Mr. Gregory Bowes reports

NORTHERN GRAPHITE MANAGEMENT CHANGE AND CORPORATE UPDATE

Don Baxter, PEng, has resigned as president of Northern Graphite Corp. Mr. Baxter is available to provide services to the company on a consulting basis. The board and management would like to thank Mr. Baxter for his contributions to the Bissett Creek graphite project.

Environmental permitting

On Oct. 31, 2012, the company submitted the mine closure plan for the Bissett Creek project to the Ministry of Northern Development and Mines (MNDM). This "45-day approval process" has been continuing for over seven months despite Bissett Creek being a relatively benign operation with no major environmental issues. It has strong community support, and first nation consultations have been positive and constructive.

The company understands that MNDM's review of the mine closure plan is complete but it cannot be filed (approved) until the MNDM issues a mining lease for the project. Application for the mining lease was made in October, 2011. In July, 2012, the company was ordered to redo the government survey of provincial lot and concession lines that form the property boundary. The survey was submitted to the surveyor general's office in November, 2012, for a 30-day approval process, but a mining lease has still not been issued. The company believes approval is imminent but cannot provide further guidance; Northern Graphite suggests any interested parties contact the MNDM directly.

Northern Graphite is competing with companies in Quebec, Europe, Africa and Australia to build the first new western graphite mine in over 20 years. Being first to market is a very important, but the company is at a competitive disadvantage due to the regulatory process in Ontario, which continues to damage the province's reputation as a place to invest, and is potentially depriving it of investment, jobs and tax revenues.

Revised feasibility study economics

The economics in the existing bankable feasibility study are being revised to incorporate a new resource model and mine plan, a number of modifications to the original capital and operating cost assumptions, and lower graphite prices. Completion has been delayed over two months by the consulting firm, which has a large backlog of work with other clients.

We seek Safe Harbor.