Mr. Arno Brand reports

GRATOMIC SIGNS COMMERCIAL PARTNERSHIP AND SALES AGREEMENT FOR UP TO 7,260 TONNES PER ANNUM

Gratomic Inc. has entered into a commercial partnership and sales agreement with TM2 Verticals. Gratomic will sell concentrate to the partnership for the joint supply of value-added applications. The initial focus will be on alkaline batteries.

On June 12, 2023, Gratomic executed a purchase order to supply TM2 with one tonne of graphite concentrate from its Aukam vein graphite mine in Namibia. The concentrate is being sent to South Africa for further upgrading and then onward to mid-stream processors in the United States and Europe, where it will be converted into a purified flake graphite (PFG) equivalent to include in alkaline batteries. The pilot processing of this material is being financed by an end-user that chooses to stay anonymous during this period. Once the supply chain and the PFG have been qualified, the end-user will enter into a direct purchase agreement with the commercial partnership.

One of the terms of this arrangement is that Gratomic will sell its graphite to the commercial partnership for a 50:50 split of the profit after toll processing between TM2 and Gratomic. In case the grade of the concentrate exceeds 95 per cent, which is the grade quoted by the Benchmark Mineral Intelligence index price, a special premium will be applied to the concentrate price. In such a case, the final price for the concentrate will be adjusted and increased by the special premium to the final concentrate price. The target rate will be a 6.5-per-cent increase for a 96 per cent grade, a 19.5-per-cent increase for a 97 per cent grade and a 32-per-cent increase for a 98 per cent grade, until such time as there is a quotable index for a grade above 95 per cent.

This particular arrangement appears to be the first of its kind in the graphite industry for an up-and-coming producer and shows the power of vertical integration and the benefit of early partnerships with the right people. TM2 and Gratomic have been working together during the past two years and both agree it is a mutually beneficial arrangement.

"We foresee that over the next 36 months, every major OEM on the planet will be backwards integrating to the mine -- securing long-term supply and a reliable supply chain. TM2 realized this several years ago and became one of the first movers in the battery metals space to start building globally integrated and connected markets. Gratomic has been a key visionary in the graphite vertical and this partnership is a powerful step towards building market liquidity, transparent pricing and interconnectivity from source to consumer," says Petur Georgesson, chief executive officer of TM2.

The successful completion of the pilot program will present one of the first cases of vein graphite being commercially adopted for alkaline batteries. Historically, vein graphite has played a vital role in world markets as the purest and highest-grade naturally occurring graphite. In modern times, through contracts such as this one, it is once again poised to offer end-users a much more attractive alternative to synthetic and flake, making it stand out amongst other graphite types.

The contract establishes a target lead time of 120 days starting on May 24, 2023, to secure binding agreements with end-users. The contract is valid for five years, and establishes annual quantities for delivery starting at 4,200 tonnes per year and reaching 7,260 tonnes per year.

Arno Brand, president and CEO of Gratomic, stated: "It is gratifying for the company and TM2 Verticals to be working in such an innovative partnership. Not only does it offer mutual benefits but opens the door for new applications of Aukam vein graphite."

Gratomic wishes to emphasize that no preliminary economic analysis, preliminary feasibility study or feasibility study has been completed to support any level of production. In fact, no mineral resources, let alone mineral reserves demonstrating economic viability and technical feasibility, have been delineated on the Aukam property.

The company is working toward completing a feasibility study (FS) on the Aukam processing plant. The study, its recommendations and their subsequent implementation will provide conclusions and recommendation at an FS level of comfort about scaling up the existing processing plant to a commercial facility that can produce the desired concentrate grades and production rates.

Gratomic wishes to emphasize that the supply of graphite is conditional on bringing the Aukam project to production phase, and for any graphite produced meeting certain technical and mineralization requirements.

Risk factors

No mineral resources, let alone mineral reserves demonstrating economic viability and technical feasibility, have been delineated on the Aukam property. The company is not in a position to demonstrate or disclose any capital and/or operating costs that may be associated with the processing plant until the feasibility study is completed.

The company advises that it has not based its production decision on even the existence of mineral resources, let alone on a preliminary feasibility study or feasibility study of mineral reserves, demonstrating economic and technical viability. As a result, there may be an increased uncertainty about achieving any particular level of mineral recovery or the cost of such recovery, including increased risks associated with developing a commercially minable deposit.

Historically, such projects have a much higher risk of economic and technical failure. There is no guarantee that production will begin as anticipated or at all, or that anticipated production costs will be achieved.

Failure to commence production would have a material adverse impact on the company's ability to generate revenue and cash flow to finance operations. Failure to achieve the anticipated production costs would have a material adverse impact on the company's cash flow and future profitability.

About Gratomic Inc.

Gratomic is a multinational company with projects in Namibia, Brazil and Canada. The company is focused on becoming a leading global graphite supplier and aims to secure a strong position in the electric vehicle battery supply chain. With the continued development of its flagship Aukam project and further exploration on the company's Capim Grosso property, Gratomic sets itself apart by seeking out unique top-quality assets around the world. True to its roots, the company will continue to explore graphite opportunities displaying potential for development.

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