🕐08.05.12 - 00:27 Uhr

THE ADVANCED CLASS: STANDARD GRAPHITE ACQUIRES ADVANCEDFLAGSHIP QUEBEC GRAPHITE PROJECT



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The Advanced Class: Standard Graphite Acquires AdvancedFlagship Quebec Graphite Project

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By acquiring the advanced Mousseau East graphite deposit 50 km near a graphite mine, Standard Graphite nears development phase.

In one fell swoop; through acquiring the Mousseau East graphite deposit in Southwestern Quebec, Standard Graphite (TSXV: SGH) has obtained a development asset that moves the company from exploration into the development stage. Located 50 km from TIMCAL Canadas producing Lac-des-Ilesgraphite mine, Mousseau East is at an advanced stage that if further metallurgical work proves fruitful can potentially bring about a swift route to production.

With a historically significant (but non NI-43-101 compliant) in place, the company isnt wasting time before getting to work on the newly acquired flagship. Beginning with analysis of the historic data, Standard Graphites team has its work cut out for them prior to further exploration on the property. Plans are already in place to expand the resource beyond what was already discovered in the past.

Bringing integral graphite expertise, Standard Graphites team appears poised to capitalize on its total of 15 highly prospective graphite properties in both Quebec and Ontario. Setting themselves apart from their junior peers is the fact that they bring both a graphite exploration geologistand a graphite executive with sales, marketing and operations experience to the table, as they take the next step in their companys story.

MOUSSEAU EAST - QUEBEC

Initially discovered in 1983, the Mousseau East Deposit has been outlined by 62 diamond drill holes totaling nearly 5,000 metres. The previous work resulted in a historical resource, calculated by Graphicor Resources, which totaled Proven: 598,480 tonnes, at a grade of 8.29% Cg (carbon in graphite), Probable: 219,450 tonnes at 8.13% Cg, and Possible: 288,760 tonnes averaging 7.85% Cg.

High on the agenda for Standard Graphite will be to complete the necessary work to bring the historic resource estimate up-to-date and into proper NI-43-101 compliance. As well, there is plenty of room for expansion, since the original resource evaluation only calculated to a depth of 40 m, thus allowing opportunity to expand the resource to depth as well as along strike. The company has already reported that it plans to spend in excess of $5 million in 2012 to evaluate and advance its current project portfolio.

What wont appear in the numbers when the re-evaluation takes place are the intangibles that come along with the property, namely the location and infrastructure. The region is known to host some of the most favourable geological terrain for graphite exploration in Canada, along with quality graphite resources. The property is easily accessible and situated next to a highway, within 12 km of Highway 117, and within a 3-hour drive of Montreal.

But possibly most important is the propertys close 50-km proximity to the Lac-des-Ilesgraphite mine, owned and operated by TIMCAL Canada. Established in 1989, the mine remains in production, and is the largest of only two flake graphite producers in North America. Graphite ore produced from Lac-des-Ilesis mined and refined into high quality graphite products of various sizes and purities. The deposit has a grade of 7.5% Cg, and contains close to 25 million tonnes, including 5.2 million tonnes to be mined by open pit.

Standard Graphite will be looking to verify the resource on the Mousseau East deposit and determine the quality of the graphite within. Should the numbers correlate with expectations, express development of the project could soon follow.

GRAPHITE-BASED MANAGEMENT

Of the team thats been assembled, two particular members stand out based on their exposure to the graphite sector. First is Chief Geologist Antoine Fournier and his 20 years of experience, which includes a role in discovering the high-grade, large-flake graphite Lac Knife Deposit held by Focus Metals (TSXV: FMS). Next is Senior VP Business Development, Benoit Gascon, who previously served as President of Stratmin Graphite, which was a previous owner of the Lac-des-Iles mine.

With both Fournier and Gascon, Standard Graphite stands out as the only junior graphite exploration company with both a graphite exploration geologist and an executive familiar with all of the marketing and operations know-how required for this distinct sector. The team is equipped to not only find, identify and evaluate the project, but also can take it into production.

While Fourniers importance as a finder is self-evident, its Gascons experience that provides the special touch that graphite marketing requires. While at the helm, Gascon oversaw the negotiation of Stratmins takeover that led to the formation of TIMCAL, where he remained in senior roles.

Theres more to the story of graphite than just finding it. Unlike gold, theres not a general market to sell into, as buyers need to be secured, and relationships fostered. Global consumption of graphite is becoming more evident with growth from 600,000 tonnes in 2000 to approximately 1.2 million tonnes in 2011. But what isnt always looked at with graphite plays is a companys ability to swing a healthy deal to sell the graphite that they produce. Gascon brings to Standard Graphite a history of dealing with this exact type of relationship, and should be able to help foster future relationships when the time is right.

What is at stake is the proper handling of the higher quality flake graphite that the company is expected to develop. Mosseau East is located within familiar territory of this team, and is considered near enough to the Lac-des-Iles graphite mine to warrant a similar strategy and approach.

THE BOTTOM LINE

Bringing the Mousseau East deposit into the companys portfolio is a game changer. While the other projects bring merit and deserve their own recognition, Mousseu East is just that much closer to fruition for Standard Graphite to move into a different stage of its story.

The market seems to be taking notice, as of May 2, 2012, the company saw a surge in its share price of $0.07, bringing it to a close of $0.55. Tightly held, with only 24.1 million shares outstanding, this bump saw the market cap rise from approximately $11 million to $13.28 million.

Keep in mind the ongoing development of two of the companys other major projects, both located in Ontario, on which groundwork is already underway: the 2,800-hectare Little Bryan property, in proximity to Northern Graphites (TSXV: NGC) Bisset Creek large-flake graphite project and Ontario Graphites Kearney mine; and the 9,000-hectare Black Donald property that surrounds a former mine that produced amorphous and flake graphite for almost 60 years at grades between 25%-30% carbon, making it one of the highest-grade producing projects in the world.

Going forward, the conversation on Standard Graphite will certainly start be dominated by talk about Mousseau East, and what it brings to the table. Theres still plenty of room to potentially expand the resource along strike and to depth, as it comes closer to NI-43-101 compliance. This very well could be the team that can pull it off.

G. Joel Chury
for the Bottom Line Report

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