Mr. Darryl Levitt reports

VECTOR RESOURCES INC. SIGNS AGREEMENT FOR BUSINESS COMBINATION

Vector Resources Inc. has entered into an agreement with Ontario Graphite Ltd. (OGL).

Under the terms of the agreement, Vector will acquire all of the issued and outstanding common shares of OGL, so that OGL's current shareholders will own approximately 98.73 per cent of the resulting issuer (RI) and Vector current shareholders will own approximately 1.27 per cent of the issued common shares of the RI (business combination). The precise ownership percentages will depend on the value for OGL being equal to the lower of that received in a contemplated equity offering or $70-million and Vector being valued at $900,000 plus the value of any cash held at the closing of the business combination.

Ontario Graphite Ltd.

OGL is a privately owned Canadian carbon solutions company committed to the responsible recommissioning and operation of the Kearney mine, one of the largest confirmed graphite mineral resource projects in North America and among the largest individual deposits in the world. The Kearney mine, located in Kearney, Ont., Canada (approximately 250 kilometres north of Toronto), is slated to begin production in 2016.

Kearney mine

The Kearney mine and milling facility is known to have the largest confirmed mineral resource of any North American graphite project, and is one of the largest individual flake graphite deposits outside of China and North Korea.

Flake graphite was first identified in rocks outside of the town of Kearney in Ontario, Canada, in the early 20th century. In 1989, an open pit mining and milling facility was constructed on 445 hectares of Crown land southeast of Graphite Lake and four kilometres west of Algonquin Park. The Kearney mine remained operational through 1994, during which time it produced and processed almost one million tonnes of ore and 17,000 tonnes of flake graphite product, which was sold to Canadian and American customers. The mine was closed in 1994 during a drop in global graphite prices.

Currently, in the process of being recommissioned, the Kearney mine has been under careful care and maintenance since its closure. Under new ownership and management since 2007, the mine is presently undergoing a recommissioning process that will lead to its reopening in 2016. When reactivated, it is estimated the Kearney mine will process approximately one million tonnes of ore per year while producing approximately 20,000 tonnes of natural, large flake, high carbon graphite concentrate.

Having been a fully operational facility in the past, the mine enjoys the credibility of having produced a product that is known and highly regarded in the marketplace. Based on past operations, sales records and laboratory testing, the Kearney mine will produce a high-quality, low impurity, commercially attractive graphite product.

It is expected that the Kearney mine will be a best-in-class asset for the production of natural flake graphite, given its mineral qualities and quantities, and its location in a first-world country with immediate access to transportation infrastructure. This will help ensure stable, lower cost, reliable long-term delivery of product of consistent quality to all customers. An NI 43-101-compliant report completed in August, 2013, confirmed 51.8 million tonnes of indicated resources (2.14 per cent Cg average) and 47.8 million tonnes of inferred resources (2.0 per cent Cg average).

Because of the high product quality, OGL will have the ability and intends to sell directly to end-user customers, allowing for better response to customers' needs, development of strong customer relationships and generation of high margins. Ontario Graphite will be one of only three producers of natural flake graphite in North America.

Proposed officers of the RI

It is proposed that the management of the RI shall comprise the following individuals.

Tom Burkett, chief executive officer

Mr. Burkett was vice-president for the GMS business area for the Americas for SGL Group from 2010 to 2014. Prior to that he was division president of the expanded graphite division for SGL in Wiesbaden, Germany, from 2008 to 2010. Prior to that he was managing director of Ningbo SSG, an SGL joint venture company in Ningbo, China, from 2006 to 2008.

Ellerton Castor, chief financial officer

Mr. Castor was founder and managing director of Panterra Partners LLC, a real estate restructuring advisory and capital raising firm focused on distressed opportunities in the southeastern United States and Caribbean from 2005 to 2009. He also acted as managing director for Latin America merger and acquisition, and merchant banking, Banc of America Securities, from 2000 to 2004. Prior to that, he acted as executive director for the global M&A group at CIBC Oppenheimer from 1995 to 1999. Mr. Castor was also a senior associate in corporate finance and M&A at Morgan Stanley from 1993 to 1995.

Advisers and finder's fee

There are no advisory or finder's fees being paid out to any third party for this transaction.

Conditions precedent

The completion of this business combination is subject to a number of approvals and conditions precedents, which include the following:

• Satisfactory completion of the due diligence of Vector by OGL;
• Satisfactory completion of the due diligence of OGL by Vector;
• Shareholder approval at Vector's annual general meeting to be scheduled;
• Regulatory approval;
• Execution of a definitive agreement.

Future disclosure

The corporation will disseminate additional information, as it is known with regard to the business combination.

We seek Safe Harbor.