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Gratomic to acquire Capim Grosso from Zumbi

2021-08-13 13:33 ET - News Release

Mr. Arno Brand reports


Gratomic Inc. has entered into a letter of intent with Zumbi Mineracao Brazil and the shareholders of Zumbi for the acquisition of 100 per cent of the rights and interests in and to the Capim Grosso property, located in Capim Grosso, Bahia, Brazil.

In consideration for a 100-per-cent interest in the target property, Gratomic will, upon closing of the acquisition, (i) make a one-time cash payment equal to $200,000; (ii) issue that number of common shares in the capital of Gratomic, as is equal to the number arrived at by dividing $2.3-million by the price per common share at the date of the execution of the definitive agreement relating to the acquisition; and (iii) issue a promissory note in the amount of $3-million payable on the earlier to occur of (a) that date which is 24 months after closing; and (b) 10 business days after the receipt by Gratomic of a prefeasibility study in respect of the target property completed in accordance with and pursuant to National Instrument 43-101 (Standards of Disclosure for Mineral Projects). The subject shares will be issued as directed by the vendors and will be subject to a four-month-and-one-day hold period from the closing.

The vendors will also retain a 3-per-cent gross smelter return royalty in respect of all minerals processed from the target property, other than graphite, on the terms and conditions set forth in a gross smelter royalty agreement, which shall contain the usual covenants, agreements, terms and conditions for a royalty agreement. The royalty will be reduced by any pre-existing net smelter royalties in respect of the target property.

Acquiring the Brazilian graphite project provides Gratomic the opportunity to diversify the company's interests and develop the graphite deposit at the Capim Grosso project. This strategically positions the company to better meet growing demand for high-quality graphite and provides a significant competitive advantage by limiting risk through business development in several key mining-friendly jurisdictions.

The Capim Grosso graphite project is located within the Sao Francisco craton (SFC). The SFC is a tectonic domain surrounded by Neoproterozoic orogens. Its southern sector is composed by Archean crust, with age between 3.5 billion and 2.6 billion years, that is formed mostly by granite-gneisses and greenstone belts constituted by mafic-ultramafic, intermediate-felsic volcanic and volcanoclastic rocks with terrigenous sediments. Graphite at Capim Grosso is set within northwest-southeast-striking ultramafic units.

The vendors of the project have completed three preliminary drill holes and 10 shallow trenches over a one-kilometre part of the mineralization. Assay results show total graphitic carbon (TGC) of between 6.79 per cent TGC over 2.5 metres (m) to 20.95 per cent TGC over 2.4 m in surface trenching. Drilling results of 26.47 per cent TGC over one m have been obtained. While the qualified person (QP) has visited the sites, assays have not been verified and true mineralization widths have not yet been obtained.

Immediately following closing, Gratomic will commence a trenching program to generate further geological information and plan future drilling. The company has collected verification samples on the property and has sent these to SGS Geosol Brazil for umpire analysis. These form part of the prequalification conditions to conclude the transaction.

Arno Brand, president and chief executive officer, commented: "Obtaining the Capim Grosso project will serve as our base in Brazil, the largest graphite producer outside of China, as we plan to expand operations. The company has reviewed projects all around the world and considers Zumbi to be one of the most promising."

Armando Farhate, chief operating officer and head of graphite marketing and sales, stated: "Bringing Gratomic to my home country has a touch of personal satisfaction to me. Having worked for the largest and most traditional graphite producer in the country gives me the required experience to support Gratomic on this very strategic move towards becoming a key player in the graphite world."

The acquisition is subject to satisfactory completion of a due diligence review of Zumbi and the target property by Gratomic, the determination of the appropriate structure of the acquisition and execution of a definitive agreement relating to the acquisition. The acquisition (including the issuance of the subject shares) is subject to the fulfilment of certain conditions precedent as are customary for transactions of this nature, including the approval of the TSX Venture Exchange.

Nico Scholtz is a consulting geologist and has reviewed and approved the scientific and technical information in this news release. Mr. Scholtz is a registered professional natural scientist with the South African Council for Natural Scientific Professions. Mr. Scholtz has reviewed and approved the scientific and technical information in this press release and is the company's qualified person as defined by National Instrument 43-101 (Standards of Disclosure for Mineral Projects).

About Gratomic Inc.

Gratomic is focused on introducing an exceptional anode material to the global electric vehicle and energy storage supply chains. The company aims to achieve full operational capabilities in 2021, with further plans to take its Aukam graphite project fully solar by 2022. Large quantities of its naturally high-quality graphite have been shipped for testing to confirm its viability as an anode material. Gratomic is confident that the results will provide a unique competitive advantage in its desired target markets.

The company's recent collaboration agreement with Forge Nano has advanced the developments on its graphite finalization phase for the micronization, spheronization and patented ALD coating of its Aukam vein graphite for use in lithium-ion batteries. Forge Nano is a global leader in surface engineering and precision nanocoating technology, using atomic layer deposition.

Gratomic has two outstanding offtake purchase agreements with Todaq and Phu Sumika with contract fulfilment slated to begin in 2021. Gratomic plans to deliver mine-to-market traceability through its partnership with deep-tech company Todaq by providing documented tracking on all graphite generated at its flagship Aukam graphite project.

We seek Safe Harbor.

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