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Canada's Magazine for Financing & Leasing Executives

January 8, 2015

Focus Graphite, Caterpillar consider financing arrangements

Ottawa, ON-- Focus Graphite Inc. has announced that Caterpillar Financial Services Corporation has expressed its formal interest to further evaluate the company's Lac Knife Project in order to provide Focus with a financing solution for the Lac Knife development.

Cat Financial provides innovative financial solutions for clients across the globe including integrated project and structured financing solutions.

"Cat Financial's Letter of Interest represents an important milestone as we develop the Lac Knife project financing structure," says Don Baxter, Focus Graphite president and COO. "Both parties are discussing mine equipment leasing plus project financing options with a view to achieving a mutually satisfactory conclusion.

"This financing package could potentially represent twelve percent of the total project financing requirements and reduce operating costs as we move to owner-mining instead of contractor-mining as outlined in our feasibility study."

Mr. Baxter adds "Cat Financial's interest in Focus's advanced position in the Canadian graphite mining sector underscores the significant progress the Focus team has made in developing our Lac Knife high purity graphite mining project."

While there is not yet a formal commitment in place with Cat Financial, financing discussions are continuing with a number of investors and institutional funds, in both the public and private sector with an objective to minimize shareholder dilution through a mix of debt and equity financing. The provincial government of Quebec also provides some financing alternatives that are not available in other jurisdictions, Mr. Baxter said.

On August 8, 2014 Focus Graphite published its ‘Lac Knife Project Feasibility Study’ that included a mine and concentrator operation with a capital expenditure requirement of $165.6 million including a $17.1 million contingency.

Cat Financial holds the capabilities of arranging and syndicating various possible financial scenarios for the mining sector. The current expression of interest between Focus and Cat Financial is non-binding in nature with terms and conditions yet to be negotiated. Signing of a definitive agreement for project financing arrangements remains subject to credit approval and due diligence by Cat Financial, which would include, but is not limited to Focus Board of Director's approval, as well as compliance with all applicable legal and regulatory requirements and approvals.



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