Mr. Donald Baxter reports

ALABAMA GRAPHITE CORP. ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT FOR COOSA GRAPHITE PROJECT IN COOSA COUNTY, ALABAMA, USA; FILES COMPLETED PEA NI 43-101 TECHNICAL REPORT

Alabama Graphite Corp. has released the results of a positive preliminary economic assessment for its 100-per-cent-owned flagship Coosa graphite project, located in east-central Alabama, United States (all amounts are in U.S. dollars). The PEA technical report was prepared pursuant to National Instrument 43-101 by the independent engineering firm AGP Mining Consultants Inc. of Barrie, Ont., in conjunction with Metal Mining Consultants Inc. of Highlands Ranch, Colo., co-authors of the PEA and authors of the Coosa graphite project's updated mineral resource estimate technical report, and demonstrates that the Coosa graphite project has strong economics and excellent potential to become a near-term producer of high-value, ultrahigh-purity specialty graphite products for the burgeoning American green energy markets. The technical report concluded that the PEA is positive and recommends the Coosa graphite project be advanced to the feasibility stage of development.

Additionally, AGC announces it has filed the accompanying NI 43-101 technical report dated Nov. 27, 2015, entitled, "Alabama Graphite Corp. Preliminary Economic Assessment (PEA) on the Coosa Graphite Project, Alabama, USA," under the company's SEDAR profile and on its website.

PEA addresses both primary and secondary-processed, specialty graphite products

AGC's PEA diverges from others in the flake graphite development space in that it addresses both primary and secondary processing to produce specialty, ultrahigh-purity graphite products, as opposed to sole primary processing to make traditional graphite concentrate. AGC does not intend to sell any graphite concentrate. This is a significant point of differentiation between AGC and other flake graphite development companies. Recent known flake graphite development companies' PEAs and feasibility studies have been based solely on primary processed, run-of-mine (ROM) graphite concentrates of various purities and flakes sizes. AGC intends to divert 100 per cent of primary processed graphite to secondary processing to produce specialty graphite, specifically, coated spherical graphite (CSPG) for use in lithium-ion batteries and purified micronized flake graphite (PMG) for use in polymer, plastic and rubber composites, powder metallurgy, energy materials, and friction materials, among other applications. As a result, the company's PEA incorporates mining and primary ROM processing capital and operating expenditures, as well as secondary processing, specialty graphite capital and operating expenditures.

Highlights of the Coosa graphite project's PEA are summarized below:

• The PEA confirms Coosa as a project with low capital intensity and attractive potential returns;
• The PEA is based on Coosa producing two finished (final) specialty, secondary-processed graphite products -- a coated spherical graphite product and a purified micronized flake graphite product. The PEA is not modelled on producing a final run-of-mine graphite concentrate product typical of other conventional flake graphite projects;
• Initial capital expenditure of $43.2-million, with a payback period of 1.9 years (pretax) and two years (posttax) from commencement of commercial production;
• Base-case pretax net present value of $444 million, posttax NPV of $320-million (8-per-cent discount); pretax NPV of $329-million, posttax NPV of $236-million (10-per-cent discount);
• Pretax internal rate of return of 52.2 per cent, posttax IRR of 45.7 per cent;
• Base-case pretax annual cash flow of $67.5-million, posttax annual cash flow of $49.7-million;
• Life-of-mine gross revenue (less royalty) of $2.4-billion;
• Life-of-mine operating expenses of $533-million;
• Life-of-mine plan of 27 years based on mining approximately 10 per cent of mineral resource estimate; mining is occurring within the oxide zone (the PEA is based on milling 15.2 million tons -- 12.6 million tons at 2.85 per cent Cg of the indicated resource and 2.6 million tons at 2.95 per cent Cg of inferred resource -- of the Coosa graphite project's 78.5-million-ton indicated and 79.4-million-ton inferred mineral resource estimate);
• Surface mining operation, low waste-to-ore stripping ratio of 0.11 to 1;
• Primary and secondary processing plants to produce 5,500 tons (5,000 tonnes) of specialty high-purity graphite products annually, ramping up to 16,500 tons (15,000 tonnes) annually in year seven, subsequent capital expenditures to be financed through free cash flow;
• PEA is based on selling two specialty, high-value high-purity graphite products -- CSPG (75 per cent of planned production) and PMG (25 per cent of planned production);
• Selling price for CSPG at $8,165 per ton ($9,000 per tonne) and PMG at $1,814 per ton ($2,000 per tonne) for a blended selling price of $6,577 per ton ($7,250 per tonne);
• Life-of-mine average cash operating costs of $1,410 per ton ($1,555 per tonne) for final product of CSPG and PMG.

AGC co-chief executive officer and executive director Donald Baxter commented: "Today marks the most significant milestone in AGC's history. The PEA signals a new era and a new strategic direction for the company and its shareholders as AGC advances the Coosa graphite project. We are very pleased with the excellent results of the PEA, which indicate a low-cost project with excellent potential economics. Our senior management and technical team have more than a century of combined graphite mining, graphite processing, graphite purification, specialty graphite products and applications, and graphite marketing and sales experience -- and with our partners at AGP Mining Consultants and Metal Mining Consultants -- we have delivered a technically sound, realistic and potentially highly profitable project.

"The PEA demonstrates that the Coosa graphite project holds the potential to become a reliable, long-term U.S. supplier of specialty high-purity graphite products. Further, the products AGC is planning to produce are targeted to address what clean-tech and green-energy customers actually want and need, products that are in high demand and command the highest prices in the flake graphite space, with historically inelastic pricing. Our mine-to-green-energy-markets business strategy is simple -- we intend to supply American graphite for the growing American green energy industry. We look forward to commencing with the feasibility study and bringing this exceptional American asset into production."

Project overview

The Coosa graphite project is located in the western part of Coosa county, east-central Alabama, United States. The Coosa graphite project's mineral tenure comprises mineral rights leased by AGC totalling 41,964 acres (16,982 hectares) or 65.6 square miles. The property is located 50 miles south-southeast of Birmingham, Ala., in a geopolitically stable, mining-friendly jurisdiction with significant historical production of crystalline flake graphite in the flake graphite belt of central Alabama, also known as the Alabama graphite belt (source: U.S. Bureau of Mines).

 COOSA GRAPHITE PROJECT MINERAL RESOURCE ESTIMATE @ 1.0% CG CUT-OFF

Resource category             Tons          Cg          Contained Cg
                                            (%)                (Tons)
                                         
Indicated               78,488,000        2.39             1,876,000
Inferred                79,433,000        2.56             2,034,000

Inferred mineral resources represent material that is considered too 
speculative to be included in economic evaluations. Additional 
trenching and/or drilling will be required to convert inferred 
mineral resources to measured or indicated mineral resources. 
Mineral resources that are not mineral reserves do not have 
demonstrated economic viability. There is no guarantee that all or 
any part of the mineral resource will be converted into a mineral 
reserve.

A significant portion of the Coosa graphite project is characterized by graphite-bearing material that is oxidized and has been weathered into extremely soft rock. The Coosa property has infrastructure in place, is within close proximity to major highways, rail, power and water, and is approximately three hours (by truck or train) to the port of Mobile, the Alabama Port Authority's deep-seawater port and the ninth-largest port by tonnage in the United States (source: U.S. Army Corps of Engineers/USACE). The state of Alabama's hospitable climate allows for year-round mining operations and the world's largest marble quarry (which operates 24 hours a day, 365 days a year in Sylacauga, Ala.), which is located within a 30-minute drive of the Coosa graphite project.

AGC's strategy is to exclusively target the oxide portion of the Coosa graphite project's mineral resource and subsequently to divert 100 per cent of primary graphite production to secondary-processed, specialty high-purity graphite utilizing the company's proprietary low-temperature purification process. This was highlighted in AGC's Sept. 29, 2015, news release announcing the company's preliminary graphite purification trials. Those trials achieved 99.99-per-cent Cg purity -- across all flake sizes from Coosa graphite project graphite concentrate -- at one of North America's premier independent metallurgical laboratories.

The PEA proposes a 27-year, open-pit mine with a mill and primary processing plant located on-site at the Coosa graphite project. A purification plant for secondary processing to produce specialty graphite products is to be located in the vicinity of Rockford, Ala. (19 miles from the Coosa graphite project mine site with access via county roads 29 and 22). Access to natural gas in this location is key for AGC's purification plant furnaces. The company intends to locate primary and secondary processing plants within close proximity of each other in order to generate a potentially strong annual cash flow and a high rate of return.

The PEA indicates that the Coosa graphite project has excellent potential to become a low-cost U.S. source of ultrahigh-purity specialty graphite products -- without the use of dangerous and environmentally harmful hydrofluoric acid (as is commonly used in Chinese graphite production) or costly high-temperature thermal upgrading and purification. The principal high-value specialty graphite product AGC intends to produce -- CSPG for Li ion batteries -- has significant enduring future demand; however, consumers are increasingly holding manufacturers accountable for where they source their critical input materials and, as importantly, how said input materials are produced. Environmental considerations are now more critical than ever when sourcing critical input materials for green-energy-based applications, such as Li ion batteries.

Financial and operational highlights

It is important for readers to understand that the Coosa graphite project's PEA is not based on producing a final ROM graphite concentrate product, nor has the PEA been modelled on the Coosa graphite project being developed as a conventional flake graphite project. Instead, the PEA is based on Coosa producing two finished (final) secondary-processed, specialty graphite products -- a coated spherical graphite product and a purified micronized flake graphite product.

For the first five years of operation, production is scheduled to be 5,500 tons (5,000 tonnes) of finished specialty graphite products, expanding capacity to 16,500 tons (15,000 tonnes) of finished specialty graphite products by year seven. The capital costs associated with increasing production capacity (11,000 tons or 10,000 tonnes) are planned to be paid for via the company's free cash flow.

Capital costs

Initial capital expenditures for mining operation, and both primary and secondary processing plants for the first five years of production are estimated to be $43.2-million. Subsequent capital expenditures for production expansion -- commencing in year five onward -- are estimated to be $84.4-million, representing a grand total of $127.6-million in capital expenditures for the 27-year LOM, and would be financed through free cash flow.

               INITIAL CAPITAL DISPOSITION

Capital category                              Years 1-5

Surface mining operations                         $ 1.1
Milling and flotation                             $11.7
Purification plant                                $11.9
Infrastructure                                    $ 2.4
Environmental                                     $ 0.0
Indirects                                         $10.0
Contingency                                       $ 6.1
Total                                             $43.2

                               PROJECT ECONOMICS

Category                                      Unit      Pretax     Posttax

CSPG (15 microns) greater than 99.95%      
carbon                                     $/tonne     $ 9,000     $ 9,000
PMG (5 micron greater than 80%) greater    
than 98% carbon                            $/tonne     $ 2,000     $ 2,000
CSPG annual production                      tonnes       9,500       9,500
PMG annual production                       tonnes       3,200       3,200
NPV (0%)                                        $M     $ 1,779     $ 1,299
NPV (8%)                                        $M       $ 444       $ 320
NPV (10%)                                       $M       $ 329       $ 236
NPV (12%)                                       $M       $ 247       $ 176
IRR                                              %        52.2%       45.7%
Payback period                               Years         1.9         2.0
Net revenue (less royalty)                      $M   $ 2,439.5   $ 2,439.5
Total operating cost                            $M     $ 532.8     $ 532.8
Total capital cost                              $M     $ 127.6     $ 127.6
Pretax cash flow                                $M   $ 1,779.0   $ 1,779.0
Posttax cash flow                               $M         N/a   $ 1,298.7

Operating costs (life of mine)

As the Coosa graphite project's PEA is modelled on producing two finished (final) specialty, secondary-processed graphite products -- a coated spherical graphite product (CSPG) and a purified micronized flake graphite (PMG) product -- the operating costs per ton (and per tonne) for the 27-year life of mine (LOM) are blended and presented in the table. Operating costs per ton (and per tonne) include mining, milling and floatation, general and administrative expenses, filter cake transport, and purification.

                          OPERATING COSTS

                             Cost per ton           Cost per tonne

Mine operating cost                $1,410                   $1,555

                            SELLING PRICES

Product               Percentage of annual production       Selling price

Greater than 99.95%                                        $8,165 per ton
Cg CSPG (15 microns)                              75%   ($9,000 per tonne)
Greater than 98% Cg                                        $1,814 per ton
PMG (5 microns)                                   25%   ($2,000 per tonne)

Pricing assumptions

According to United Kingdom-based Benchmark Mineral Intelligence, widely regarded as one of the world's leading independent sources on battery input materials' prices, sales and demand forecasts, selling prices for coated spherical graphite (CSPG) for Li ion batteries range from $7,000 to $12,000 per tonne. For the company's CSPG product, AGC has utilized a conservative $9,000 per tonne selling price in the Coosa graphite project PEA.

Selling prices for purified micronized flake graphite (PMG) range from $1,800 to $2,800 per tonne. For the company's PMG product, AGC has utilized a conservative $2,000-per-tonne selling price in the Coosa graphite project PEA (source: Benchmark Mineral Intelligence (2015))

Notes:

1. Canadian Institute of Mining, Metallurgy and Petroleum definition standards for mineral resources and mineral reserves were followed for mineral resources.
2. Mineral resources are estimated at a cut-off grade of 1 per cent Cg.
3. Numbers may not add due to rounding.

Cautionary note

This PEA is considered by AGP to meet the requirements of a preliminary economic assessment as defined by National Instrument 43-101. The economic analysis contained in the technical report is based, in part, on inferred resources (as defined in NI 43-101) and is preliminary in nature. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no guarantee that all or any part of the mineral resource will be converted into a mineral reserve. Inferred resources are considered too geologically speculative to have mining and economic considerations applied to them and to be categorized as mineral reserves (as defined in NI 43-101). Additional trenching and/or drilling will be required to convert inferred mineral resources to measured or indicated mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the reserves' development, production and economic forecasts on which the PEA is based will be realized.

Qualified persons

Independent engineering firms AGP Mining Consultants and Metal Mining Consultants completed the Coosa graphite project preliminary economic assessment technical report and are independent of the company under National Instrument 43-101 guidelines. The information in this news release relating to the mining and metallurgy portions of the 2015 Coosa graphite project preliminary economic assessment was prepared by AGP Mining Consultants' Gordon Zurowski, PEng, an independent qualified person as defined by National Instrument 43-101, and Andy Holloway, PEng, an independent qualified person as defined by National Instrument 43-101. The information in this news release that relates to the geology and mineral resource estimation portions of the PEA was prepared by Scott E. Wilson, CPG, from Metal Mining Consultants, an independent qualified person as defined by National Instrument 43-101 guidelines.

Gordon Zurowski, PEng, principal of AGP Mining Consultants, is a qualified person as defined by National Instrument 43-101 guidelines, and has reviewed and approved the content of this news release.

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