Mr. Aubrey Eveleigh reports

ZENYATTA ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT FOR ALBANY GRAPHITE PROJECT

Zenyatta Ventures Ltd. has released the results of a positive preliminary economic assessment on its Albany hydrothermal graphite project located in Northern Ontario, Canada (all amounts are in U.S. dollars). The PEA was prepared by the independent engineering firm RPA Inc. in Toronto with mill design input from SGS Canada Inc. The RPA report concluded that the PEA is positive and the project should be advanced to the prefeasibility stage. An animated video of the proposed mining project can be found on the Zenyatta website.

PEA highlights:

• Open-pit life of mine of 22 years based on less than 50 per cent of the indicated and inferred mineral resources. Underground mining of inferred resources below the sill is not included in this study. The deposit is open at depth;
• 3,000-tonne-per-day open-pit mine and process plant to produce 30,000 tonnes of high-purity (greater than 99.9 per cent graphite) Cg annually;
• Price of purified graphite at $7,500 per tonne and operating costs of $2,046 per tonne showing a margin of $5,454 per tonne;
• Total LOM gross revenue of approximately $4.8-billion and an aftertax cash average annual cash flow of $110-million;
• A base-case aftertax net present value at a 10-per-cent discount rate of $438-million, yielding an aftertax internal rate of return of 24 per cent.

RPA proposes a 22-year, open-pit mine with a processing plant located on-site which generates a strong annual cash flow and high rate of return. The PEA indicates that the Albany graphite project has excellent potential to be a low-cost source of high-purity graphite without the use of dangerous and environmentally harmful hydrofluoric acid (as in China) or costly thermal upgrading (as in synthetic graphite derived from petroleum coke). Recent work performed by SGS, on behalf of Zenyatta, successfully completed and tested an innovative and relatively benign purification process for the production of consistent and highly crystalline graphite exceeding 99.9-per-cent purity from the Albany deposit. Feedback from the cleantech sector suggests that environmental considerations are critical when sourcing raw materials for today's high-tech applications like energy storage. Supply chain transparency is easier to track and is expected in an ever-demanding green world.

The PEA is based on mineral resources that are not mineral reserves and have not demonstrated economic viability. Thus, there is no certainty that the results of this PEA will be realized.

                                 OPERATING 

Purified graphite (greater than 99.9% Cg) price per tonne             $7,500
Purified graphite operating cost per tonne                            $2,046
Total operating cost per tonne processed ore                             $62
Tonnes ore mined per day (grade at 4.05% Cg)                           2,736
Tonnes purified graphite product per year (350 days)                  30,000
Tonnes ore processed (mill feed -- LOM)                           20,927,000
Tonnes purified graphite product (LOM)                               633,636
Tonnes contained graphite in mineral resource 
(indicated and inferred)                                 977,000 and 441,000

It is common practice in the mining industry to assess the economic viability of a mineral project at various development stages. Generally, a mining company will first conduct a PEA, then a prefeasibility study followed by a feasibility study. Each stage will analyze, in further detail and to a greater level of certainty, the economic, technical and geological factors that will determine whether the mining project is commercially viable. The goal of a PEA is to determine, at an early stage, whether a mining project is potentially viable, in order to advance to a prefeasibility phase.

                                 LOM CASH FLOW 

Total gross revenue                                           $4,752,271,000
Net revenue                                                   $4,700,312,000
EBITDA                                                        $3,344,895,000
Pretax cash flow                                              $2,641,987,000
Aftertax cash flow                                            $1,999,891,000

Aubrey Eveleigh, president and chief executive officer at Zenyatta, commented: "The company is exceptionally pleased with the strong PEA results presented by RPA and will now proceed to a prefeasibility stage, where further project definition and optimization is expected. This is a very important milestone for Zenyatta that started with the discovery of a rare graphite deposit in 2011 and has now gained global recognition for its unique purity and crystallinity. Zenyatta's early-stage study has resulted in extremely encouraging economics that will support discussions with potential strategic partners and financiers."

                                      CAPITAL COST

Total direct capital cost mining, processing and infrastructure             $262,908,000
EPCM/owners/indirect engineering, procurement and construction management    $68,732,000
Contingency (24%)                                                            $79,826,000
Total initial capital cost                                                  $411,465,000

Zenyatta's 100-per-cent-owned Albany graphite deposit is located in Northern Ontario, Canada, near good infrastructure. The deposit is located 30 kilometres north of the Trans-Canada Highway (TCH), with access to the power line and natural gas pipeline near the communities of Constance Lake First Nation and Hearst. A rail line is located 70 km away, with an all-weather (all season) logging road approximately 20 km from the graphite deposit.

The PEA proposes building an access road, power line and gas line to the property from near the TCH. Planned infrastructure and facilities at the project site include the open-pit mine, processing plant, tailings management facility, handling facilities, crushers and secondary buildings, including offices and workshops.

                               PROJECT ECONOMICS 

Pretax payback period                                             3.7 years
Pretax internal rate of return                                          27%
Pretax net present value (0% discount)                       $2,641,987,000
Pretax net present value (8% discount)                         $814,717,000
Pretax net present value (10% discount)                        $614,676,000
Pretax net present value (12% discount)                        $462,942,000
Aftertax payback period                                           4.0 years
Aftertax internal rate of return                                        24%
Aftertax net present value (0% discount)                     $1,999,891,000
Aftertax net present value (8% discount)                       $593,115,000
Aftertax net present value (10% discount)                      $438,434,000
Aftertax net present value (12% discount)                      $320,967,000

The pricing model for the PEA was derived from an extensive detailed study of targeted market segments and industry trends that are relevant for the high-quality and high-purity graphite sector. A summary of approximate price ranges for these market segments of the graphite industry are shown in the table. Estimated annual production of 30,000 tonnes of high-quality graphite product from the Albany deposit represents about 7 per cent of the 2017 market demand estimate.

                             HIGH-PURITY GRAPHITE MARKET

                    2017 market                                       Average
                demand estimate                      Price range        price
Market segment              (kt)                      (US$/tonne)  (US$/tonne)

Batteries                   160     4,000 to greater than 20,000       12,000
Powder metallurgy            20     3,000 to greater than 12,000        7,000
Fuel cells                   15     5,000 to greater than 10,000        8,000
Conductive
polymers                      6      3,000 to greater than 5,000        4,000
Carbon brushes               90      3,000 to greater than 5,000        4,000
Nuclear                      30    10,000 to greater than 35,000       23,000
Lubricants                   80      3,000 to greater than 5,000        4,000
Supercapacitors               2     5,000 to greater than 10,000        8,000
Graphite artifacts           15     3,000 to greater than 10,000        7,000
Electronics                   8    30,000 to greater than 40,000       35,000
Total                       426

Zenyatta has previously reported that preliminary testing has indicated that the performance of Albany graphite is within the range of anode materials that are presently used for lithium-ion batteries (LIB). Independent testing has also indicated that it is suitable for use in hydrogen fuel cells and in powder metallurgy (PM) applications. At this time Zenyatta anticipates having a targeted market application segmentation which includes 25 to 30 per cent in LIB, 20 to 25 per cent for fuel cell products, 25 to 30 per cent for high-purity graphite in PM and 15 to 30 per cent from other applications in the list above. The company is in discussion with end-users on other types of high-purity applications that could possibly change the market segmentation and will disclose these potential markets at the appropriate time.

The outlook for the global graphite market is very promising with demand growing rapidly from new applications. Graphite is now considered one of the more strategic elements by many leading industrial nations, particularly for its growing importance in high technology manufacturing and in the emerging green industries such as components of energy storage devices for electric vehicles, computers and smart phones. The applications for graphitic material are constantly evolving due to its unique chemical, electrical and thermal properties. It maintains its stability and strength under temperatures in excess of 3,000 C and is very resistant to chemical corrosion. It is also one of the lightest of all reinforcing elements and has high natural lubricating abilities. Some of these key physical and chemical properties make it critical to modern industry.

This news release describes a PEA cash flow model based upon geological, engineering, technical and cost inputs developed by RPA. A National Instrument 43-101 PEA technical report will be filed on SEDAR and made available on the company's website within 45 days. Jason Cox, PEng, executive vice-president, mine engineering, principal mining engineer of RPA, Alex Mezei, MSc, PEng, director, engineering technical services, at SGS Lakefield, independent consultants to Zenyatta, Peter Wood, PEng, PGeo, VP, exploration, and Dr. Bharat Chahar, PE, VP, market development, for Zenyatta, are the qualified persons under National Instrument 43-101. Jason Cox, Alex Mezei, Peter Wood and Bharat Chahar have supervised, approved and read the scientific and technical information that forms the basis for the disclosure contained in this news release.

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