprojectwillbecompletedandtheportreopened,howeveritisexpectedtobeduring2020.

During2019,allvesselshavebeenrestrictedfromdockingattheMtwaraPortbythegovernmenthowever,intheeventthatthereareenoughcontainersrequestedtobecollected,acontainervesselmaybepermittedtostopthere.Whilstsmallerfeedervesselscouldbeusedtotrans-shipthroughDaresSalaam,itiscurrentlymorecosteffectivetotrucktoandshipdirectlyfromDaresSalaam.

TheCompanyexpectsthatuponconclusionoftheMtwaraPortexpansionproject,therewillbesufficientregionalcontainerisedshippingrequirementsfortransportofgraphitefromtheMtwaraPorttocommencefromyear3ofoperations.

10. PRODUCTMARKETING

Howisthegraphitemarketdifferenttoothercommodities?

Flakegraphiteisnotanexchange-tradedcommodityandtradingofflakegraphitedoesnottakeplaceontheLondonMetalsExchange.Pricesarenegotiateddirectlybetweenbuyerandseller.Independentinformationregardinggraphitepricingandmarketsupply/demandisthereforedifficulttocomebyasit’streatedastheintellectualpropertyofsuppliersandcustomers.

Flake graphite is not a commoditised or homogeneous product. It comes in many different sets ofspecifications,eachwithuniquecharacteristics.Asaresult,therearewide-rangingusesofthedifferentmeshsizesandpuritylevelsofflakegraphite.

Thephysicalandchemicalpropertiesofeachflakegraphite‘signature’areuniquefromoneminetoanother.Graphitesuppliersarethereforerequiredtoqualifytheirproductsdirectlywithpotentialcustomers.Thisprocessbeginswithcustomertestworkonlaboratorysamples.Onceithasbeendeterminedthatthegraphiteproduct is suitable, customers will request trial orders from commercial production ranging from 5-100tonnes.Oncetrialordershavebeenconfirmedtomeetcustomerspecifications,salesagreementscanbenegotiated.

The process of qualification is more stringent for customers of high-value or higher specification flakegraphite. For example, customers requiring graphite for fire-retardants can go through qualificationtimeframesof12-24months.Conversely,thereislittlequalificationrequiredforrefractorygraphite,withthe minimum carbon purity being the only requirement. Flake graphite products requiring moreunique/stringent quality requirements will achieve higher prices as a result while prices for selling intorefractorymanufacturingarelow.

Chilaloproduct

Graphex has a distinct signature in its Chilalo resource, possessing specific metallurgical and chemicalattributesideallysuitedforfoils,fire-retardants,engineeredproducts,lubricants,andthermaldrillingfluids.TheChilaloresourcehasprovedthatitcanbeprocessed,usingstandardflotation,toachieve95%to>99%LOIaswellasachievinghigherthanaveragecoarseflakefractions.Theseattributesareexpectedtoproduceahigh-valueproductsuitableforhigh-techandhigherpricedapplications.



TheChilaloprocessplantwillhavethescreeningcapabilitytoproduceupto8differentstandardmeshsizeproducts at one time andwith the interchangeability of screen decks, it will have the capacity tomeetcustomer’sexpectationsirrespectiveoftheirmeshsizerequirements.

Graphexwilloffertwobaserangecarbonpuritieswiththeabilityforadditionalprocessingtomeetcustomer-specificandmarketmeshsizespecificationsinthefuture.Graphexwillalsoseektoproduceandqualifyahigh-purity(>99%LOI)productoncecommercialproductionofthebaserangeproductshasbeenachieved.

Graphitepricing

Graphitedoesnottradeonadesignatedmetalexchange,withpricesnegotiatedbetweenbuyerandseller.Thesefactorsresultinpricingforgraphitebeingopaque.

Maximising sales prices requires consideration of numerous activities outside of merely providing high-qualitygraphiteproducts, including ISOcertification forqualitycontrolandenvironmental,provisionofarangeofpackagingoptionsforcustomers,flexibleproductscreening,brandingandassessingthenatureofthesalescounterparty,salescontractvolumeandterm.Ofcourse,flakesizeandpurityaremajordriversofpricing.

TheDFSpricingassumptionsareprovidedfurtheraboveinTable12.

Marketingstrategies

TheCompany’ssalesandmarketingstrategy ismulti-facetedand is focusedonmaximisingrevenuesandmarginsandpositioningGraphexasthesupplierofchoiceforhigh-valuegraphiteproducts.

ThisapproachisexpectedtoenabletheCompanytoachievediversificationsacrossthreekeyareas:

• Geographical diversification – during 2019, the Company has strengthened its customerengagementwithpotentialcustomersinEurope,USAandJapan,complementingitsalreadystrongrelationshipsinChina.

• Diversification in applications /markets – in addition to the Company’s focus on expandablegraphite for foils and fire retardants, theCompany is targetingadditionalapplications includingthermalmanagement, lubricants,carbonbrush,high-endrefractories,dispersions,ceramicsandhotmetal toppings. The Company is focused only on high-value applications for which Chilalographite is suitable and as such, does not intend to participate in the competitive refractorytenderingprocesseswhichrepresentthelow-price,high-volumeendofthegraphitemarket.

• Diversification of flake graphite vs value-added products – owing to longer qualificationtimeframes and more stringent reliability and consistency requirements for most value-addedgraphite products, pricing of these products is less volatile than pricing for flake graphiteconcentrate. A sensible value-added strategy will enhance revenues and profits prior toconsiderationofproductionexpansions.

TheCompanyexpectsthat,asitcontinuestoqualifyChilaloproductwithhigh-valuecustomersintheearlyyearsofoperations,theaveragesalespriceforitsstandardmeshflakegraphiteconcentratewillcontinuetoincrease.

Statusofsalesagreements

Non-Chinese graphite customers will not sign binding sales agreements until they have processed acommercialbulktrialshipment(20-100t)fromthecommissionedandcalibratedcommercialplanttoverifypositive lab results from initial qualifications. As stated in the ASX announcement dated 26 June 2019,



GraphexalsobelievesthatwhilstChinesecustomersarewillingtosignsalesagreements,thelackofpricingin these agreements means they are not legally binding or enforceable as true sales agreements. Thishighlights the critical importance of due diligence by a potential financier on the graphite market, acompany’ssalesandmarketingstrategy,athoroughunderstandingofthegraphitemarketandindustry,anditsrelationshipswithprospectivecustomers.

DownstreamtestworkhighlightsthesuitabilityofChilaloflakegraphiteforallhigh-valueandhigh-growthtarget markets. The Company has clearly had a significant level of engagement with interested parties(particularlyinChina)forcompaniesatthisstageofdevelopment.

WhilstGraphexhastheabilitytoenterinto‘offtakeagreements’similartothosereportedbyanumberofASX listed graphite development companies, it will continue to work with the Financier as to themostsuitablecustomersandtheappropriatetimingforenteringintobindingandlegitimatesalesagreements.

Expandablegraphite(EG)

Overthepastfouryears,GraphexhasengagednumerousendusersaswellasthreeindependentlaboratoriestoevaluatetheuseofChilaloflakegraphite(invariousmeshsizes)fortheproductionofexpandablegraphiteandtodeterminehowGraphexexpandablegraphitewouldperformwhencomparedtootherexpandablegraphiteproducersandproducts.EvaluationshaveconsistentlyconcludedthatChilaloflakegraphite,usingtwo different intercalation / oxidation compound formulas, meets the performance characteristics forgraphitefoilsandfire-retardants.Duetoitsuniquechemistrymarkers,Chilaloflakegraphitemeetscriticalparametersthatarerequiredforfire-retardantmanufacturers.

The Company has identified numerous western fire-retardant customers with demand for expandablegraphite. Fire-retardant customers do not purchase flake graphite concentrate. They buy expandablegraphite that isexclusivelymanufactured inChina.Rather thansellinggraphiteconcentrate toaChineseexpandable graphite manufacturer who then makes substantial margins upgrading it into expandablegraphite for fire-retardant customers, Graphex conducted due diligence on various Chinese expandablegraphitemanufacturerstoactasaprocessingagentforafee.Tothisend,GraphexhassignedatermsheetwithYichangXinchengGraphiteCoLtd,China’slargestexpandablegraphitemanufacturer.

Importantly,thisopportunityrequiresnocapital investment, leveragesfromexistingprocessingexpertiseandprovidestheCompanywithimmediateaccesstothelucrativeandrapidlygrowingvalue-addedmarkets.It should be noted that Chilalo graphite will likely follow the path from Chinese expandable graphitemanufacturertowesternfire-retardantcustomerswithouttheCompany’sintervention.Theopportunitytoshare in this upside is compelling, given the Company’s relationships with Chinese expandable graphitemanufacturers.

WhilsttheCompanyhasexhaustivelytestedthesuitabilityofChilalographitefortherequiredspecifications,itwillworkwiththeEGProcessingAgentoverthecomingmonthstolabqualifyChilaloexpandablegraphitewiththetargetedcustomers.Qualificationsfromcommercialproductioncantake12-24monthsfromfirsttrialshipmentwith24-monthqualificationtimeframesandaprotractedsalesramp-upbeingincludedintheDFSassumptions.

TheDFS is baseduponpricing betweenUS$5,200 andUS$6,200 FOBper tonne for expandable graphitedependent on the flake size of the feedstock (either +50 or +80 mesh). Pricing was based on recenttransactions and provided to the Company by an independent consultantwith relevant expertise in theexpandablegraphitemarket.



Micronisedgraphite

Thestrategytopursuemicronisedgraphitehasanumberofadvantages:

• Naturalflakegraphitefeedstocktoproducemicronisedgraphiteis-100mesh,95%LOI,whichisalso a graphite product competing with Chinese suppliers and Syrah Resources Limited and isthereforemorelikelytoattractlowprices;

• Micronisationequipmentisrelativelylowcapitalcost(evenso,it isproposedasasecondphasefollowingcommissioningofthemainChilaloplant);and

• Significantvalueupliftisachievable(weightedaveragesalespriceforstandardpuritymicronisedgraphitebasedonGraphex’s targetedproductmix increasedtoUS$2,802/tFOBPortcomparedwithsignificantlylowerpricesforselling-100meshconcentrateintoChina).

Graphex has identified a large number of micronised graphite customers and the detailed technicalspecificationsofthefivestandardproductssoughtbycustomers.Whilstcontractsizeisrelativelysmallincomparison,thesubstantialupliftinvaluehasthepotentialtosignificantlyincreasemargins.

Graphexhasinitiatedmicronisationequipmentproducttrialswithamillingequipmentsupplierthatprovidesafullyautomated,programmableprocessingsystemthatcanachieveuptoa~1.5%improvementinfinishedproductpurity.Thepreferredmillingsystemachievesayieldof~95%onaveragefromtheoriginalfeedstockwiththeabilitytoachievefiveindustry-standardmicronisedgradestomeetmarketspecifications.

TheDFSassumesthatamicronisationunitcapableofproducing~8,000tonnesofmicronisedgraphite(basedonthetargetedproductmix)isfundedoutofcashflows,withconstructioncommencingatthebeginningofyear1(ie.12monthsafterconstructionofthemainplantiscompleteallowingsufficienttimeforcalibrationandcommissioning).

The DFS has assumed a ramp-up of micronised graphite sales aligned with conservative qualificationtimeframessuchthatthe8,000-tonneproductionlevelisnotreachedfor5years.CapitalandoperatingcostsfortheDFShavebeenprovidedbytheequipmentmanufacturer.

Graphexhas targeted twoof the five standard industry grades for in-house evaluations and subsequentcustomer testing.Thecustomer informationobtainedwillbeused increating technical specifications forGraphexmicronisedflakegraphiteproductsforfuturedevelopment.

TheCompanyhasworkedwithanindependentconsultantwithover15years’experienceinthemicronisedgraphiteindustry,withpricingbeingbasedonrecenttransactions.ThefinemillingequipmentpreferredbytheCompanyformicronisedgraphiteproductioniscapableofproducingallfivetargetedproducts.Table13belowshowsthetargetedproductmixwithinthefivestandardmicronisedgraphiteproductsandtheaveragesalespriceassumedfortheStudy.



Table13:StandardPurityMicronisedGraphite–ProductMixandAverageSalesPrice

Product Price(US$/t) ProductMix AverageSalesPrice(US$/t)FOBProduct1 1,620 40% 648Product2 2,429 10% 243Product3 3,555 35% 1,244Product4 3,844 10% 384Product5 5,646 5% 282AverageSalesPrice 2,802

11. CAPITALCOSTESTIMATE

The capital cost estimate includes all costs prior to the commencement of production including minedevelopmentcosts.

Ingeneral,theapproachisasfollows:

• Theengineeringoftheprocessplantassociatedinfrastructureandtheprocurementofequipmentwillbeperformedbyacompetentengineeringcompanywhichwilldeliverdetailedconstructiondrawingsandadjudicatedequipmentselectionsapprovedforpurchase.

• Equipment will be purchased by Graphex with expediting, quality control and logistic controlundertakenbytheappointedengineer.

• Construction management will be performed by Graphex utilising experienced constructionmanagementpersonnel.

• Constructionwillbeundertakenbylocalandregionalcontractorsoneitherafixedlumpsumorratesbasis.

• The mine establishment will be executed by a mining contractor under direct contract withGraphex.

Theestimateincludesallthenecessarycostsassociatedwithprocessengineering,designengineeringanddrafting,procurement,constructionandconstructionmanagement,commissioningof theprocess facilityandassociatedinfrastructure,miningestablishment,firstfillsofplantreagentsandconsumables,sparepartsandworkingcapitalrequiredtodesign,procure,constructandcommissionallofthefacilitiesrequiredtoestablishtheproject.

Theestimateisbaseduponpreliminaryengineering,quantitytake-offs,budgetpricequotationsformajorequipmentandbulkcommodities.UnitratesforinstallationwerebasedonmarketenquiriesspecifictotheprojectandbenchmarkedtothoseachievedrecentlyonsimilarprojectsundertakenintheAfricanmineralsprocessingindustry.

Theestimateisquotedinthirdquarter2019UnitedStatesDollars(US$)toalevelofaccuracyof±15%.Itisbased onOwner’s costs for the Project being inclusive of salaries,messing and accommodation, flights,equipment hire, communications and project insurances. Owner’s Costs are included in the capital costestimate.

ThecapitalcostestimateissummarisedinTable14.



Table14-Capitalcostestimate–Chilaloflakegraphiteconcentrateplant

CapitalCosts US$MBulkearthworks 1.4Processplant 41.8Tailingsstoragefacility 6.2Rawwatersupply 0.2Roads 1.3Mining(inclpre-strip) 4.5Landaccessandresettlement 1.4EPCM 9.7Owner’scosts 7.9Other 5.2Contingency 7.8TotalCapitalSummary 87.4

Capitalcostincreasesince2018PFS

Thecapitalcostestimatehasincreasedsincethe2018PFSforthefollowingreasons:

• The2018PFSassumedChinesemanufacturedequipmentandafullChineseEPCandinstallation.Tanzanianlocalcontentlawsandregulationsaresomewhatprescriptiveinrelationtolocalcontentrequirementsforminingdevelopmentandoperations.WhiletheCompanywillinvestigatewhetherthe Tanzanian Government would grant a waiver to allow for a full Chinesemanufacture andconstruction,theDFShasbeenpreparedincompliancewithTanzanianlocalcontentrequirements.

• Scopechangesaimedatmaximisingrevenueforgraphiteproductsincluding:

o Processplantflexibilitytoseparatecoarseandfineproducts.

o Additionalscreeningcapabilities.

o Flexibilityinproductpackaging.

• TheTailingsStorageFacilityrequiresanHDPElinertopreventpotentiallyacidformingtailingsandwasterockdumprunofffromaffectinggroundwater.

• WesternequipmentpreferredtoChineseequipmentforcriticalareasoftheprocessplant–theCompanyhassoughtguidancefromexistingoperationsinthisregard.

TheDFScapitalcostestimatehasbeenbenchmarkedagainstAfricangraphitecompanieswhoareadoptingasimilarexecutionapproachandappearsinlineonacapitalintensitybasis.

Micronisedgraphite

TheDFSassumesthatfinemillingequipment,buildingsandservicesandassociatedpackagingsystemsareinstalledfromthebeginningofthesecondyearofoperations.

Theadditionalcapitalcostformicronisedgraphiteequipment,buildingsandservicesisUS$2.0M.EquipmentandpackagingequipmenthasbeenquotedbytheequipmentsupplierwhilstGREngineeringServiceshasprovidedthecostestimateforthebuildingandservices.AnallowancehasalsobeenincludedforensuringthemicronisationproductionisISOcertified.



Expandablegraphite

Dueto leveragingoff theprocessingagent’splantcapacity, theexpandablegraphitestrategypursuedbyGraphexrequiresnocapitalcost.

Sustainingcapitalestimate

TherequirementforcapitalexpenditureoverthelifeoftheProjectthatisnotcoveredinthisestimateiscapturedinthesustainingcapitalcostestimate.Thesesustainingcapitalcostsaresummarisedinthetablesbelowandareestimatedtoanaccuracyof±15%.

Table15:Sustainingcapitalestimate

Description Lifeofmine(US$M)Tailingsstoragefacilitylifts 18.0Roads 1.1Waterevaporatorsystem 1.7Totalsustainingcapital 20.7

12. OPERATINGCOSTESTIMATE

Flakegraphite

TheStudyestimatesalifeofmineoperatingcostofUS$778/tforflakegraphiteconcentrate.Miningcostsare based on a contractor mining scenario, product logistics costs have been quoted from a reputableTanzanianlogisticscontractorandGREngineeringServiceshaveprovidedtheoperatingcostsfortheprocessplant.

Table16:LifeofmineC1operatingcostsFOB–flakegraphiteconcentrate

Description US$/tMining 326Generalandadministration 62Processplant 274Productlogisticsandportcharges 94Salesandmarketing 21Totaloperatingcosts 778

SalesandmarketingcostshavebeenestimatedbyGraphexandincludesalesagencyfees,establishmentandoperationofaChinasalesofficeandproductinventorywarehousing.

AsdescribedintheOpportunitiessection,thereissignificantscopeforanimprovementinoperatingcostsfrom additional exploration. There are numerous near-mine high-conductance targets which have thepotentialtocontributetowardssignificantreductionsinminingcosts.

Expandablegraphite

TheoperatingcostsoftheCompany’sexpandablegraphiteproductionareUS$512pertonneofexpandablegraphite excluding the internal transfer price of purchasing the graphite feedstock from themine. Thisincludesthefollowing:



• SeafreightfromTanzaniatoChina;

• Customsclearance,feesandchargesandinlandtransportationtotheprocessingagent’sfacility;

• All-inclusiveprocessingandpackagingcoststoproduceandpackageexpandablegraphitetoGraphexcustomer’srequiredspecifications;

• Inland transportation from the processing agent’s facility to port, customs clearance, fees andcharges;and

• Salesandmarketingagentfees.

ExpandablegraphitepricingintheDFSisFOBPortandtherefore,seafreightfromChinatoEuropeorUSAisnotincluded.

Theprocessingcostsabovearequotedonthebasisofproducinga+99%LOIexpandablegraphiteproduct.Theinlandtransportationcostshavebeenquotedbytheprocessingagent’sshippingagent.Theprocessingagent’smarginisexpectedtobetheadditionalexpandablegraphiteproducedinadditiontothegraphiteconcentratesupplied(ie.Given1tonneofgraphiteconcentrateproducesgreaterthan1tonneofexpandablegraphiteduetotheadditionalmassoftheintercalation/oxidationcompounds,theprocessingagentwillkeeptheexcessabove1tonneasafee).

Micronisedgraphite

TheoperatingcostsfortheCompany’smicronisedgraphiteproductionareUS$383pertonneofmicronisedgraphite excluding the internal transfer price of purchasing the graphite feedstock from themine. Thisincludeslabour,power,parts,overheadsandpackagingofthemicronisedgraphite,productlogisticswithinTanzania and sales and marketing agent fees. Micronised graphite pricing in the DFS is FOB Port andtherefore,seafreightfromTanzaniatoEuropeorUSAisnotincluded.

The operating costs of the finemilling equipment and associated packaging have been provided by theequipmentsupplierandarebasedontheirexperiencewithothermicronisedgraphitemanufacturerswhousetheirequipment.



13. FINANCIALANALYSIS

SetoutinTable17arethekeyfinancialresultsoftheDFS.

Table17.Keyfinancialresults

Physicals Unit LifeofmineMinelife Years 18Totalplantfeed Mt 8.9Annualplantfeed ktpa 500Averageheadgrade TGC% 10.1%Averagegraphiteconcentrateproduction1 ktpa 50Steadystateexpandablegraphitesales ktpa 12Steadystatemicronisedgraphitesales ktpa 8ProjectFinancials Unit LifeofmineNPV8(Post-tax) US$M 331NPV8(Post-tax)–atYear4 US$M 510IRR(Posttax) % 36%Post-taxpaybackperiod years 3.5Pre-productioncapitalcost(incl.10%contingencyandpre-strip) US$M 87.4

AverageannualEBITDA US$M 74

ProductSegmentFinancialsUnit Concentrate Expandable

GraphiteMicronisedGraphite

ConsolidatedProduction3

Averagesalesprice(FOB) US$/t 1,534 5,690 2,802 2,500C1operatingcostspertonne(FOB)2 US$/t 778 512 383 905Operatingmargin US$/t 756 5,178 2,419 1,595

1. Averagegraphiteconcentrateproductionincludesgraphiteconcentrateusedasfeedstockintobothvalue-addedproducts.2. Operatingcostsofexpandablegraphiteandmicronisedgraphiteexcludestheinternaltransferprice(purchasingfeedstockfromChilalo).3. ConsolidatedProductionshowstheaveragesalesprice,operatingcostsandmarginfortheconsolidatedoperation(ie.Inclusiveofconcentrate,

expandablegraphiteandmicronisedgraphite).

Sensitivityanalysis

Inadditiontodeterminingtheexpectedfinancialoutcomes,aseriesofsensitivitieswereperformedforchangesintheweightedaveragesalesprice,feedgradeofprocessedore,operatingcostsanddevelopmentandsustainingcapitalcosts.TheresultsofthesensitivityanalysisaredisplayedasaspiderchartinFigures17and18.



Figure17.Sensitivityanalysis–NPV

Figure18.Sensitivityanalysis–IRR

Thepotentialfornear-mineexplorationtoreduceoperatingcostshasbeenidentifiedasahigh-convictionopportunitytoimprovetheProject’seconomics.AUS$100/treductioninminingcostsfromthecurrentlevelofUS$326/twouldincreasetheNPVfromUS$331MtoUS$367M.

Sensitivityanalysiswasalsoconductedonthepost-taxNPVforarangeofdiscountratesasshownbelow.

Table18.Discountratesensitivityanalysis

Discountrate(%)

Post-taxNPV(US$M)

6 4128 33110 26712 216

Taxes

Continued engagement with the Tanzanian Government has ensured that the Company has a soundunderstandingofthefiscalregimethatappliestotheProject.Financialmodellinghasassumedaroyaltyrate

0

100

200

300

400

500

75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125%

Post-Tax

NPV

(US$

m)

InputValueas%ofBaseCase

Averagesalesprice Millfeedgrade Operatingcosts Capitalcosts

20% 25% 30% 35% 40% 45% 50%

75% 80% 85% 90% 95% 100% 105% 110% 115% 120% 125%

Post-Tax

IRR(%

)

InputValueas%ofBaseCase

Averagesalesprice Millfeedgrade Operatingcosts Capitalcosts



of3%,acorporateincometaxrateof30%,anexportclearancefeeof1%andalocalgovernmentcommunitydevelopmentlevyof0.3%.

14. MINECLOSURE

AseparateconceptualMineClosurePlan(‘MCP’)hasbeencompiledbyaspecialistenvironmentalconsultingfirm,whichwillguiderehabilitationandclosureactivities.ThisMCPhasbeendevelopedtosupporttheESIAfortheProject.GraphexproposestorevisetheMCPatcommencementoftheProjectandwillupdatetheMCPevery four yearsduring the lifeof theProject as closureplanningprogresses.Closure costs for theplannedlifeofminedisturbanceareshowninTable19below(notethatthesecostsarehighlevelandarebasedonaconceptualmineclosureplan).

Table19.Lifeofmineclosurecostestimate

Domain US$MOpenpit 0.1Wasterockdump 0.5Tailingsstoragefacility 7.5Processingandnon-processinginfrastructure 0.1Roadsandlinearinfrastructure 0.2Demolition 2.6Sub-total:Directcosts 11.0Ownersmanagementcosts 1.1

0.30.7

Post-closuremanagementcosts 0.3Post-closure/longtermsupportprovision 0.7Sub-total:Indirectcosts 2.1Totalestimate 13.1

TheclosurecostestimateassumesthatprogressiverehabilitationwillbeundertakenthroughoutthelifeoftheProjectandthattheremainingclosureworkswillbecompletedattheendofminelife.Thecurrentmineplanincorporatesacostforprogressiverehabilitationofthewasterockdump,90%ofwhichisexpectedtobecompletedduringoperationsonanongoingbasis.Theprogressiverehabilitationisconsideredtobeanoperationalrequirementinordertomitigateanyclosure-relatedrisksandtomanagethewaterbalancefortheProject.

TheCompanyrecognises that thesaleofplantandequipmentat thecessationofminingandprocessingoperationsisoftenundertakenbyminingcompaniesasameansofprovidingfundingformineclosurecosts,howeveranysuchsaleofplantandequipmenthasnotbeenassumedinthefinancialanalysisoftheProject.

TheexplorationopportunityatChilaloissignificant,withonly10%ofthestrikelengthwithhighconductanceanomaliessimilartotheChilaloMainDeposithavingbeendrilled.TheCompanyhashadconsiderableandconsistentsuccessinapplyingFLEMsurveysasatargetingtoolforthestrongestconductorsandisconfidentthatfurtherexplorationatChilalowillprovideforextensionstominelife.Thereisalso11.2Mtofhigh-gradeIndicatedandInferredResourcesnotincludedinthemineplan.Asaresult,theCompanyanticipatesthatthosemineclosurecostsforecasttobeincurredattheendofthecurrentminelifemaybedeferred.

TheMCPhasbeenguidedbythefollowing:

• TheInternationalFinanceCorporation(IFC)EnvironmentalHealthandSafetyGuidelinesforMining;

• TheInternationalCouncilonMiningandMetalsToolkit;



• The Australian Government Leading Practice Sustainable Development Program for theMiningIndustry–MineClosure(2016);and

• TheWesternAustraliaDepartmentofMinesandPetroleumGuidelinesforPreparingMineClosurePlans.

15. FUNDING

InOctober2018,theCompanyenteredintofinancingagreementsthatincludedatermsheetsettingouttheproposedtermsoftheSeniorFundingPackage.Forfurtherinformationonfinancingarrangements,pleaserefertoASXannouncementdated29October2018.

CompletionofaDFSisoneofthemorematerialconditionstoavailabilityoftheSeniorFundingPackage.TheCompanyisconfidentthattheDFShasbeenpreparedtoastandardrequiredbyprojectfinanciers.InadditiontocompletionofaDFSandcustomaryconditionsprecedent,othermorematerialconditionsthatneedtobesatisfiedfortheSeniorFundingPackageinclude:

• CertainFinancierapprovalsandcompletionofduediligencetothesatisfactionoftheFinancier;

• ResolutionofissuesrelatingtoTanzania’smininglegislation;

• Entryintodefinitivetransactiondocuments;and

• Executionofmaterialcontractsincludingoff-take,miningandEPCamongstothers.

Preparation of the DFS has been overseen by the Project Steering Committee. The Project SteeringCommittee,whichiscomprisedofrepresentativesoftheFinancierandGraphex,isresponsibleforassessingand reviewing overall progress of the Chilalo Project and providing theGraphex board of directorswithrecommendations on technical, environmental, permitting and stakeholder/social aspects of the ChilaloProject.Asaresult,theFinancierhasbeenabletoreviewsomesectionsoftheDFSandaddresscertainissueswith the Company in parallelwith completion of theDFS. Financier due diligence on theDFS and otheroutstandingconditionsisongoing.

The Company has made substantial progress with the Tanzanian Government in relation to seekingclarificationofkeyissuesinordertoachievethelegalandregulatorycertaintyrequiredbyfinanciers.ThisprogresshasincludedconfirmationthattheTanzanianGovernment’sfreecarriedinterestissetat16%forallMining Licences, the publication by theGovernment of guidelines that permit the export of graphiteconcentratefromChilalo,amendmentstothelocalcontentregulationsthataremoreaccommodatingwithrespecttomeetingtherequirementsregardinglocalcontent,inprincipleagreementonastructureofbankaccountarrangementsthatisexpectedtobeacceptabletotheGovernment,theBankofTanzaniaandtheFinancier,confirmationthattheCompanymaygrantsecurityovertheChilaloMiningLicenceandgreaterclarityontheoperationoftheintegritypledge.

GraphexisnowworkingwiththeFinancieronprocuringthefinancenecessaryfordevelopmentoftheProjectandtheFinancierisopentoworkingwithothersinthisregard.

16. PERMITTINGANDAPPROVALS

In assessing and managing environmental and social risks, IFC Performance Standards and the EquatorPrinciplesarerecognisedastheglobalstandardforresourcescompaniesandhavebeenadoptedbyfinancialinstitutionsgloballyasapre-requisiteforprojectfinance.



Graphex has completed a comprehensive suite of environmental and social studies, together withaccompanyingdocumentationthatseekstoalignwithIFCPerformanceStandardsandtheEquatorPrinciples.Finalisationof regulatory, riskmanagementdocumentationhas formedan importantpart of theDFS. Inadditiontosuchdocumentation,theCompanyhasdevelopedacomprehensivesuiteofmanagementplansthatarecentraltotheDFS.Thesedocumentsandplansaresetoutbelow.

Miningandexploration

TheCompanyreceiveditsmininglicenceinFebruary2016.TheMiningLicencehasatermof10yearsandunlesstheholderofamininglicenceisindefault,hasfailedtoproducecommercialquantitiesofminerals,has not developed the mining area with due diligence or in compliance with applicable safety andenvironmentalregulations,amining licence isrenewableforafurther10years. InadditiontotheChilaloMiningLicence,theCompanyholdstitletofiveProspectingLicencessurroundingtheMiningLicence,whichcoveranareaofapproximately170.8km2.

InApril2019,GraphexsubmittedanupdatedMineDevelopmentPlantotheMinistryofMinerals.TheApril2019MineDevelopmentPlanisexpectedtobefurtherupdatedfollowingcompletionoftheDFSandanycommencementofProjectdevelopment.

Environmentalapprovals

InMarch2016,theChilaloGraphiteProjectwas issuedwithanEnvironmentalCertificatebytheNationalEnvironmentManagementCouncilofTanzania.IssueofthiscertificatefollowedareviewoftheEnvironmentandSocialImpactAssessment(‘2015ESIA’)fordevelopmentofChilalothatwassubmittedinOctober2015.ReceiptoftheEnvironmentalCertificatewasanimportantapprovalasitwasapre-requisiteforthegrantingoftheChilaloMiningLicence.

In completionof theDFS, the2015ESIAhasbeenupdated, togetherwith supportingdocumentation, toaddressanygapsinthe2015ESIA.Preparationofthe2019ESIAinvolvedcarryingoutarangeofbaselinestudies,thefindingsofwhichwereincorporatedinthe2019ESIA:

• Terrestrialfaunaandfaunasurvey;

• Baselineaquaticecologysurvey;

• Soilssurveyandclassification;

• Establishmentofdustmonitoring locationsandcollectionofdust fall-outdata foraperiodof6months;

• AdditionalsurfaceandgroundwaterqualitysamplingduringMayandJuly2019torepresentthewetanddryseason;

• Archaeologicalandculturalheritagesurvey;

• Modellingofdustfall-outandgaseousemissionsoverthelifeoftheProject;

• CalculationofgreenhousegasemissionsfromtheProject;and

• ModellingofnoiseandvibrationatnearbycommunitiesasaresultoftheProject.

Inaddition,anoverarchingEnvironmentalandSocialManagementSystem,whichincludeddevelopmentofadraftEnvironmentalandSocialPolicy,wasdevelopedwhichwillbeimplementedoverthelife-of-mine.Inresponse to the environmental impacts that were identified as part of the 2019 ESIA, the followingmanagementplanswerealsodeveloped:



• EnvironmentalandSocialManagementPlanincludingthefollowingsub-managementplans.

o LandandSoilManagementPlan;

o TerrestrialBiodiversityManagementPlan;

o AquaticBiodiversityManagementPlan;

o SiteWaterManagementPlan;

o AcidandMetalliferousDrainageManagementPan;

o NoiseManagementPlan;

o VibrationManagementPlan;

o HazardousSubstancesandDangerousGoodsManagement;

o DomesticandHazardousWasteManagement;

o SocialImpactManagementPlan;

o CommunityDevelopmentStrategy;

o StakeholderEngagementPlan;

o CulturalHeritageManagementPlan(CHMP)andChanceFindProcedure;and

o ConceptualMineClosurePlan.

Theabovemanagementplansarelikelytobeupdatedpriortoconstructionanddevelopedinmoredetail,asrequired.Anumberofadditionalplansandprocedureswillalsobedevelopedpriortothecommencementofconstruction,including,butnotlimitedto:

• Blastingmanagementplan;

• Resettlementimplementationplan;

• Livelihoodrestorationplan;

• Communitydevelopmentplan;

• Vegetationclearanceprocedures;

• Soilstrippingandstockpilingprocedures;

• Progressiverehabilitationmanagementplan;and

• Emergencyresponseprocedures.

Relocationandcompensation

In 2016, the Company completed a Relocation Action Plan (‘2016 RAP’). The 2016 RAP identified tworelativelysmallhamlets–RukoweandAmbye–asrequiringresettlementpriortothecommencementofdevelopmentworksatChilalo.The2016RAP,whichwasagreedbylocalcommunitiesandsignedoffbytheGovernmentValuerinAugust2016,setoutthepolicies,proceduresandactionsthroughwhichtheimpactsofProjectdevelopmentareaddressedincludingmanagementandcompensationofresettlement.The2016RAPcontainedanapprovedcompensationvaluationofUS$0.9million.

Under the applicable legislation – the Valuation and Valuers Registration Act – where the approvedcompensationvaluationhasnotbeenpaidwithin twoyearsof thedateof issue, thevaluationbecomesinvalid and a new compensation valuation is required. Graphex’s position with respect to payment of



compensationhasbeentoonlypaycompensationwhenprojectfinancefordevelopmentofChilalohasbeenconfirmed.Asaresult,itcommencedanupdatedRAP(‘UpdatedRAP’)intheDecemberQuarterof2018,whichwasapprovedbylocalcommunitiesandsignedoffbytheGovernmentValuerinAugust2019withanapprovedcompensationofUS$1.5million.

Stakeholderengagement

Stakeholderengagementandinvolvementformedanessentialcomponentofboththe2019ESIAandtheUpdatedRAP. Itservedasaplatformfor interestedandaffectedparties tobe informedof theproposedProjectandprovidedstakeholderswiththeopportunitytopresenttheirviewsandraiseissuesandconcernsthat require further assessment during the ESIA process. Consultation was undertaken in with variousstakeholdersandgroupsasshowninTable20.

Table20.Stakeholderengagement

Stakeholders Roles/ContributionCentralGovernment

MinistryofMinerals Responsible for issuing aMining License for theProject.

MinistryofWaterandIrrigation.

Enforcelawsandregulationsforwaterqualityandutilisation, and responsible for issuing waterlicencesinrespectoftheProject.

NationalEnvironmentManagementCouncil(NEMC)

Enforcement of laws and regulations forenvironmental management and protection, aswellaspollutioncontrol.ResponsibleforissuingofenvironmentalcertificatefortheProject.

LocalGovernment LindiRegionalCouncil In charge of regional community welfare,investment development, environmentalmanagementandsecurity.

RuangwaDistrictCouncil Ensuressoundenvironmentalpracticesareunderundertaken during Project development andundertakesenvironmentalmonitoring fromtimetotime.

MbwemkuruWardCouncil ResponsibleforWardadministration,communitydevelopment, social welfare, environment andlandmanagement.

NangurugaiVillageCouncil Responsible for people’s welfare and villagedevelopment. Responsible for ongoing liaisonwiththeProject.

ProjectAffectedPersons

LukoweandAmbyeHamletsinNangurugaiVillage

Communitymembers located in the footprintoftheProjectareaandmaydirectlybeeconomicorphysicaldisplacement.

17. PROJECTIMPLEMENTATION

In formulating the Project Implementation Plan and targeting the shortest possible construction period,priority was given to the utilisation of resources that are familiar with working in Tanzania withoutcompromisingsafety,qualityorschedule.The implementationplanalso focusesontheworkrequiredtoenableconstructionpersonnelandcontractorsthefullaccesstheyrequiretodotheirwork.



Thedesign and implementationof the Projectwill complywith applicable laws and regulations. WhereTanzanian laws and regulations do not cover a specific situation, equivalent industry standards will beapplied.

Contractingstrategy

AnEngineeringandProcurement (‘EP’)contract isproposedfortheengineeringdesignandprocurementcomponent,withGraphexplacingequipmentandcontractordersbasedontheEPrecommendationsandanownermanagedsiteconstruction.TheEPstylecontractallowsGraphexgreaterinputintothedesignandselectionoftheprocessequipment.Furtherdetailsoftheproposedapproachareasfollows:

• TheEPcontractisaseparatecontractthatiseitherfixedpriceoranincentivisedtimeandmaterialscontract.

• All equipment orders are placed byGraphex, but the EP contractor does the design, tender andrecommendationforaward.

• All sitecontractsareplacedandmanagedbyGraphexprojectpersonnel,withdesign, tenderandawardrecommendationsdevelopedbytheEPcontractor.

Asummaryofthecontractingstrategyforotherkeycontractsinclude:

• ThepowerrequirementwillbemetbyutilisingaspecialistpowerproviderwhowillprovidetheapplicablepowergeneratingequipmentandassociateddieselstoragefacilitiestoprovidepoweronaBuildOwnOperateandMaintain(BOOM)arrangement.

• Bulkearthworkswillbedoneonaunitpricingcontract.

• The pre-fabricated administration buildings will be procured directly via a stand-alone supplycontractandconstructedonsiteusinglocallaboursupervisedbythebuildingsupplier.

• Theaccommodationvillagewillbesuppliedunderabuildownandoperatearrangement.

• Siteaccessroadupgradewillbeaunitpricingcontractwiththetenderseekingbidderstoidentifysavingsiftheyarealsoawardedthebulkearthworkscontract.

• Tailingsstoragefacilitywillbedoneonaunitpricingcontractwithanexternallaboratoryengagedforqualityassuranceandongoinginspections.

Schedule/timetable

ShouldtheCompanyreachadecisiontomineinQ22020,commissioningisexpectedtobegininQ32021,asshowninthedevelopmentscheduleinTable22.



Table22:Projectdevelopmentschedule

18. REFERENCETOPREVIOUSASXANNOUNCEMENTS

InrelationtotheMineralResourceestimatepreviouslyreportedon28August2019,Graphexconfirmsthatit is not aware of any new information or data that materially affects the information included in theannouncementof28August2019andthatallmaterialassumptionsandtechnicalparametersunderpinningtheMineralResourceestimate in theannouncementof28August2019 continue toapplyandhavenotmateriallychanged.

Theinformationinthisannouncementthatrelatestoexplorationresultswasannouncedon2September2015(underIndianaResourcesLimited).Graphexconfirmsthatit isnotawareofanynewinformationordatathatmateriallyaffectstheinformationincludedintheannouncementof2September2015.



APPENDIXA:EXPLANATIONOFGRAPHITESPECIFICATIONS

GraphitePurityDetermination/Calculation

LossonIgnition(LOI)

LOIistheindustrystandardfordefiningpurityforgraphitepowders,shapes,andcomposites.

LOI is determinedby introducing50–100gramsof graphitepowder intoa ceramic crucible; heating to1,000°Cfor24hoursandmeasuringtheweightlosstocalculateLOIpurity.Forexample,if5gramsofashremainsof100gramspowderafter24hours,thenthegraphitepuritytranslatesto95%LOIasallcarbonmustbeconsumedtodetermineash/purity.

ThevastmajorityofapplicationsformulatetoLOIasthepuritystandard,fromstandardmeshflakegraphiteforrefractoriestohighpuritymicronisedgraphiteforelectrochemistryormedicaldeviceapplications.

FixedCarbon(FC)

Translatedintosimpleterms,asitpertainstographite,FC=LOI–Moisture.

Fixedcarboniscalculateddifferentlyforothercarbontypessuchascoalorcarbonblack,butinthecaseofgraphitepowders,theaforementioneddefinitionapplies.

TotalGraphiticCarbon(TGC)

TGCisusedindeterminingthegraphiticcarboncontentofanorebodytakingintoaccountbothorganicandinorganicelementstodeterminecarbonpurity.Inthecaseofgraphitepowders,TGCisincorrectlyusedastheindustrystandardinsteadofLOI.

TGC=LOI–(Volatiles+Moisture)

Dependingontheorebody,volatilescanberelativelyhighorlowwhichisacriticalfactorindeterminingtheTGCcontentoftheorebody.

For graphite powders, a very limited number of applications require TGC values which include highperformancerefractories,agriculture,andcruciblesforpreciousmetalstonameoffew.



MeshSize

Belowisamulti-dimensionalinternationalsievechartshowingvarioussievemeasurements.



APPENDIXB.INFORMATIONREQUIREDUNDERASXLISTINGRULE5.9.1

1.1 Materialassumptionsandoutcomes fromtheDFSandoptimisationstudy, includingeconomicassumptions

AppropriatestudiesforthedevelopmentoftheChilaloGraphiteProjecthavebeenundertakenbyGraphexMining Limited, CSA Global and a number of suitably qualified independent consultants, experts andcontracyngfirms. Previous studies have been to at least at a PFS level standard. TheDFS completed byGraphexMiningLimited is foraprocessing facilityofz{{ktpaROMthroughput,producingacoarseflakegraphiteproduct.ThisproducyonscenarioformsthebasisofthisOreReserveesymate.

Graphex has a disynct signature in the Chilalo resource, possessing specific metallurgical and chemicala}ributesideallysuitedforfoils,fire-retardants,engineeredproducts,lubricants,andthermaldrillingfluids.AsFlakegraphite isnotanexchange-tradedcommoditythePricesarenegoyateddirectlybetweenbuyerand seller. Independent informayon regarding graphite pricing and market supply/demand is thereforedifficulttocomebyasit’streatedastheintellectualpropertyofsuppliersandcustomers.Flakegraphiteisnotacommodiysedorhomogeneousproduct.Itcomesinmanydifferentsetsofspecificayons,eachwithuniquecharacterisycs.Asaresult,therearewide-rangingusesofthedifferentmeshsizesandpuritylevelsofflakegraphite.Thephysicalandchemicalproperyesofeachflakegraphite‘signature’areuniquefromonemine to another. Potenyal customers will therefore require graphite suppliers to qualify their productsdirectlywithcustomers.Thisprocessbeginswithcustomertestworkonlaboratorysamples.Thesea}ributesare expected to produce a high-value product suitable for high-tech and higher priced applicayons. ThemarketstudiesdonebyGraphexhaveuylizedpriceesymatesforChilaloproductfromseveralindependentsources including BenchmarkMineral Intelligence, Roskill and IndustrialMinerals. Pit opymisayons havebeencarriedoutusingafixedgraphitepriceandsetofparametersagreedbetweenGraphexandCSAGlobal.Sellingcostsincludegovernmentroyalyes,otherroyalyesandtransporyngcosts.

ThegeotechnicalparametersfortheProjecthavebeenbasedontheChilaloGeotechnicalReportsuppliedby Open House Management Soluyons (OHMS) geotechnical consultants. The report represents thegeotechnicalandstabilityassessmentofpitslopesfortheChilaloGraphiteProject.ThespecifiedparametershavebeenusedinboththeopymisayonanddesignoftheChilaloopenpit.

1.2 Criteriausedforclassification, includingclassificationofMineralResourcesonwhichOreReservesarebasedandconfidenceinmodifyingfactors

Classificayon of the Mineral Resource esymates was carried out considering the level of geologicalunderstandingofthedeposit,qualityofsamples,densitydata,anddrillholespacing.TheMineralResourceesymatehasbeenclassifiedinaccordancewiththeJORC(Ä{ÅÄ)Codeusingaqualitayveapproach.

The Mineral Resource is classified as an Indicated Mineral Resource for those volumes where in theCompetentPerson’sopinion there isadequatelydetailedand reliable, geologicaland samplingevidence,metallurgicaltesyngresultdataandsupportedbygeophysicalelectro-magneycmodellingdata,whicharesufficienttoassumegeological,mineralisayonandqualityconynuity.

TheMineralResource is classifiedasan InferredMineralResourcewhere themodelvolumesare, in theCompetent Person’s opinion, considered to have more limited geological and sampling evidence,metallurgicaltesyngresultdataandsupportedbygeophysicalelectro-magneycmodellingdata,whicharesufficienttoimplybutnotverifygeological,mineralisayonandqualityconynuity.

PetrographicandmetallurgicaldatasupportstheclassificayonoftheChilalodepositasanIndustrialMineralResource.



TheOreReserveshavebeenclassifiedaccordingtotheclassificayonoftheMineralResourceandthestatusoftheModifyingFactors.ThestatusoftheModifyingFactorsisgenerallyconsideredsufficienttosupporttheclassificayonofProbableReserves.AsthereisnoMeasuredmaterialintheResourceModel,IndicatedResourceisconsideredfortheOreReserve.NoneoftheInferredResourceisincludedintheOreReservecalculayon,alltheinferredResourceisreportedaswaste.AnalysisonthemaineconomicassumpyonswithinthecashflowmodelindicatethattheProjectproducesaposiyvediscountedcashflow(DCF)intermsofalloperayngcosts,thecurrentgraphitepriceesymateandselectedmodifyingfactors.

1.3 Miningmethodselectedandotherminingassumptions,includingminerecoveryfactorsandminingdilutionfactors

TheChilaloopenpitmineisplannedasaconvenyonaltruckandshoveloperayon,usingÇ{-z{taryculatedtrucksandmatchingexcavators.Operayonsincludedrillandblastacyviyesforthemajorityoftheopenpitmining.Contractormininghasbeenassumedforthelifeofmine.Theequipmentselecyonisappropriatefortheproposedscaleandselecyvityofthisoperayon.Theselectedminingapproachistypicalforasmalltomediumscaleopenpitminingoperayon.

ThegeotechnicalparametersuylisedinthepitdesignareaspertheOHMSrecommendayons.

Pitrampshavebeendesignedwiththefollowingcharacterisycs;

• TheduallanerampsareÅzmwidetoallowforsafepassageoftheselectedtruckswithanallowanceforabundwallontheopensideoftherampandadrainontheinnerside.

• ThesinglelanerampsareÅ{mwidecanbeusedformininglastbenchesandgoodbyecuts.

• GradientofÅ:Å{ispracycablewiththeproposedminingfleet.

• RampsexitthepitcrestinthedirecyonofboththeROMandwasterockdumps.

MinimumminingwidthofÉ{m ismaintained for thecutbackdesigns,howeverminimumÄ{mofminingwidthismaintainedonnormalbenches.ThewastedumpwillbeprogressivelyrehabilitatedtoreducetheamountofPAF(PotenyallyAcidForming)wasterockexposedthroughouttheoperayon.

AfixedvalueofÅ{%wasusedforminingdiluyoninpitopymisayons,producyonschedulingandcashflowmodel. A grade of {% TGC was assumed for diluyon material. Diluyon for tonnes and grade was alsocalculatedthroughadiluyonskinmethodandconcludedtheselecteddiluyonisreasonable.

AfixedvalueofÑz%wasusedforminingrecoveryinbothopymisayonsandproducyonscheduling.

1.4 Processing method selected and other processing assumptions, including recoveryfactorsappliedandallowancemadefordeleteriouselements

The Chilalo deposit has been subject to various metallurgical test work programs since the iniyal drillprogramswerecarriedoutinthelastquarterofÄ{ÅÇtogeneratesamplesformetallurgicaltestwork.Fromtheiniyaldrillprograms,samplingandcomposiyngwasundertakentogeneraterepresentayvesamplestoassess the ore's amenability to beneficiayonby froth flotayon and to idenyfy the nature, flake size andoccurrenceofthegraphiteinaselecyonofdrillcoresamplesandflotayonproducts.ThistestworkprogramwascompletedbySGS(Perth)andmanagedbyBa}eryLimitswiththeresultssupporyngtheprocessdesignandengineeringfortheÄ{ÅzPFS.

Further programs of work were iniyated in Ä{ÅÜ and Ä{Åá on samples generated since the PFS wascompleted,aimedatproducingbulkconcentratesamplesformarkeyngandaddiyonalpreliminarytesyngofoxideore.Inaddiyon,duringÄ{ÅÜatestworkprogramwasundertakenbySuzhouwithafocustoproducecoarseflakegraphitewithgradesgreaterthanàz%TGC.



Inaddiyon,duringÄ{Åàafurtherseriesoftestswereundertakentoopymisecoarseflakesizerecovery.InÄ{Åà/Ä{ÅÑ a newdrill programwasundertaken to complete aDFS level testworkprogramand includedaddiyonalvariabilitysamplefromnewareasoftheexpandedresourceandafurtherÇ{tbulksamplewastaken froma seriesof trencheswithin themain central zoneof theorebody. The key focusof theDFSprogramincluded;

• Compilayonofglobalorebodyrepresentayvesamples.

• Testwork program to enable robust flow sheet opymisayon in terms of maximise flake sizepreservayonandrecovery.

• Producyonofprocessengineeringinputdata.

• Variabilitysampletestworkfromnewareasoftheexpandedresource.

• Demonstraterobustflowsheetfromabulksampleoperayonrun.

• Generatesufficientproductandtailingsforaddiyonalvendorordownstreamtestworkandmarketsamples.

ArepresentayvetestworkprogramdemonstratesthattheoreoftheChilaloGraphiteProjectisfavourabletotheproducyonofahigh-gradegraphiteproduct.ResultsfromthemetallurgicalprogramsoftheChilaloGraphiteProducthighlightedtheabilitytoproducegradesinexcessofÑz%TGC.

Metallurgical processing recoveries as based on the testwork conducted on samples taken fromNorth,CentralandWestpitareas.Recoveriesusedfortheopymisayon,scheduleandcashflowmodelareshowninTable1.

Table1: MetallurgicalRecovery

Item Unit ValueMetallurgicalRecoveryNorthPitOxide % 90.3MetallurgicalRecoveryNorthPitFresh % 96.1MetallurgicalRecoveryCentralPitOxide % 91.8MetallurgicalRecoveryCentralPitFresh % 97.5MetallurgicalRecoveryWestPitOxide % 94.5MetallurgicalRecoveryWestPitFresh % 96.1

Graphexwilloffertwobaserangecarbonpuriyeswiththeabilityforaddiyonalprocessingtomeetcustomer-specificandmarketmeshsizespecificayonsinthefuture.Itisnotcommerciallyfeasibleoreconomictohaveawide range of carbon puriyes.Graphexwill also seek to produce and qualify a high-purity (>ÑÑ% LOI)productoncecommercialproducyonofthebaserangeproductshasbeenachieved.

GraphexengagedGREngineeringtocompletetheDFSstudyontheprocessing facility.TheDFSesymateincludes all the necessary costs associated with process engineering, design engineering and draâing,procurement, construcyon and construcyon management, commissioning of the process facility andassociatedinfrastructure,miningestablishment,firstfillsofplantreagentsandconsumables,sparepartsandworking capital required to design, procure, construct and commission all of the faciliyes required toestablishtheProject.Theesymateisbaseduponpreliminaryengineering,quanytytake-offs,budgetpricequotayonsformajorequipmentandbulkcommodiyes. Unitratesfor installayonwerebasedonmarketenquiriesspecifictotheProjectandbenchmarkedtothoseachievedrecentlyonsimilarprojectsundertakenintheAfricanmineralsprocessingindustry.TheesymateisquotedinUnitedStatesDollars(USä)toalevelof accuracy of +/-Åz% based on the available data. The company considered a single stage z{{ ktpa



processingschedule.TheLoMscheduleandcostmodelhasbeencompletedonz{{ktpaprocessingscheduleanddemonstratedthefinancialviabilityoftheChilaloGraphiteProject.Theproposedprocessingplantwillincludeatwostagecrushingcircuitthatwilldeliverproducttoastoragebin.Orewillbereclaimedfromthestoragebinanddeliveredtoatwostagemillingcircuit.Theprimaryrodmillwilloperateinclosedcircuitwithascreen.Theundersizefromthemillproductscreenwillreporttoarougher flotayon cell for recovery of coarse fast floayng graphite. The rougher tail will report to thesecondaryballmilloperaynginclosedcircuitwithcyclones.Theundersizefromtheballmillcycloneswillreporttothescavengercells.Therougherandscavengerconcentratewillundergovariousstagesofcleaningregrindingand screening.Coarseandfinegraphite concentratewill befilteredanddried separately.Drygraphiteconcentratewillbescreenedintovariousproductsizesandbaggedforshipping.Flotayontailingswillreporttothetailingshopperthickenerandthenbepumpedtothetailingstoragefacility(TSF).Designthroughputratesfortheprocessingplanthavebeensetatz{{ktpatpaofopenpitorewithproducyonofapproximatelyz{ktpaofgraphite.AneffecyveuylisayonofÑÅ%hasbeenusedfordesignpurposes.Inclusionof an intermediate crushed ore bin and installed standby equipment will enable this uylisayon to beachieved.

1.5 Basiccut-offgradeappliedThe revenuegenerated fromagraphiteoperayon isprimarilydrivenby theflake sizedistribuyonof thegraphiteproduct.Theflakeproporyonoveraseriesofsizecategoriesdeterminestheaveragesalespriceofthegraphiteproduct.Thecarbongrade(TGC)isnotdirectlyrelatedtotheflakesize.

TheMineralResourceisreportedforblocksabovealowercut-offgradeofÄ%TGC.Orereservehasn’tusedaparycularcut-offgradeforIndicatedResource.Thecut-offbetweenoreandwastehasbeendeterminedbynetvalueperblock.Atotalblockrevenueisesymatedforeachblockwithintheblockmodel,accounyngfortotalgraphiterecoveredtoapayableproductaswellasthegraphiteproductprice.Totalblockcostsareesymatedforalloperayngcoststothepointofsale includingprocessing,producthaulage,crusher feed,generalandadministrayon,oredifferenyal,sustainingcapital,sellingcosts,andgradecontrolcosts.Thetotalblockrevenueminusthetotalblockcostsesymatethenetvalueperblock.Anyblockreturningaposiyvenetvaluehasbeendefinedas“ore”forthepurposesofpitdesignandproducyonscheduling.Theblockswithpotenyal for inclusion intoOreReserves first had to achieve a block grade greater thanor equal to themarginalcut-offgradeofeachblockaswellasaresourcecategorystatusofMeasuredorIndicated.Ifthismaterialwaswithintheapprovedpitdesign,thiswasdefinedasbeing“processable”andthuswaspermi}edforinclusionwithintheOreReserves.

Projecteconomics fromthetotalProjecthavebeenconsideredat theendof the fullProject iterayontoconfirmthatthecut-offcriteriasupporteconomicoperayonsfortheChilaloGraphiteProject.

1.6 EstimationmethodologyWhi}le™soâwarehasbeenusedtogenerateaseriesofeconomicPitshellsforthisdepositusingtheMineralResourceblockmodelandinputparametersasagreedbyGPXandCSAGlobal.

InferredMineralResourceisnotconsideredinthepitopymisayon.Posiyvenetvaluemethodisappliedtoidenyfytheore.AminingandproducyonschedulewascompletedwithInferredMineralResourcetreatedaswasteandconcludedthatconversionofInferredMineralResourcetoprocessedproductisnotrequiredfortheoverallfinancialviabilityoftheChilaloGraphiteProject.

Usingtheselectedparameters,asetofnestedpitshellswereproducedbytheWhi}leopymisayonsoâware.Thepitshellswereusedtodeterminetrendsinmineralisayonand/orhigher-gradeareaswhichofferabest-casescenarioforgradeandDCF.



Figure1demonstratethetonnagesmined,theIdealDCF,undiscountedcashflow,striprayos,andcashcostsforthevariousopymisayonpitshells.

Figure1: ChilaloOp9misa9on

PitshellsÄÉwithaRevenueFactor(RF)of{.à{waschosenastheidealpitshell.ThisshellmaximisestherecoveryofthecurrentlydefinedIndicatedResourcewhileapplyingtheselectedopymisayonparameters.Table2summarisestheopymisayonoutput.

Table2: Op9misa9onOutput

Item Unit OutputsShell No. 23

RevenueFactor 0.80

TotalMined Mt 53.3

WasteMined Mt 44.3

StripRatio t:t 4.92

TotalROMFeed Mt 9.0

IndicatedResourceintheROMFeed Mt 9.0

PercentageofIndicatedResourceintheFeed % 100.0%

InferredResourceintheROMFeed Mt 0

PercentageofInferredResourceintheFeed % 0.0%

ROMFeedGrade % 9.9%

AveragePlantRecovery % 96.4%

TotalGraphiteProduced Mt 0.86

TotalGraphiteConcentrate Mt 0.91

OperatingCosts US$M 738



Item Unit OutputsRevenue US$M 1,358

CashFlow US$M 619

WorstDCF US$M 307

BestDCF US$M 364

IdealDCF US$M 330

1.7 PitDesign,MiningSchedule,CostModelandSensitivityChecks

PitDesign

Detailed pit designs were completed on updated mining models which form part of the Ore Reserveesymayon.ThepitdesignhadtoachieveaposiyvecashflowresultinordertomoveintoOreReservestatus.ThepitdesignswerecompletedwithcollaborayonbetweenGPXandCSAGlobalstaff.

A realisyc pit design has been prepared based on the results of the opymisayons and incorporayngappropriatewallangles,geotechnicalberms,minimumminingwidths,andaccessrampsappropriatefortheequipmentselected.Anetvaluea}ributewascreatedintheblockmodel(val_mcog)tocalculatetheblockvalue (revenue-selling cost-processing cost). Any block with val_mcog posiyve is considered as ore.Throughoutthedesignprocess,thepitwascheckedwithblockmodelandselectedWhi}leshells.

Materialwithin thepit designshasbeenesymatedby intersecyng thepit designwith the topographicalsurface within the mining block models. A detailed topographic surface digital terrain model (DTM)generatedbymodellingacombinayonofsurveyeddrillcollars,surveyedspotheightsandanaerialdronesurveywasprovidedtoCSAGlobal.Theminingdiluyonandorelossfactorswereappliedagainstthein-situnumbersresulyngfromthisprocess.

NorthandWestpitsweredesignedwithastarterpitandcutbackintothefinalpit.CentralpithasastarterpitandÉcutbacksintothefinalpit.FigureÄshowsFinalPitandStagedesigns.FigureÉshowsFinalPit,WasteDumpandROMPadlocayons.



Figure2: ChilaloPitDesign



Figure3: FinalPit,WasteDumpandROMPadDesigns

ThepitdesignvolumescameclosetotheselectedWhi}leshell.Table3showsthecomparisonofWhi}leshellwiththepitdesign.

Table3: PitDesignandWhiDleComparison

Totalmined Waste TotalROM

feed ROMFeed AverageGrade

(t) (t) (t) (t) %

FinalPitDesign 53,515,488 44,593,060 8,922,428 8,922,428 9.92%

RF0.80Optimisation 53,302,689 44,297,944 9,004,745 9,004,745 9.90%

Variance 0.40% 0.67% -0.91% -0.91% 0.21%

LoMScheduleMineSched™soâwarewasusedtoproducethefollowingscheduleonamonthlybasis.MiningrateswereappliedtosuitGraphex’sproposedprocessingscheduleofz{{ktpaROMFeed.TheschedulewascompletedwithInferredMineralResourcetreatedaswaste.InferredmaterialisapproximatelyÄÅ.É%(ÅÅ.ÇMt)oftotalmovement,inthis,Å.ÅMtatá.ÄÅ%TGCandÅ{.ÉMtatÉ.ÇÇ%TGC.

Processingrecoveryhasbeencodedintheblockmodelaccordingtothemininglocayonandoxidayon.

MiningrecoveryofÑz%andminingdiluyonofÅ{%isappliedintheschedule.

AnyIndicatedResourcereturningaposiyvenetblockvaluewithinthepitdesigndeemedasprocessable.TheROMFeed isdivided in to fourgradebins toachieveconsistentFeedgradeandmaximise thecashflow.FigureÇshowstheROMFeedwithinthePit.CentralPithasbeenprioriysedduetobe}ergradeandlowerstriprayo.



Figure4: ROMFeedbyGrade

TomaximisethecashflowWestandNorthPit isminedwithtwostagesandCentralpitwithfourstages.Figure 5 shows the individual pitmovements in tonnes.Mining commences in Central Pit.Mining in theCentralPit isprioriysedas ithasbe}ergrade.TotalmaterialmovementbydifferentmaterialclassesareshowninFigure6.ItcanbeseenthatsomeInferredResourceisavailableinthepit.AlltheInferredResourceisconsideredaswasteinthereservescheduleandfinancialmodel.



Figure5: TotalTonnesMinedbyPit



Figure6: TotalTonnesMinedbyMaterialClass



TotaloretonnesminedbygradeisshowninFigure7andFigure8showstheprocessingschedule.

Figure7: TotalOreTonnesMinedbyGrade



Figure8: TotalOreTonnesProcessedbyGrade

FinancialModelandSensitivityChecksCapitalandoperayngcostsesymatedtoaminimumPFSlevelofconfidencehavebeenappliedtotheplannedacyviyes.TherevenueassumpyonsarebasedonamarketreportinconjuncyonwithGraphex.Thecashflowmodelhasbeengeneratedsolelyfororereservestudies.

Thecostinputsandthemodifyingfactorsusedfortheopymisayonarealsousedinthecashflowmodel.TheNPVwascalculatedusingaÅ{%discountrateappliedatthebeginningofeachyearfromthecommencementofprocessingoperayons.PotenyalequipmentleasingoralternayvefundingarrangementscouldsignificantlyimpactthereportedNPV,thesewillbeaddressedbyGPXduringalateroperayonalopymisayonprocess.

Sensiyvity analysiswasdone for themetal price,metallurgical recovery, operayng cost, capital cost anddiscount rate. The project NPV remains posiyve for the tested sensiyvitybetween +Ä{% and -Ä{%. Thesensiyvityanalysiscompletedindicatesthattheprojectresultsaremostsensiyvetocommoditypriceandthentothemetallurgicalrecovery.TheprojectNetPresentValue(NPV)remainsposiyveforapricevariancedownby-ÄÑ%andmetallurgicalrecoveryvariancedownby-ÉÉ%.TheprojecthasaposiyveNPVunyltheoperayng costs are increased by +Üà%. The NPV remains posiyve for the tested discount rate variancebetween{%paandÄ{%pa.

1.8 Material modifying factors, including status of environmental approvals, miningtenementsandapprovals,othergovernmentfactorsandinfrastructurerequirementsforselectedminingmethodandtransporttomarket

Material modifying factors including land access, infrastructure requirements, and logisycs have beenaddressedintheChilaloGraphiteProjectDFStoanadequatelevelofconfidenceforaProbableOreReserve.Theenvironmentalapprovalprocess for theChilaloGraphiteProjecthasbeencompletedalongwith the



environmentalceryficate,signedbytheMinisterresponsiblefortheEnvironment,issuedonÄndNovemberÄ{ÅÜ.Followingtheissueoftheenvironmentalceryficate,themininglicenseapplicayonwassubmi}edandobtainedinFebruaryÄ{Åá.AspartofthepreparayonoftheDFS,Graphexhassubmi}edanupdatedESIAtotheTanzanianGovernmentinDecemberÄ{ÅÑ.

InfrastructurerequirementsaredetailedintheDFSandconsistofprocessplantandassociatedequipmentsuchasthepowerstayonandofficefaciliyes;tailingsstoragefacility;mineandwastedumps;watersupplyborefieldandpiperoutes;accessroadswithintheplantandtheProjectsite;campfaciliyescompletewithdedicated services. Access to the Project is via both sealed and unsealed road from the Mtwara Port.Engagement with local communiyes is proposed to be part of the process in road design and roadmanagementpracycesforProjectstaffandcontractors.Twoopyonsforexportofthegraphiteproducthavebeenassessed.AlistairLogisycs,alocalTanzanianlogisycsgroup,hasprovideddetailedopyonsfordeliveryofproducttoeitherDaresSalamPortorMtwaraPort.TheDFShasassumedthatthemajorityofthegraphiteproductwillbeexportedviathePortofMtwara.

Mine Waste Management Pty Ltd (MWM) has conducted the study for the management of acid andmetalliferousdrainage (AMD)generayngwasterockwithin theproposedwasterockdump(WRD)at theChilalo Graphite Project (the Project) for Graphex Mining Limited (Graphex). MWM provided an AMDmanagementdesignphilosophyfortheChilaloWRD.Mostofthematerialwithinthepitshellisacidformingand/orpotenyallymetalliferous.FigureÑshowstheNAF(NonAcidForming)&PAF(PotenyallyAcidForming)materialproducyonthroughouttheminelife.ThefollowingWRDdesignstrategiesarerecommendedfortheproject:

• ControlallWRDtoeseepagesothatitreportstotheTSFfootprint;

• PlacementofNAFoxidewasterockaroundtheouterperimeterandfinaluppersurfaceoftheWRDtoencapsulatePAFwasterockandreduceoxygeningress.

• Material segregayonbasedongeochemical (NAFvsPAF) classificayon,withhigher riskmaterialsbeingencapsulatedbylowerriskmaterials(thisapproachwillbeassessedduringthedetaileddesignphase);

• ManagingofphysicalWRDproperyesbyplacingwasterockusinganalternayngpaddockdumpingapproachandÄmhighliâmethodstominimiseoxygeningressbyadvecyon;

• Watermanagementtopreventrun-onwatertotheWRD;and

• IncorporayonofcontrolstodirectWRDseepagetowardstheTSFintotheWRDdesignphilosophy.



Figure9: NAFandPAFMaterialMinedfromChilaloPit



APPENDIXC.COMPETENTPERSONSCONSENTS

OreReserveEstimate

The information in this announcement that relates to theOreReserveat theChilaloProject isbasedoninformationcompiledbyKarlvanOlden,aCompetentPerson,whoisaFellowoftheAustralasianInstituteofMiningandMetallurgy.KarlvanOldenisemployedbyCSA.MrvanOldenhassufficientexperience,whichisrelevanttothestyleofmineralisationandtypeofdepositunderconsideration,andtotheactivityheisundertaking, to qualify as a Competent Person in terms of the JORC Code 2012 Edition.Mr van Oldenconsents to the inclusionof such information in this announcement in the formand context inwhich itappears.

Metallurgy

Theinformationinthisannouncementthatrelatestometallurgicaltestworkmanagement,interpretationofresultsandprocessdesignforaDFSlevelassessmentisbasedoninformationcompiledandreviewedbyMrDavidPass,whoisaMemberoftheAustralasianInstituteofMiningandMetallurgy.MrPassisanemployeeofBatteryLimitsPtyLtd.MrPasshassufficientexperiencerelevanttothemineralogyandtypeofdepositunderconsiderationandthetypicalbeneficiationthereoftoqualifyasaCompetentPersonasdefinedbytheJORCCode2012Edition.MrPassconsentstotheinclusioninthereportofthemattersbasedonthereviewedinformationintheformandcontextinwhichitappears.

Engineering

The information in this announcement that relates to the process plant and infrastructure design for afeasibility study assessment to a ±15% level is based on information compiled and reviewed by GREngineeringServices.GREngineeringServicesconsentstotheinclusioninthereportofthemattersbasedonthereviewedinformationintheformandcontextinwhichitappears.

ForwardLookingStatements

Thisnewsreleaseincludescertain“forward‐lookingstatements”.Forward-lookingstatementsandforward-looking informationarefrequentlycharacterisedbywordssuchas“plan,”“expect,”“project,”“intend,”“believe,”“anticipate”,“estimate”andothersimilarwords,orstatementsthatcertaineventsorconditions“may”,“will”or“could”occur.Allstatementsotherthanstatementsofhistoricalfactincludedinthisreleaseareforward‐lookingstatementsorconstituteforward-lookinginformation.Therecanbenoassurancethatsuchinformationorstatementswillprovetobeaccurateandactualresultsandfutureeventscoulddiffermateriallyfromthoseanticipatedinsuchinformation.ImportantfactorscouldcauseactualresultstodiffermateriallyfromGraphex’sexpectations.

These forward-looking statements are based on certain assumptions, the opinions and estimates ofmanagementandqualifiedpersonsatthedatethestatementsaremadeandaresubjecttoavarietyofrisksanduncertaintiesandotherfactorsthatcouldcauseactualeventsorresultstodiffermateriallyfromthoseprojectedintheforward-lookingstatementsorinformation.Thesefactorsinclude,butarenotlimitedtotheinherentrisksinvolvedintheexploration,developmentandminingofmineralproperties;geological,miningand processing technical problems; the inability to obtain mine licenses, permits and other regulatoryapprovals required in connection with mining and processing operations; competition for among otherthings,capital,acquisitionsofreserves,undevelopedlandsandskilledpersonnel;variouseventsthatcoulddisruptoperations; thepossibilityofproject costoverrunsorunanticipated costs andexpenses; and theabilityofcontractedpartiestoprovideservicesascontracted.



Graphexundertakesnoobligation toupdate forward-looking statementsor information if circumstancesshouldchange.Forwardlookingstatementsareprovidedasageneralguideonlyandshouldnotbereliedonas a guarantee of future performance. The reader is cautionednot to place undue reliance on forward-looking statements or information. Readers are also cautioned to review the risk factors identified byGraphexinitsregulatoryfilingsmadefromtimetotimewiththeASX.

StatementsregardingplanswithrespecttotheCompany’smineralpropertiesmaycontainforwardlookingstatements.StatementsinrelationtofuturematterscanonlybemadewheretheCompanyhasreasonablebasisformakingthosestatements.

The Company believes it has a reasonable basis for making the forward-looking statements in thisannouncement,includingwithrespecttoanyproductiontargets,basedontheinformationcontainedinthisannouncementandinparticular:

• TheDFSwascompletedbyGRES,whichenvisagesthedevelopmentoftheProjectbasedontheOreReserveandMineralResourceestimateprovidedbyCSA,assetoutintheDFS.GREShascompiledthecapitalandoperatingcostsestimatesandprovidedsign-offfortheFeasibilityStudylevelcostestimates(excludingowner’scosts)basedontheminingscheduleandestimatedmineoperatingcostsprovidedbyCSAandcapitalandoperatingcostsfortheprocessplant.RichardvanZylofGREShasvisitedtheChilalositeandhelddiscussionswithserviceprovidersinTanzaniafortheProject.

• Additional capital and other operating costs including non-process infrastructure, producttransportation and general and administration, were developed by GRES from internaldatabases.

• The Study is sufficient to be considered aDefinitive Feasibility Study levelwith approximateaccuracyof±15%.



APPENDIXD.JORC2012,TABLE1REPORTING

Section1:SamplingTechniquesandDataCriteria CommentarySamplingtechniques Pre-2018drillingprograms:

• Reverse circulation (RC) drilling was used to collect 1 m downhole samples for thelaboratoryanalysis.

• Typically, a 1–2 kg samplewas collected using a cone splitter or during 2016 drilling, arepresentative 1/8 sample was collected using a three-tier riffle splitter. Samples werecompositedto2mnumberedandbaggedbeforedispatchtothelaboratoryandsentforcombustioninfrareddetection(LECO)analyses.AllRCsamplesweresubmittedforanalysis.

• HQdiamondcorewasgeologicallyloggedandsampledtocorresponding2mcompositeRCintervalswhen twinninganRChole,otherwise samplingwas togeological contactswithnominalsamplelengthsbetween0.25mand1.5m.

• HQquarter-coresampleswerecollectedbydiamondbladerocksaw,numberedandbaggedbefore dispatch to the laboratory and sent for LECO analyses. All core samples weresubmittedforanalysis.

• Commercialreferencematerials(CRMs)andfieldduplicatesampleswereregularlyincludedinto the sample stream for both RC and diamond to monitor analytical accuracy andsamplingprecision.

• SamplingisguidedbyGraphex’sstandardoperatingandQAQCprocedures.2018drillingprogram:• Sampleswerecollectedon1mbasiswithinthesamezone(i.e.withinHG,LGandWASTE).

When there is a change in zone, samples were collected based on the lithologicalboundariesofmineralisation,withminimumsamplelengthof0.5mandmaximumlengthof1.5mandsentforLECOanalysesgraphiticcarbonandsulphurcontent.Allresourceholescoresweresubmittedforanalysis.Forthepitgeotechnicalandtailingsstoragefacility(TSF)sterilisationholes,themineralisedzoneswereselectedandsubmittedforassaying.

• CRMsandfieldduplicatesampleswereusedtomonitoranalyticalaccuracyandsamplingprecision.

• SamplingisguidedbyGraphex’sstandardoperatingandQAQCprocedures.• PQ (resourceholes)andNQ (pitgeotechnicalandTSF sterilisationholes)diamondcores

weregeologicallyloggedandsampled.Coreisquartercoredbydiamondbladerocksaw,numberedandbaggedbeforedispatchtothelaboratoryforpreparationandanalysis.

• Coreisroutinelyphotographedwetanddry.Drillingtechniques Pre-2018drillingprograms:

• Diamond and RC holes were drilled in a direction to intersect the mineralisationorthogonally.

• RCholesweredrilledusinga140–146mmfacesamplinghammerbuttonbit.• The RC drilling was completed using either a Schramm 450 or UDR 650 drill rig with

additional booster and auxiliary used as required to keep samples dry and produceidentifiablerockchips.

• DiamondholesweredrilledusingHQdiameter(63.5mm)corebitwithstandardinnertubestotargetdepth.

• Thediamonddrillingwascompletedusingaconventionalwire-linecorerig.• Coreorientationsweremeasuredeverydrilledrun,either3mor1.5m.• Downholedirectionalsurveywastakenevery30mtoensuretargetwasreached.2018drillingprogram:



Criteria Commentary• Diamondholesweredrilledinadirectiontointersectthemineralisationorthogonally.• Metallurgicaldrillholesweretargeteddowndiporverticallytoobtainmaximumamounts

ofmineralisedmaterialtoprovidesuitablesamplesformetallurgicaltesting.• DiamonddrillingwithstandardinnertubesPQ3andNQaredrilledtotargetdepth.• Diamonddrillingwascompletedusingaconventionalwirelinerig.• Coreorientationsweremeasuredeverydrilledruneither3mor1.5m.• Downholedirectionalsurveywastakenevery30mtoensuretargetwasreached.

Drillsamplerecovery RCdrilling:• Samplequalityand recoveryofRCdrillingwascontinuouslymonitoredduringdrilling to

ensurethatsampleswererepresentative,andrecoveriesmaximised.• RCsamplerecoverywasrecordedusingsampleweights.Diamonddrilling:• Diamond core recoveries in fresh rock are measured in the core trays per drilling run.

Diamond core is reconstructed into continuous runs and marked with bottom-of-holeorientationlines.Depthsarecheckedagainstdepthsmarkedoncoreblocks.Rockqualitydesignation(RQD)isalsorecordedaspartofthegeologicalloggingprocess.

• Corerecoveriesweregood–typically>95%.• There isnodiscernible relationshipbetweensample recoveryand total graphitic carbon

(TGC)grade.DiamondtwinningofRCholeshasdemonstratedaminimaldownwardsbiasinRCTGCgrade.

Logging RCdrilling:• Detailed geological logging of RC holes captured various qualitative and quantitative

parametersincludinglithology,mineralisation,colour,textureandsamplequality.RCholeswereloggedat1mintervals.

• RCchiptraysarephotographed,wetanddryforfuturereference.Diamonddrilling:• Detailed geological logging of all diamond holes captured various qualitative and

quantitativeparametersincludingmineralogy,colour,textureandsamplequality.• All diamond corehas been geologically and geotechnically logged to a level of detail to

supportMineralResourceestimation.• Logging data is collected via rugged laptops. The data is subsequently loaded into a

dedicatedfullyrelationalgeologicaldatabase(Datashed)hostedbyaconsultant(rOREdataPtyLtd)forstorage.

• Coreisregularlyphotographedwetanddryforfuturereference.• Allholesdrilledhavebeengeologicallyloggedintheirentireties.

Subsamplingtechniquesandsamplepreparation

RCdrilling:• RC sampleswere sampleddryand routinely takenat1m intervals. Thiswas completed

eitherdirectlywitha1–2kgsampleretrievedfromaregularlycleanedconesplitterorarepresentative 1/8 sample taken from a regularly cleaned three-tier riffle splitter. Theremainderofthedrilledsamplewasrecoveredinalargeplasticbag.

• RC1msampleswerethencompositedintoa2msampleusingalaboratorydecksplitter,orwherepossiblesampledtonearest1mgeologicalboundary.

• AsmallfractionofRCsamplesreturnedtothesurfacewet.Thesesamplesweredriedpriortosampling.Allsamplesweresubmittedforassay.

• AllRCsampleswerelabelledsuchthattheycorrespondedtoremaindersamplesiffurtheranalysiswasrequired.

Diamonddrilling:



Criteria Commentary• Coreiscutwithadiamondsawintohalfcoreandthenonehalfintoquartercore.Aquarter

ofthecore,sampledto1morlithologicalboundaries,issenttothelaboratoryforassay.• Aquartercoreisarchived.Ahalfcoreisreservedforanyotherrequiredtest-work.Suchas

metallurgical,AMDetc.Alldrilling:• Controlsamples(blanks,fieldduplicatesandcommercialstandards)areinsertedintothe

samplestreamevery20thsample(onestandard,oneblank,onesiteduplicate)ornotlessthan5%ofallcollectedsamplesforeachcontrolsample.Additionally,onestandard,oneblankandonesiteduplicatewillbeinsertedforevery20mofmineralisationintersected.Amineralisedzoneisazonegreaterthan5mwithavisualestimateofmorethan5%graphite.Internal dilution of non-mineralisation (up to 5 m) can be included in the mineralisedthickness.

• Highvaluedstandardsarepreferably insertedwithinthestrongmineralisation.Similarly,lowvaluedstandardsareinsertedwithintheweakmineralisation.Amineralisedzoneisazonegreaterthan5mwithavisualestimateofmorethan5%graphite.

• Sampleswerestoredonsitepriortobeingtransportedtothelaboratory.• Samplesweremarkedwithuniquesequentialnumberingtoensurecontrolsagainstsample

lossoromission.• Samplesweresorted,driedandweighedatthelaboratorywheretheywerethencrushed

andrifflesplittoobtainasub-fractionforpulverisation,inpreparationforsampleanalysis.Qualityofassaydataandlaboratorytests

Pre-2108drillingprograms:• All RC and diamond samples were submitted to ALS for both sample preparation and

analyticalassay.• Sampleswere sent to theALS laboratory inMwanza (Tanzania) for samplepreparation.

Samples are crushed to >70% passing -2 mm and then pulverised to >85% passing-75microns.

• ForallsamplesasplitofthesampleisanalysedbymeansofacombustioninfrareddetectionmethodusingaLECOanalysertodetermineTGC(ALSMineralsCodesC-IR18).

• Majority (97%) of samples have also been assayed for total sulphur by means of acombustioninfrareddetectionmethodusingaLECOanalyser(ALSMineralsCodeS-IR08).

• Laboratoryduplicatesandstandardswerealsousedasqualitycontrolmeasuresatdifferentsubsamplingstages.

• 76samplesweresentforumpirelaboratorytesting,withtheresultsvalidatingtheaccuracyoftheprimarylaboratoryassayresults.

• Examination of all the QAQC data indicates that the laboratory performance has beensatisfactory for both standards, with no failures and acceptable levels of precision andaccuracy.

2018drillingprogram:• All sampleswere submitted toALS laboratory in Johannesburg, SouthAfrica for sample

preparationandanalyticalassay.• Samples are crushed to >70% passing -2mm and then pulverised to >85% passing -75

microns.• Forallsamples,asplitofthesampleisanalysedusingaLECOanalysertodeterminegraphitic

carbonandsulphurcontent(ALSMineralsCodesC-IR18andS-IR08).• Laboratoryduplicatesandstandardswerealsousedasqualitycontrolmeasuresatdifferent

subsamplingstages.• 148samplesweresentforumpirelaboratorytestingattheSGSRandfontein,SouthAfrica

laboratory. Analysis of the results showed an insignificant upward bias (+2.1%) in theprimarylaboratorymeangraderesults,fewoutliersandover95%passing10%halfabsolute



Criteria Commentaryrelativedifference.Theresultsareconsideredtovalidatetheaccuracyandprecisionoftheprimarylaboratoryassayresults.

• Examination of all the QAQC data indicates that the laboratory performance has beensatisfactoryforbothstandards,withveryfewfailuresandacceptablelevelsofprecisionandaccuracy.CSAGlobalbelievesthatlaboratoryaccuracyandprecisionhasbeensufficientlydemonstratedtousethedrillassaydatawithareasonablelevelofconfidenceinaMineralResourceestimate(MRE).

Verificationofsamplingandassaying

• SeniorNgwenaTanzaniaLtd(Ngwena)/GraphexMiningLtd(Graphex)geologicalpersonnelsupervisedthesampling,andalternativepersonnelverifiedthesamplinglocations.

• Externaloversightisestablishedwiththecontractingofanexternalconsultanttoregularlyassessonsitestandardsandpracticestomaintainbestpractice.

• Six RC holes have been twinned by diamond drilling core holes to assess the degree ofintersectionandgradecompatibilitybetweenthedominantRCsamplesandthetwinnedcore

• AssaydataisloadeddirectlyintothefullyrelationalDatashedgeologicaldatabasewhichishostedandmanagedbyanexternaldatabaseconsultancy.

• Visual comparisonswill beundertakenbetween the recordeddatabase assays andhardcopyrecordsatarateofnotlessthan5%ofallloadeddata.

• Noadjustmentshavebeenmadetoassaydata.

Locationofdatapoints

• Drillholecollar locationshavebeensurveyedusingahandheldglobalpositioningsystem(GPS)withanaccuracyof5mforeasting,northingandelevationcoordinates.

• Drillholecollarswherere-surveyedusingadifferentialGPSwithanaccuracyof<5cmattheendoftheprogram.

• Collarsurveysarevalidatedagainstplannedcoordinatesandthetopographicsurface.• DownholesurveysareconductedduringdrillingusingaReflexsingleshotevery30m.• Theprimary(only)gridusedisUTMWGS84Zone37Southdatumandprojection.• Thetopographicsurfaceusedinresourcemodellinghasbeengeneratedfromthecontour

data generated from theUAV surveys completed by AtlasGeophysics in 2017 and spotheightsandcollarsurveysdatacapturedusingdifferentialGPS.

Dataspacinganddistribution

• TheChilalodeposithasbeensampledusingRCanddiamondcoredrillingoveranumberofdrillingcampaigns,withinitialdrillingcompletedonanominal200mx200mgrid.

• Subsequentinfilldrillingprogramshavesequentiallyreducedthegridspacingtoanominal50mdrillspacingondrillsectionlinesnominally100mapartalongstrike.

• Sixgeotechnicaldrillholeshavebeencompletedbetween200mand400mapart,designedtoprovideinformationonthestabilityofthepitwalls.

• Metallurgicaldrilling(twoholes)wasaimedatcollectingenoughmineralisedmaterialformetallurgical testwork.Oneof themetallurgyholeswasdrilleddowndipthemainhigh-grademineralisationzoneandthesecondonewasdrilledverticalataboutsection472,000mE.

Orientationofdatainrelationtogeologicalstructure

• All drillholes have been orientated to intersect the graphitic mineralisation as close toperpendicularaspossible.

• From surface mapping of the outcrops in the area, trenching and already completedmodelling,theinterpretedmineralisationzones,dipatanglesofbetween50°and60°tothesouthtosouth-southwest.Thedrillingwashenceplannedatadipof-50/60°oriented315–360°.

• Theorientationofdrillingisnotexpectedtointroduceanysignificantsamplingbias.

Samplesecurity • All samples are marked with unique sequential numbering to ensure controls againstsamplelossoromission.Thisnumberwasretainedduringtheentireprocess.



Criteria Commentary• Thesamplesarecut,packedandlockedintheofficesatNtakacamp(atsite)whichhave24-

hoursecuritypriortotransportationbylockedcommercialtruckcarrier.• Prior to the 2018 drilling campaign, samples were trucked to the ALSMwanza sample

preparationfacility,whichthenpreparedandshippedthesealedpreparedsamplestotheALSBrisbanelaboratoryforanalysis.

• Forthe2018drillingcampaign,thesamplesweretransportedtoDar-es-SalaambylockedcommercialtruckcarrierduetotheALSMwanzafacilityhavingbeenshutdown.

• AnexportpermitisprocessedwhilesamplesarekeptattheDar-es-Salaamofficeswith24hourssecuritypriortobeingsealedbygovernmentofficialsfromtheministryofminerals.

• ThesealedsampleswerethenairfreightedtotheALSlaboratoryinJohannesburg,SouthAfricabyDHLcourier.

Auditsorreviews AnindependentconsultantfromCSAGlobal,withexpertiseingraphite,completedasitevisitprior to and upon commencement of drilling to ensure the sampling protocol met bestpracticestoconformtoindustrystandards.

Section2:ReportingofExplorationResultsCriteria CommentaryMineral tenementand land tenurestatus

• The Mineral Resource Estimate (MRE) reported in this announcement was originallysituatedongrantedprospectinglicencePL6073/2009whichisownedbyNgwena,awhollyownedsubsidiaryofGraphex.

• Subsequentmining licenceapproval at thebeginningof2017hasenveloped theChilaloMineralResourcewithinML569/2017,ownedbyNgwena,whilsttheremainderoforiginalPL6073/2009nowexistsaslicencePL11034/2017alsoheldnowbyNgwena.

• ML569/2017andPL11034/2017arecurrentlyvalidandingoodstanding.Exploration done byotherparties

ExplorationhasbeenperformedbyanincorporatedsubsidiarycompanyofGraphex,Ngwena.StreamsedimentsurveyscarriedouthistoricallybyBHPwerenotassayedforthecommodityreferredtointheannouncement.

Geology The regional geology is comprised of late ProterozoicMozambiquemobile belt lithologiesconsisting ofmafic to felsic gneisses interlayeredwith amphibolites andmetasedimentaryrocks.Themineralisationconsistsofa seriesof intercalatedgraphitichorizonswithin felsicgneiss (siliceousandaluminous rich sediments), amphibolites (mafic sourcedmaterial) andrarelyhighpuritymarblehorizons.

Drillholeinformation • AllrelevantdrillholeinformationhasbeenpreviouslyreportedtotheAustralianSecuritiesExchange (ASX). No material changes have occurred to this information since it wasoriginallyreported.

• Allrelevantdatahasbeenreported.Data aggregationmethods

NotrelevantwhenreportingMineralResources.

Relationshipbetweenmineralisationwidths and interceptlengths

NotrelevantwhenreportingMineralResources.

Diagrams Refertofigureswithinthemainbodyofthisreport.

Balancedreporting NotrelevantwhenreportingMineralResources.

Other substantiveexplorationdata

• Aversatiletimedomainelectromagnetic(VTEM)geophysicalsurveywasinitiallycompletedoveralargeportionoftheNachingweaProperty.Itidentifiednumerousanomalieswhichwerelikelytobeassociatedwithgraphitemineralisation.BasedontheVTEMdataanumber



Criteria Commentaryof the identified targets were drilled in 2014 and the Chilalo high-grade deposit wasdiscovered.

• Downhole electromagnetic (DHEM) surveyswere carried out on 18 of the RC drillholescompletedin2014;ninediamondholescompletedin2015,fiveRCdrillholescompletedin2016and11diamondholescompletedin2018.TheDHEMsurveydatawereacquiredbyGraphex’s in-house survey crew and equipment (EMIT probe and receiver, and Zongetransmitter). The aim of the DHEM survey campaignwas to detect known and off-holeelectromagnetic(EM)responsesassociatedwithgraphitemineralisation.TheEMresponsesweremodelledbyResourcePotentialsPtyLtdtodeterminethelocation,orientationandsize of the conductors associated with graphite mineralisation. The modelled DHEMconductor plate wireframes were provided in 3D DXF format to assist in geologicalmodelling.

• Fixedloopelectromagnetic(FLEM)surveyswerecarriedoutduringthe2015and2016fieldseasons to collect ground EM data over multiple linear conductive graphitic horizonsidentifiedintheexistingversatiletime-domainEM(VTEM)surveydata.Graphex’sin-houseZongeGGT-10transmitter,aSmartEM24receiverandaSmartFluxgate3-componentB-FieldsensorandpersonnelwereusedfortheFLEMsurveying.

• AllothermeaningfulexplorationdataconcerningtheChilaloProjecthasbeenreportedinpreviousreportstotheASX.

• NootherexplorationdataisconsideredmaterialinthecontextoftheMREwhichhasbeenprepared.AllrelevantdatahasbeendescribedinSection1andSection3ofJORCTable1.

Furtherwork • ADefinitiveFeasibility Studyhasbeencompletedand releasedon29 January2020, theresultsofwhichareincludedinthisannouncement.

• Figuresareprovidedwithinthemainbodyofthisreport.

Section3:EstimationandReportingofMineralResourcesCriteria CommentaryDatabaseintegrity • DatausedintheMREissourcedfromadatabaseexport.Relevanttablesfromthedatabase

are exported to Microsoft Excel format and converted to CSV format for import intoDatamineStudio3software.

• Validationofthedataimportincludechecksforoverlappingintervals,missingsurveydata,missingassaydata,missinglithologicaldata,andmissingcollars.

Sitevisits • Representativesof theCompetentPersonhavevisitedtheprojectonseveraloccasions,mostrecentlyinJune2015.TheCompetentPerson’srepresentativeswereabletoreviewdrillingandsamplingprocedures,aswellasexamine themineralisationoccurrenceandassociatedgeologicalfeatures.AllsamplesandgeologicaldataweredeemedfitforuseintheMRE.

Geologicalinterpretation

• Thegeologyandmineraldistributionofthesystemappearstobereasonablyconsistentthroughthecorehigh-gradezone.ModellingofthegeologyoftheChilaloMaindeposithasbeenupdatedtoreflecttheresultsofdrillingcompletedinin2018.The2018drillingwasprimarilyfocusedoninfilltoupgradeconfidenceinthegeologicalandgradecontinuityofthedepositinthesouthwestextensionoftheMaindepositandonextensionandinfillforthe North deposit similarly to upgrade confidence in the geological interpretation andcontinuity,andgradecontinuity.

• Anystructural influencesarenotexpectedtobesignificantthroughthecorehigh-gradezoneoftheChilaloMaindeposit,wherethedrillingandgeophysicaldatahaveshowngoodgeological and grade continuity; however structural influences are at noted at roughly471,280m Ewith a strike change noted in theMain deposit and a linear topographicfeaturetrendingnorthwesttosoutheast.Thestructuralinfluencesarenotanticipatedtosignificantlyalterinterpretedmineralisationvolumesorgradesintheareaofintersection



Criteria Commentarywiththemainzonemineralisation.Themineralisationzonestothenorthoftheeasternside of Main deposit appear separated from theMain deposit by a structural featureevidencedbyatopographiclowbetweenthedeposits.TheNorthdepositmineralisationhasasouthwarddipandappearstobestructurallyterminatedtotheeast,southandwest.

• Drillholeinterceptlogging,assayresults,DHEMandFLEMmodellinghaveformedthebasisforthemineralisationdomaininterpretation.Assumptionshavebeenmadeonthedepthandstrikeextentsofthemineralisationbasedondrillingandgeophysicalinformation.

• Theextentsofthemodelledzonesareconstrainedbytheinformationobtainedfromthedrill logging and geophysical data. Alternative interpretations are unlikely to have asignificantinfluenceontheglobalMRE.

• Anoverburdenlayerwithanaveragethicknessof2.5mhasbeenmodelledbasedondrilllogging and is depleted from themodel. Graphex geologists have updated weatheringlogging in drillholes to ensure interpretive consistency across drilling campaigns. ThisupdatedweatheringdatahasbeenprovidedtoCSAGlobalandusedinconcertwithvisualvalidationusingcoreandchipphotographs,aswellassulphuranalysisvaluestogenerateweatheringsurfacesforbaseofcompleteoxidationandtopoffreshrock.

• InterpretationsofthegeologicalunitsoftheChilaloprojectareahavebeengeneratedbyGraphexgeologists.AmineralisationinterpretationbasedonanominalTGC%cut-offgradeof5%forthecorehigher-gradelensesandanominal2%forthesurroundinglower-gradelenseshasbeengeneratedbyCSAGlobalandcorrelatedwiththegeologicalinterpretationreasonablywell.

• Continuityofgeologyandgradecanbeidentifiedandtracedbetweendrillholesbyvisual,geophysicalandgeochemicalcharacteristics.Additionaldataisrequiredtomoreaccuratelymodeltheeffectofanypotentialstructuralorotherinfluencesonthedowndipandstrikeextentsofthedefinedmineralisedgeologicalunits.ConfidenceinthegradeandgeologicalcontinuityisreflectedintheMineralResourceclassification.

Dimensions • In theChilaloMaindeposit thecorehigh-grademineralisation(>5%TGC) interpretationconsistsoftwo lenses.Themainfootwall lensstrikestowards250°,dippingroughly50°towards 160°, with a strike length of roughly 1.1 km from the northeast towards thesouthwest,andafurtherstrikelengthofroughly500m,afterastrikechangeto250°atabout471280mEwithadiproughly40°towards180°.Theaverageinterpreteddepthisapproximately200mbelowsurfaceandthetruethicknessisapproximately25mfortheeasternhalfand10mforthewesternhalf.Thesecondaryhigh-gradelensisinterpretedtobeapproximately1.1kmlonginthehangingwallofthewesterntwothirdsofthemainlensfromroughly471800mEextendingtothewest.Itisinterpretedtobebetween40mindepthintheeast,and160mindepthinthewest,andbetween2mand15mintruethicknesswithasimilarstrikeanddiptothemainlens.Thelow-grademineralisation(>2%TGC)lensesenclosethehigh-gradelensesandareinthehangingwallabovethemandhavesimilarstrikeanddepthextentsovertheclassifiedportionsofthemodel.Someofthelow-gradelensesareinterpretedtocontinuealongstriketothewestforapproximately800m,buttheseportionsofthemodelarenotclassifiedduetoinsufficientdataandthereforelowerconfidence.Theselensesaregenerallyabout5–15mintruethickness.

• AttheChilaloNorthdeposit,thecorehigh-grademineralisation(>5%TGC)interpretationconsists of two lenses. The hangingwall lens strikes towards 240°, dipping roughly 45°towards 150°, with a strike length of roughly 500 m from the northeast towards thesouthwest.Theaverageinterpreteddepthisapproximately150mbelowsurface,rangingbetweenroughly110montheeasternandwesternendstoamaximumroughly180mnearthecentre.Truethicknessrangesbetweenroughly6montheeasternandwesternextremitiesthroughamaximumofroughly30mnearthecentre.

• Thefootwalllenshasaverysimilarstrikeanddipgeometrytothefootwalllensbutextendsabout90mbelowsurfaceintheeastand120mbelowsurfaceinthewestanduptoabout230mnearthecentre.Theaveragetruethicknessofthislensisroughly7mintheeast



Criteria Commentaryand6minthewest.Theinterpretedlow-grademineralisation(>2%TGC)lensesenclosethehigh-gradelensesorarebetweenorinthehangingwallabovethem.Theyhavesimilarstrikeanddepthextentstothehigh-gradelenses.Theaveragetruethicknessofthetwolargerlow-gradelensesthatenclosethehigh-gradelensesisroughly40minthecentreto10mintheeastandwestforthehangingwall lens,andthefootwall lensisonaverageabout12m.

Estimationandmodellingtechniques

• Themineralisationhasbeenestimatedusingordinarykriging(OK).• Two>5%TGChigh-grade lensesandfour>2%low-grade lenseswere interpretedatthe

ChilaloMaindeposit,withtwohigh-grade lensesandsix low-grade lenses intheChilaloNorthEastdeposit.

• Sampleswereselectedwithineachlensfordataanalysis.Statisticalanalysiswascompletedoneachlenstodetermineifanyoutliergradesrequiredtopcutting.

• Statistical analysis to check gradepopulationdistributionsusinghistograms, probabilityplotsandsummarystatisticsandthecoefficientofvariation,wascompletedoneachlensfortheestimatedelement.Thechecksshowedtherewerenosignificantoutliergradesinthe interpreted cut-off grade lenses. The few modestly outlying values were visuallyassessedandfoundtoreflecttruehigher-gradezones,havingsomecontinuity,butwhichwerenotlargeenoughtoseparatelymodel.Theseareaswerecheckedduringthemodelvalidationprocesstoverifytheydidnotundulyinfluencethegradeestimation.

• Aninversedistancesquared(IDS)gradeestimatewascompletedconcurrentlywiththeOKestimateinanumberofestimationrunswithvaryingparameters.Blockmodelresultsarecompared against each other and the drillhole results to ensure an estimate that besthonoursthedrillsampledataisreported.

• Nomininghasyettakenplaceatthesedeposits.• Nominingassumptionshavebeenmade.• Sulphurhasbeenestimatedintothemodelforpossiblefutureusebymineengineersand

metallurgistsintermsofprocessingandwaterquality.• Interpreteddomainsarebuilt intoasub-celledblockmodelwitha10m(N)x25m(E)x

5m(RL)parentblocksize.Searchellipsoidsforeachlenshavebeenseparatelyorientatedbasedon theiroverall geometry. Toaccommodate the strike change in the interpretedmineralisationlensesintheChilaloMaindeposit,additionalsearchellipsoidorientationshavebeendefinedforeachaffectedlens.Blocksize,samplenumbersperblockestimate,ellipsoid axial search ranges and block discretisation have been tailored based on theresults of a kriging neighbourhood analysis. The search ellipse is doubled for a secondsearchpassandincreased20-foldforathirdsearchpasstoensureallblocksareestimated.Samplenumbersrequiredperblockestimatehavebeenreducedwitheachsearchpass.

• Hard boundaries have been used in the grade estimate between each individualinterpretedmineralisationlens.Softboundariesareusedwithineachlenstoaccommodatethestrikechangesandassociatedadjustedsearchellipsoids.

• Validation checks included statistical comparison between drill sample grades, the OKestimateandtheIDSestimateresultsforeachzone.Visualvalidationofgradetrendsalongthedrillsectionswascompletedandtrendplotscomparingdrillsamplegradesandmodelgrades for northings, eastings and elevation were completed. These checks showreasonablecorrelationbetweenestimatedblockgradesanddrillsamplegrades.

• Noreconciliationdataisavailableasnomininghastakenplace.Moisture Tonnageshavebeenestimatedonadry, insitubasis,andsamplesweregenerallydry.No

moisturevaluescouldbereviewedasthesehavenotbeencaptured,withcoresamplesbeingdriedbeforedensitymeasurements.

Cut-offparameters Visualanalysisofthedrillassayresultsdemonstratedthehigher-gradezonesinterpretedatthenominallowercut-offgradeof5%TGCcorrespondstoanaturalgradechangefromlowertohighergrademineralisation.The lowercut-off interpretationof2%TGCcorresponds to



Criteria Commentarynatural break in the grade population distribution. Graphex verbally confirmed that earlyindicationsfrommetallurgicaltestingshowthatthelower-gradematerialiscapabledeliveringgoodqualityflakematerial.Sincethismaterialisalsoprimarilylocatedinthehangingwall,anditwouldneedtobeminedinanopencuttoaccessdeeperportionsofthehigher-gradezones,ithasbeenclassifiedasInferredasitmaybepossibletoeconomicallybeneficiate.

Miningfactorsorassumptions

• Ithasbeenassumedthatthesedepositswillbeamenabletoopencutminingmethodsandareeconomictoexploittothedepthscurrentlymodelledusingthecut-offgradeapplied.

• Noassumptionsregardingminimumminingwidthsanddilutionhavebeenmade.

Metallurgicalfactorsorassumptions

2015“ChilaloMain”MineralResource:• 32quarter-coresamplesfromfourboreholeswereselectedforthinsectionexamination

byTownendMineralogy,mainlytoidentifyweatheringzonesandtoassessgraphiteflakesizeandlikelyliberationcharacteristics.

• Mineralssuchasjarosite,opalinesilica,claysandgoethitehavereplacedFe-sulphidesandsilicatemineralstodepthsof20–30mdownhole.ThismineralassemblageisinterpretedtodefinetheOxidisedZone.

• There is significant weathering/alteration in the high-grade graphite domain, resultingparticularly in the breakdown of sillimanite to kaolin which occurs to depths ofapproximately50mdownhole.Theoccurrenceofkaolinisedsillimanite(plusFesulphides)isinterpretedtodefinetheTransitionalZone.

• There appears to be two graphite populations in terms of flake width: (i) thin flakesgenerallylessthanabout100micronwidthanduptoabout1mminlength,inlithologieswithbetweenabout2%and5%TGC;and(ii)flakesupto1mmthickandseveralmillimetresinlengthinrockswithmorethanabout5%graphite.

• Metallurgical compositeswere prepared at SGS laboratory in Perth from diamond drillcore,toformrepresentativefreshandtransitionaloresamples.

• The metallurgical composites were crushed to minus 3.35 mm and demonstrate thathighestTCgradesareinthecoarsesizefractionsgreaterthanabout0.25mm.

• Cleaner flotation testwork on fresh and transitional composites using five stages ofcleaningproducedfinalgraphiteconcentratesat targetgradeTGC>94%andupto95%graphiterecovery,maintaininga favourablecoarseparticlesizedistribution (PSD)–40–70%oftheflakesare>150micron).

• Testworkonoxidecompositesusingastandardflotationprocedurehasdemonstratedhighgraphiterecovery.

• Thepreliminarytestworkprogramdemonstratedthatthemineralisation isamenabletotheproductionofhigh-gradegraphiteconcentrates,atcoarseflakesizes,usingrelativelysimpleflotationprocesses.

• Additional metallurgical testwork on each mineralisation and weathering domain isrequiredtoverifyandrefinetheinitialfindings.

2017“ChilaloNorthEast”MineralResource:• 19compositeRCchipsamplesfromthreeboreholesNRC16-181,NRC16-184andNRC16-

185wereselectedforthinsectionexaminationbyTownendMineralogy.Theobjectivewasto identify weathering zones, to assess graphite flake size and likely liberationcharacteristicsinadditiontocomparisonwiththeMaindeposit.

• ItiscautionedthatRCchipsamplesarenotexpectedtobeasrepresentativeasdiamondcoresamples,giventhattheRCchipsexcludefinepowdersgeneratedbytheRCpercussionmethod.

• Mineralssuchasjarosite,opalinesilica,claysandgoethitehavereplacedFe-sulphidesandsilicatemineralstodepthsof15–30mdownhole.ThismineralassemblageisinterpretedtodefinetheOxidisedZone.



Criteria Commentary• The occurrence of partially kaolinised sillimanite and/or feldspars (plus unoxidised Fe-

sulphides)isinterpretedtodefinetheTransitionalZonewhichextendstoabout30–60mdownhole.Thehigher-gradepartsofthedepositappeartobemoredeeplyweatheredthanlowgrade,orunmineralisedlithologies.

• There are several graphite populations in terms of flakewidth: (i) thin elongate flakesgenerallylessthanabout0.1mmwidthanduptoabout1mminlength,(ii)flakesuptoabout0.5mmthickandseveralmillimetresinlength;and(iii)verysmallflakeslessthanabout0.1mmin lengthespeciallywithin felsicporphyroblasts. It isanticipatedthat thepopulationofverysmallflakes<0.1mmlengthmaynotberecoverable;however,asthispopulationdoesnotappeartobesignificant,thisisnotexpectedtomateriallyaffectoverallmetallurgicalrecoveries.

• Graphiteflakesobservedfromthehigh-gradezoneoftheNorthEastdepositarevisuallysimilar to flakes observed from theMain deposit, in terms of shape, size and texturalrelationships.Thissuggeststhatthehigh-gradepartoftheNorthEastdepositmayhavesimilarmetallurgicalprocessresponsetotheMaindeposit.

2019“Chilalo”MineralResource:• Representativecompositesamplesfromthemetallurgylaboratory,crushedto-3.35mm

andhomogenisedthrougharotarysplitter,weremountedandpolished.Eachslidewasanalysed by petrographicmicroscopy at TownendMineralogy Laboratory, using a Leicaimageanalysisprogram.

• Image analysis suggests that there are two in situ flake populations, with a break atapproximately180–150micron.

• SeveraloftheOxideandTransitionalsamplesshowextensivesplittingofgraphiteflakeswhenincontactwithclayminerals.

• Globalcompositeandvariabilitycompositesmadeupfrom2018drillcoresamplesweresubmittedtoALSLaboratory,Perth,formetallurgicalprocesstestsduring2019.

• Themetallurgical compositesweregroupedaccording toweatheringdomains; (i)Oxideand(ii)TransitionalandFreshsampleswhichwerecombinedanddescribedasFresh.

• Two global compositesweremade from across the deposit, described as Global Oxide(threedrillholes)andGlobalFresh(ninedrillholes)fromtheWest,NorthandCentralpartofthedeposit.

• Sixvariabilitycompositesweremadefromacrossthedeposit,describedasNorthOxide(onedrillhole);NorthFresh(threedrillholes);CentralOxide(onedrillhole);CentralFresh(fourdrillholes);WestOxide(threedrillholes)andWestFresh(fivedrillholes).

• ExamplemapbelowshowinglocationofFreshvariabilitycompositedrillcollars.Theredpolygonsaretheoutlineofthe2017InferredMineralResource.Mapgridis100mx100m.



Criteria Commentary• Headgradesofthecompositesrangedbetween~8%and14%TGC.• Thevariabilitysamplesincludedindividualcoresampleintervalswithgradesbetween~4%

and ~15% TGC, which is considered representative of the ‘high grade’ portion of thedeposit.

• Sulphurvaluesintheheadsamplesweregenerallylowcomparedwithgraphitecontentsandrangedfrom0.06%to0.48%totalsulphurintheoxidecompositesto1.54%to2.26%totalsulphurinthefreshcomposites.

• Sulphidesulphurcontentinoxidesamplesislow,asmostsulphurinoxidisedmaterialisintheformofmineralssuchasjarosite.

• FlotationtestworkofthecompositeswhichwereinitiallystagegroundtoP1001.4mm,and using flash rougher flotation, screening and five stages of cleaning produced finalgraphite concentrates above target grade TGC >94% and 90–98% graphite recovery. AfavourablecoarsePSDwasmaintained,atapproximately60%>180micronflakesize.

• Metallurgytestworkiscontinuing;furtherresultsareanticipatedlaterin2019.

Environmentalfactorsorassumptions

Noassumptionsregardingwasteandprocessresiduedisposaloptionshavebeenmade.Itisassumedthatsuchdisposalwillnotpresentasignificanthurdletoexploitationofthedepositandthatanydisposalandpotentialenvironmental impactswouldbecorrectlymanagedasrequiredundertheregulatorypermittingconditions.

Bulkdensity • Insitudrybulkdensityvalueshavebeenappliedtothemodelledmineralisationbasedonthe average measured values for each of the weathering zones. Of the 1,141measurements taken thatwere considered valid for analysis, 12 are in the interpretedoverburdenzone,197fallwithintheinterpretedweatheredzone,559inthetransitionalzoneand373inthefreshzone.

• Density measurements have been taken on drill samples from all different lithologicaltypes,usingwaterdisplacementmethods.

• Weatheredmaterialwaswaxcoatedpriortoimmersion,whilethenon-porouscompetentrockdidnotrequirecoating.

• Itisassumedthatuseoftheaveragemeasureddensityforeachofthedifferentweatheringzonesisanappropriatemethodofrepresentingtheexpectedbulkdensityforthedeposit.

Classification • Classification of the MREs was carried out taking into account the level of geologicalunderstandingofthedeposit,qualityofsamples,densitydataanddrillholespacing.

• TheMRE has been classified in accordancewith the JORC Code (2012 Edition) using aqualitative approach. All factors that have been considered have been adequatelycommunicatedinSection1andSection3ofthisTable.

• Overallthemineralisationtrendsarereasonablyconsistentovernumerousdrillsections.• TheMineral Resource is classified as an IndicatedMineral Resource for those volumes

where in the Competent Person’s opinion there is adequately detailed and reliable,geological and sampling evidence, supported by geophysical electromagneticmodellingdata,whicharesufficienttoassumegeological,mineralisationandqualitycontinuity.

• The Mineral Resource is classified as an Inferred Mineral Resource where the modelvolumes are, in the Competent Person’s opinion, considered to have more limitedgeological and sampling evidence, supported by geophysical electromagneticmodellingdata,which are sufficient to imply but not verify geological,mineralisation and qualitycontinuity.

• TheMREappropriatelyreflectstheviewoftheCompetentPerson.Auditsorreviews Internal audits were completed by CSA Global which verified the technical inputs,

methodology, parameters and results of the estimate. No external audits have beenundertaken.



Criteria CommentaryDiscussionofrelativeaccuracy/confidence

• TherelativeaccuracyoftheMREisreflectedinthereportingoftheMineralResourceaspertheguidelinesoftheJORCCode(2012).

• TheMineralResourcestatementrelatestoglobalestimatesofinsitutonnesandgrade.JORC(2012)Table1Section4–EstimationandReportingofOreReserves

Criteria JORCCodeexplanation CommentaryMineralResourceestimateforconversiontoOreReserves

• DescriptionoftheMineralResourceestimate

usedasabasisfortheconversiontoanOre

Reserve.

• Clear statement as to whether the Mineral

Resources are reported additional to, or

inclusiveof,theOreReserves.

• The Mineral Resource estimate for the ChilaloGraphite Project is based on informationcompiled by Mr. Grant Louw a full-timeemployee of CSA Global Pty Ltd under thedirectionandsupervisionofDrAndrewScogings,who is anAssociateof CSAGlobal.Dr Scogingstakes overall responsibility for the report. DrScogings is a Member of both the AustralianInstitute of Geoscientists (“MAIG”) andAustralasian InstituteofMining andMetallurgy(“AusIMM”)andhassufficientexperience,whichisrelevanttothestyleofmineralizationandtypeof deposit under consideration, and to theactivity he is undertaking, to qualify as aCompetentPersonintermsofthe‘AustralasianCode for Reporting of Exploration Results,MineralResourcesandOreReserves’(JORCCode2012Edition).

• ClassificationoftheMineralResourceestimateswascarriedouttaking intoaccountthe levelofgeologicalunderstandingofthedeposit,qualityof samples, densitydata anddrill hole spacing.TheMineralResourceisclassifiedasanIndicatedMineralResourceforthosevolumeswhereintheCompetentPerson’sopinionthereisadequatelydetailed and reliable, geological and samplingevidence, supported by geophysical electro-magneticmodellingdata,whicharesufficienttoassume geological, mineralisation and qualitycontinuity.CSAGlobalobjectivelyconsiderstheMineralResourcehasreasonableprospectedforeventualeconomicextraction.

• The Mineral Resource estimate is reportedinclusiveoftheOreReserveestimate.

Sitevisits • Commentonanysitevisitsundertakenbythe

CompetentPersonandtheoutcomeofthose

visits.

• Ifnositevisitshavebeenundertakenindicatewhythisisthecase.

• TheCompetentPerson,MrKarlvanOldenofCSAGlobalPtyLtdvisitedtheChilaloGraphiteProjectinMay2015.

• Thesitevisit comprisedofan inspectionof thedeposit outcrops and drill sites. The proposedProject area including access roads, proposedprocess plant site and surrounding areas werevisitedandinspectedonfootbythecompetentperson.Drill core fromselectedboreholesandoutcropmappingwerealsoinspectedduringthesitevisit.Thesitevisitconfirmedthestatusofthe



Criteria JORCCodeexplanation CommentaryProject area and location as reported in thevarious studies that support this Ore ReserveestimatefortheChilaloGraphiteProject.

• Nomaterial changeshaveoccurredon the sitesincetheCompetentPersonvisit.

Studystatus • The type and level of study undertaken toenableMineralResourcestobeconvertedto

OreReserves.

• The Code requires that a study to at leastPrefeasibilityStudylevelhasbeenundertaken

toconvertMineralResourcestoOreReserves.

Such studieswill have been carried out and

will have determined a mine plan that is

technically achievable and economically

viable, and thatmaterialModifying Factors

havebeenconsidered.

• GraphexMiningLimitedengagedCSAGlobal toconduct a DFS study on mining and GREngineering to conduct a DFS study onprocessing facility. The study proposed anoperation processing 500ktpa of ROMthroughput for the entire Mine Life. The DFSaddressed key technical and economicparameters relating to the Chilalo GraphiteProject to an appropriate level of confidence.This Ore Reserve estimate considers theIndicated Resource only scheduling scenario oftheChilaloGraphiteProject’sMineralResourceestimate, applyingall of theModifying Factors.TheDFSfoundthattheProjectisphysicallyandeconomicallyviablewithastrongInternalRateofReturnandaPay-Backperiodofapproximately2.5years.

• Theworkundertakentodatehasaddressedallmaterial Modifying Factors required for theconversionofaMineralResourcesestimateintoanOreReserveestimateandhasshownthatthemine plan is technically feasible andeconomicallyviable.TheOreReserveshavebeenbased on parameters provided by GPX anddetermined by CSA Global, from relevanttechnical studies conducted by differentcompanies and rates acquired from differentcontractors.

Cut-offparameters

• The basis of the cut-off grade(s) or qualityparametersapplied.

• The revenue generated from a graphiteoperation is primarily driven by the flake sizedistributionoftheproduct.Theflakeproportionover a series of size categories determines thebasket price of the product. The carbon grade(TGC)isnotdirectlyrelatedtoflakesize.Mineralresourcehasaminimumcutoffof2%TGC.Thereis no further cut off applied for the IndicatedResourcecategory.Thecut-offbetweenoreandwastealsohasbeendeterminedbynetvalueperblock. Total block costs are estimated for alloperating costs to the point of sale includingprocessing, product haulage, crusher feed,general and administration, ore differential,sustainingcapital,sellingcosts,andgradecontrolcosts. The total block revenue minus the totalblockcostsestimatethenetvalueperblock.AnyIndicatedblockreturningapositivenetvaluehasbeen defined as “ore” for the purposes of pitdesignandproductionscheduling.AnymaterialthathasbeendefinedasMineralResourcethat



Criteria JORCCodeexplanation Commentaryhas a negative net value has been defined as“waste”.

• Project economics from the total Project havebeen considered at the end of the Projectiteration to confirm that the cut-off criteriasupport economic operations for the ChilaloGraphiteProject.

Miningfactorsorassumptions

• The method and assumptions used as

reported in the Pre-Feasibility or Feasibility

StudytoconverttheMineralResourcetoan

Ore Reserve (i.e. either by application of

appropriate factors by optimisation or by

preliminaryordetaileddesign).

• Thechoice,natureandappropriatenessoftheselectedminingmethod(s)andothermining

parameters including associated design

issuessuchaspre-strip,access,etc.

• The assumptions made regarding

geotechnicalparameters(egpitslopes,stope

sizes,etc),gradecontrolandpre-production

drilling.

• The major assumptions made and Mineral

Resource model used for pit and stope

optimisation(ifappropriate).

• Theminingdilutionfactorsused.

• Theminingrecoveryfactorsused.

• Anyminimumminingwidthsused.

• The manner in which Inferred Mineral

Resources are utilised inmining studies and

the sensitivity of the outcome to their

inclusion.

• The infrastructure requirements of the

selectedminingmethods.

• Inputparametersforthepitoptimizationswere;mining costs based on mining contract ratesreceived from Digmin Mining Contractors; pitgeotechnical parameters were provided byOHMS geotechnical consultants; mineralprocessing costsand recoveries fromreputablelaboratoriesandGRE,commoditypricefora95%TGC graphite product from GPX. Graphex hastaken market studies from various reputableauthorities and consultants to price the Chilaloproduct.TheseinputparameterswerereviewedbyCSAGlobalandareconsideredappropriateforthe current graphiteworldmarkets.WhittleTMsoftware applied these parameters to theResource Block Model to estimate anappropriatepit shellwhichwasusedasabasisfor the pit design. The current pit design isconsideredsuitableforOreReserveestimation.

• A traditional excavator (40t to 120t) andarticulateddumptruck(40tto50t)configurationhavebeenselectedbasedonamaximumannualminingrateof5Mtpaandisappropriateforthedesign, bench height, mining dilution andrecoveryappliedintheDFS.Theselectedminingapproach is typical forasmall tomediumscaleopenpitminingoperation.Thisdepositisgoingto bemined out asmultiple pits and cutbacks.Minimumminingwidthof30mismaintainedforthecutbackdesigns.Operationsincludedrillandblast activities for themajority of the open pitmining. Thewaste dumpwill be progressivelyrehabilitatedtoreducetheamountofPAFwasterockexposedthroughouttheoperation.

• Geotechnical analysis has been undertaken byOpen House Management Solutions (OHMS).Theproposedpitslopesareconsideredlikelytobestableforthecurrentpitdesign.

• The Mineral Resource Block Model wasestimatedbyCSAGlobal.TheMineralResourceBlockModelwas used for pit optimization andmine planning after inclusion of additionalattributes.TheBlockModelhasblocksizesof25x10x5mforthepitdesignswhichisconsideredsuitable for the proposed mining method andequipment selection. The Mineral ResourceBlock Models were used for optimisation and



Criteria JORCCodeexplanation Commentarymine planning after inclusion of additionalattributestobecomeaMiningModel.

• Afixedvalueof10%wasusedforminingdilutionin both pit optimisations and mining andproduction scheduling. A grade of 0% TGCwasassumed for dilution material. As a check,dilutionfortonnesandgradewasalsocalculatedthrough a dilution skin method and concludedtheselecteddilutionisreasonable.

• A fixed value of 95% was used for miningrecovery in both optimisations and mining &productionscheduling.

• A minimum mining width of 20m for normalbenchandaminimumcutbackwidthof30mwasusedinthepitdesign.Thepitdesignhasaduallanerampof15mandasinglelanerampof10mforthefinal30verticalmetres.

• InferredMineralResourcesisnotincludedinthepit optimisation and pit design. Ore Reservecontainsonly IndicatedResource.Aminingandproduction schedule were completed withInferredMineralResourcetreatedaswasteandconcluded that conversion of Inferred MineralResource to processed product is not requiredfor the overall financial viability of the ChilaloGraphiteProject.

• TheChilaloGraphiteProject’sDFSaddressestherequirements of all site-based infrastructure,power,water,andlogisticstoestablish,buildandoperate the Project. The planning of theserequirements in the DFS comprised of design,budget estimates from suppliers and detailedcost estimates at least to a PFS level ofconfidence as required by the JORC code. Theappropriatecostsof infrastructureand logisticsfor the establishment and support of theproposed operation are included in the costestimates for the Project. The company isplanning to construct all the infrastructurerequired to meet the selected mining methodandschedule.

Metallurgicalfactorsorassumptions

• Themetallurgical process proposed and the

appropriatenessofthatprocesstothestyleof

mineralisation.

• Whether the metallurgical process is well-

testedtechnologyornovelinnature.

• The nature, amount and representativeness

of metallurgical test work undertaken, the

nature of the metallurgical domaining

appliedand the correspondingmetallurgical

recoveryfactorsapplied.

• Any assumptions or allowances made for

deleteriouselements.

• Representative samples have been used toassess the Chilalo Graphite Projectmineralisation’samenability tobeneficiationbyfroth flotation, and also to identify the nature,flake size and occurrence of graphite in aselection of drill core samples and flotationproducts. The testwork was completed in2015,2017,2018and2019.

• The proposed metallurgical process is wellestablishedandusedsuccessfullyinindustryfortherecoveryofgraphite.

• In 2017, a bulk concentrate production pilotplant trial was conducted on two composites,



Criteria JORCCodeexplanation Commentary• Theexistenceofanybulksampleorpilotscale

test work and the degree to which such

samplesareconsideredrepresentativeofthe

orebodyasawhole.

• For minerals that are defined by a

specification,has theore reserveestimation

beenbasedontheappropriatemineralogyto

meetthespecifications?

oneweatheredtrenchcomposite(5.8t)andonefreshPitcomposite(1.2t).

• In 2019, a representative testwork programcompletedinALSLaboratorydemonstratesthatthe ore of the Chilalo Graphite Project isamenable to the production of high-gradegraphite product from oxide, transitional, andfreshoretypes.

• ALStestworkconsidered3stages,o Testworktofinalise flowsheetdesignand

providedprocessengineeringdatabasedonprogram using global fresh and oxidecomposites produced from samples fromthe latest drilling campaign based on theobjective of maximum graphite flake sizepreservationatadesigntargetgradeof95%TGCforallflakesizes.

o Testwork on a number of variabilitycompositesidentifiedwithintheorebodytoassess ore variability to establishedflowsheet.

o 30-40 t bulk trench sample bulk run tovalidatetheestablishedflowsheet,producebulkconcentrateformarketingpurposesormaterialsforanyrequiredvendortesting.

• Approximately2tofdrillcorewasdeliveredtoALSMetallurgybetweenFebruaryandMay2019.Thesesampleswereusedtoformglobalmastercomposites as well as establishing variabilitycompositesfortheDFS.TheMastercompositesweresplit intoeitherFreshandOxideorezonewithsamplescomingfromtheallthreeareasofthe resource (North, Central and West). Thesamples were selected based on consultationwith the Graphex geology consultant andincludedconsiderationofsamplerepresentivity,appropriate cut off grades, location within thelikelypitshells,mineralisationcontinuity,miningwidths, lithology.weatheringstateand internalwastedilutionandspatialspreadwithinthepits.

• Theproposedprocessingplantwillincludeatwo-stagecrushingcircuitthatwilldeliverproducttoa storage bin. Ore will be reclaimed from thestoragebinanddeliveredtoatwo-stagemillingcircuit.Theprimaryrodmillwilloperateinclosedcircuitwithascreen.Theundersizefromthemillproductscreenwillreporttoarougherflotationcellforrecoveryofcoarsefastfloatinggraphite.Theroughertailwillreporttothesecondaryballmilloperatinginclosedcircuitwithcyclones.Theundersizefromtheballmillcycloneswillreportto the scavenger cells. The rougher andscavenger concentrate will undergo variousstages of cleaning regrinding and screening.



Criteria JORCCodeexplanation CommentaryCoarse and fine graphite concentrate will befiltered and dried in separately. Dry graphiteconcentrate will be screened into variousproductsizesandbaggedforshipping.Flotationtailings will report to the tailings hopperthickener and then be pumped to the tailingstoragefacility(TSF).

• Design throughput rates for the Phase 1processingplanthavebeensetat500,000tpaofopen pit orewith production of approximately50,000tpaofgraphite.Aneffectiveutilisationof91%hasbeenusedfordesignpurposes.Inclusionofanintermediatecrushedorebinandinstalledstandbyequipmentwillenablethisutilisationtobeachieved.

• No specific price adjustments have beenmadefordeleteriouselements.

Environmental • The status of studies of potential

environmental impacts of the mining and

processing operation. Details of waste rock

characterisation and the consideration of

potential sites, status of design options

consideredand,whereapplicable,thestatus

ofapprovalsforprocessresiduestorageand

wastedumpsshouldbereported.

• Graphex Mining Limited has prepared andsubmitted to the Tanzanian government, anEnvironmental and Social Impact Assessment(ESIA)andanEnvironmentalManagementPlan(EMP)aspartoftheprocessofgrantingmininglicenses for the Project. The mining licenseapplication was submitted and obtained inFebruary2017.TheChilaloGraphiteProjecthasbeenissuedwithanEnvironmentalCertificatebytheNationalEnvironmentManagementCouncilof Tanzania. This certification is a pre-requisitefor the granting of a Mining License. TheappropriateenvironmentalconsiderationsoftheProjectareincludedintheProjectplanning.

• Aspartof thepreparationof theDFS,GraphexhassubmittedanupdatedESIAtotheTanzanianGovernmentinDecember2019.

Infrastructure • The existence of appropriate infrastructure:availability of land for plant development,

power,water,transportation(particularlyfor

bulk commodities), labour, accommodation;

ortheeasewithwhichtheinfrastructurecan

beprovidedoraccessed.

• TheChilaloGraphiteProject’sDFSaddressestherequirements of all site-based infrastructure,power,water,andlogisticstoestablish,buildandoperate the Project. The planning of theserequirements in the DFS comprised of design,budget estimates from suppliers and detailedcost estimates to a minimum of DFS level ofconfidence. The appropriate costs ofinfrastructureandlogisticsfortheestablishmentand support of the proposed operation areincludedinthecostestimatesfortheProject.

Costs • The derivation of, or assumptions made,

regardingprojectedcapitalcostsinthestudy.

• Themethodologyusedtoestimateoperating

costs.

• Allowances made for the content of

deleteriouselements.

• The capital cost estimate used in the DFS hasbeen compiled based on the design, supply,fabrication,construction,andcommissioningofanewgraphiteprocessingplantinTanzaniaandincludes mining equipment, supportinginfrastructure, and indirect costs. The estimatefor the processing facility is based on thepreliminary process design, process design



Criteria JORCCodeexplanation Commentary• Thederivationofassumptionsmadeofmetal

or commodity price(s), for the principal

mineralsandco-products.

• The source of exchange rates used in thestudy.

• Derivationoftransportationcharges.• The basis for forecasting or source of

treatmentandrefiningcharges,penaltiesfor

failuretomeetspecification,etc.

• The allowances made for royalties payable,

bothGovernmentandprivate.

criteria and equipment list, and processflowsheets. Capital estimates have been basedupon budget prices quotations for majorequipment, in-housedatafromrecentProjects,and industry standard estimating factors forequipmentandinstallationcosts.ThecapitalcostestimatespresentedintheDFSareconsideredtohaveaminimumoverallaccuracyof+/-15%.ThecapitalcostestimatehasbeendevelopedinUS$.Different independent contractors and expertswereengagedbyGraphex togenerate thecostestimate.

• The operating cost estimate used in the DFSincludes all costs associated with mining,processing, infrastructure, and site-basedgeneralandadministrationcosts.TheoperatingcostestimateshavebeendevelopedinUS$.Theoperatingcostestimatehasbeenpreparedtoanaccuracy of +/- 15%. The operating costs havebeen estimated from a variety of sources,including; budget quotations received fromsuppliers; operating cost databases;wages andsalariesprovidedbyGraphexMiningLimitedandindustry sources; estimated based on industrystandardsfromsimilaroperations;firstprincipleestimates based on typical operating data; themining operating cost estimates have beensourcedfromaminingcontractorbyCSAGlobal.

• Graphexwillofferabaserangeofcarbonpuritieswiththeabilityforadditionalprocessingtomeetcustomer-specific and market mesh sizespecificationsinthefuture.Itisnotcommerciallyfeasible or economic to have a wide range ofcarbonpurities,yetitisacceptabletohavesmalloverlaps in carbon purity specifications tooptimise inventorycontrolandaccommodateagreater range of market applications. If acustomer specifies a particular carbon purityrange (LOI), additional processing can beaccomplished by adhering to the value-addedand / or tighter specifications commandinghigherpricesfromthecustomer.High-purityfornaturalflakegraphiteisdefinedasproductwith99.0% LOI and higher. Graphex will have thecapability to producehigh-purity flake graphite(99.0% + LOI) using standard flotation andprocessingmethodswithoutaggressivechemicalintervention.

• AlloperatingcostestimateshavebeenbasedinUSD.

• Transportationchargesarebasedonthedetailedprice provided by a local contractor, AlistairLogistics. Transportation cost was assumed asUS$143pertonneofproduct.



Criteria JORCCodeexplanation Commentary• Processing rate has been provided by Graphex

basedonthestudiesconductedbytheconsultsengagedbythecompany.

• Operating costs and Capital costs have beenreviewed by CSA Global and are consideredreasonablefortheintendedapplication.

• Selling cost include Government royalties (3%)andOtherroyalties(1%).

Revenuefactors • The derivation of, or assumptions made

regarding revenue factors including head

grade,metalorcommodityprice(s)exchange

rates,transportationandtreatmentcharges,

penalties,netsmelterreturns,etc.

• Thederivationofassumptionsmadeofmetal

or commodity price(s), for the principal

metals,mineralsandco-products.

• The average Graphite price of USD$1500 pertonne of product has been used for Whittleoptimisation. Market predictions and trendanalysis has been done by Graphex’sindependent market consultant who providesdetailed pricing across multiple markets,applications, and directly from end users. Theconsultant also uses government publications;dedicated websites to global graphite miningactivities and global pricing information; USGS,andtheGlobalTradeAtlas.Graphexbelievestheprice estimates used in the DFS are the mostaccurateestimatesforsellingChilalographite.

• ForChinaprices,Graphexhasconsidered inputfrom Benchmark Mineral Intelligence, RefWin,Industrial Minerals, Graphex’s China marketconsultant and conversations with potentialcustomers.

Marketassessment

• The demand, supply and stock situation for

the particular commodity, consumption

trendsandfactorslikelytoaffectsupplyand

demandintothefuture.

• A customer and competitor analysis along

with the identification of likely market

windowsfortheproduct.

• Priceandvolumeforecastsandthebasisfor

theseforecasts.

• For industrial minerals the customer

specification, testing and acceptance

requirementspriortoasupplycontract.

• Thereisapositivecorrelationbetweengraphitepurityandprice.Higherpuritygraphiteproductdemandsahigherpricebecauseitrequiresmoreprocessing on the producer side to removeimpurities/volatiles within the graphite andopens the product to more applications. Ingeneral, larger flake sizes demand a premiumprice due to producing premium products(expandable graphite applications) and tightersupply conditions. Larger flake material offersgreaterstrengthtoproductsduetothestructureof theparticles. This is aprimary reason for itsmarketuse.Thescarcityofgraphitewithaflakesize exceeding +80 mesh means there is anescalationinprocessabovethissize.

• Graphitedoesnot tradeonadesignatedmetalexchange,nordoes ithaveabenchmark index.Prices are negotiated directly between buyersand sellers. Given the graphite industry hashistorically been dominated by privatecompanies, access to reliable graphite pricingdata is difficult to obtain. There are alsonumerous products across a number of gradesand flake sizes and prices differ depending onthesecharacteristics.



Criteria JORCCodeexplanation Commentary• Flake graphite price forecasts for the next five

yearsdemonstrate the increase inpricesbasedon the market assessment by Graphex and itsmarket consultant, especially for coarse flakefractions where Graphex see the strongestgrowth.

• Graphex has a distinct signature in the Chilaloresource, possessing specific metallurgical andchemical attributes ideally suited for foils, fire-retardants,engineeredproducts,lubricants,andthermal drilling fluids. TheChilalo resourcehasproven it can be processed, using standardflotation,toachieve95%to>99%LOIaswellasachieving higher than average coarse flakefractions. These attributes are expected toproduceahigh-valueproduct suitable forhigh-techandhigherpricedapplications.

• Graphex has selected targetmarkets for initialfocus after understanding the competitiveadvantagesofChilalographiteandundertakingmarket research on supply/demand,qualification timeframes and growthexpectations of various markets. The initialtarget markets are as follows: ThermalManagement Market Group, EngineeredProductsMarket Group and LubricantsMarketGroup. Graphex plans to sell into otherapplications for its products to diversify itsrevenue streams. These include value-addedproductsinmicronisedgraphiteandexpandablegraphite.

Economic • The inputs to the economic analysis to

produce the net present value (NPV) in the

study, the source and confidence of these

economic inputs including estimated

inflation,discountrate,etc.

• NPVrangesandsensitivitytovariationsinthesignificantassumptionsandinputs.

• The economic analysis is based on cash flowsdrivenbytheproductionschedule.Thecashflowprojectionsincludeinitialandsustainingcapital;mining,processingandproductlogisticscoststothecustomer;revenuebasedonanappropriatesalepriceadjustedforfees,charges,androyalty;anda10%discountfactor.

• Sensitivityanalysiswasundertakenfora+/-20%variation on the key Project financial metricsincluding: average sale price; operating costs;capitalcosts;metallurgicalrecoveryanddiscountrate. In all sensitivity cases, the NPV of theprojectwaspositive.

Social • The status of agreements with key

stakeholders and matters leading to social

licencetooperate.

• Local, regional and national stakeholders havebeenengagedinthedevelopmentandplanningoftheProject.

• The previously approved relocation action plan(RAP) has been updated, agreed with localcommunitiesandapprovedbytheGovernmentValuer to address the relocation andcompensation of community members whowouldbeaffectedbyminingoperations.



Criteria JORCCodeexplanation Commentary• Appropriate permitting for issues such as

dewatering are being addressed through theappropriateprocesses.

Other • To the extent relevant, the impact of the

following on the project and/or on the

estimation and classification of the Ore

Reserves:

• Any identified material naturally occurring

risks.

• Thestatusofmaterial legalagreementsand

marketingarrangements.

• Thestatusofgovernmentalagreementsand

approvals critical to the viability of the

project,suchasmineraltenementstatus,and

government and statutory approvals. There

mustbereasonablegroundstoexpectthatall

necessary Government approvals will be

receivedwithinthetimeframesanticipatedin

the Pre-Feasibility or Feasibility study.

Highlight and discuss themateriality of any

unresolved matter that is dependent on a

thirdpartyonwhichextractionofthereserve

iscontingent.

• GraphexMiningLimitedisconductingadvanceddiscussionswithpotentialbuyersofthegraphiteproduct regarding offtake agreements andpotentialinvestmentinthecompany.

• According to Graphex, there are no apparentimpediments to obtaining all governmentapprovalsrequiredfortheChilaloProject.

• TheOreReservesstatedarelocatedonapprovedminingleases.

Classification • The basis for the classification of the OreReservesintovaryingconfidencecategories.

• Whethertheresultappropriatelyreflectsthe

CompetentPerson’sviewofthedeposit.

• TheproportionofProbableOreReservesthathave been derived from Measured Mineral

Resources(ifany).

• TheMineralResourcehasbeenmodifiedbytheapplication of suitable modifying factors andhavebeen classified as Probable, basedon theIndicatedclassificationof theMineralResourceestimate.Thelevelofworkundertakenthroughpit optimisation studies and pit designing isconsidered sufficient for the classification ofProbable Ore Reserves. The Ore Reserveestimate considers only Indicated MineralResourcesanddoesnotincludeanyquantityofInferred or unclassifiedmaterial. Thus, theOreReserveestimatecomprisesofonlyProbableOreReserves.

• Mr Karl Van Olden, the Competent Person forthis Ore Reserve estimation, has reviewed theworkundertakentodateandconsidersthatitissufficientlydetailedandrelevanttoeachofthedeposits to allow those Ore Reserves derivedfrom the Indicated Mineral Resources to beclassifiedasProbable.

• NoMeasuredmaterialhasbeenestimatedintheMineral Resource for the Chilalo GraphiteProject.

Auditsorreviews • The results of any audits or reviews of OreReserveestimates.

• The Mineral Reserve estimate, mine design,scheduling, and mining cost model has beensubjecttointernalpeerreviewprocessesbyCSAGlobal.Nomaterialflawshavebeenidentified.

• Noexternalaudithasbeenconducted.Discussionofrelative

• Where appropriate a statement of the

relativeaccuracyandconfidence level inthe

• Akeyparameteroftheestimateisthevalueoftheaveragesalepricereceivedfortheproduct.



Criteria JORCCodeexplanation Commentaryaccuracy/confidence

Ore Reserve estimate using an approach or

procedure deemed appropriate by the

Competent Person. For example, the

application of statistical or geostatistical

procedures toquantify the relativeaccuracy

ofthereservewithinstatedconfidencelimits,

or, if such an approach is not deemed

appropriate, a qualitative discussion of the

factors which could affect the relative

accuracyandconfidenceoftheestimate.

• The statement should specify whether it

relates to global or local estimates, and, if

local, state the relevant tonnages, which

shouldberelevanttotechnicalandeconomic

evaluation. Documentation should include

assumptionsmadeandtheproceduresused.

• Accuracy and confidence discussions shouldextend to specificdiscussionsofanyapplied

ModifyingFactorsthatmayhaveamaterial

impactonOreReserveviability,orforwhich

there are remaining areas of uncertainty at

thecurrentstudystage.

• Itisrecognisedthatthismaynotbepossible

or appropriate in all circumstances. These

statements of relative accuracy and

confidence of the estimate should be

compared with production data, where

available.

Thisisbasedonreliablemetallurgicaltestworktodetermine proportions of each flake sizecategory in the product. The estimated pricereceivedforthecombinedproductisbasedonacredibleestimateoftheexpectedpriceasoftheProjectbasedata.Aswithall commodities, theactual price received will depend on marketconditionsandcontractualarrangementsatthetimeofsale.Asensitivityanalysiswascompletedin the financial model for average pricereductionsof29%andtheProjectvalueremainspositiveatthispoint.

• The Competent Person considers that themethodologyappliedtoarriveattheOreReserveestimate for Graphex’s Chilalo Deposit isappropriate.

• TheestimateisbasedonadetailedblockmodeloftheResourceandadetailedminedesign.TheOre Reserve estimate is based on spatiallysupportedandexplicitminingschedule.

• Theoverallaccuracyofthecostestimateusedinthe estimation of these Ore Reserves isconsideredtobewithin+/-15%.Mostofthecostestimates have been derived from contractors,marketresearchandindependentstudies,sotheglobalaccuracyisconsideredverysolid.

• Confidence in the application of themodifyingfactorsisappropriatefortheestimate.

• Ore will not be blended from other depositsbeforetreatmentintheprocessingplant.

DEFINITIVE FEASIBILITY STUDY CONFIRMS CHILALO AS A ...

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