(NGC:TSXV, NGPHF:OTCQX) Investment Highlights

www.northerngraphite.com

Demand growth driven by the ongoing industrialization of China, India and other emerging economies, and from many new applications such as Li ion batteries, fuel cells, vanadium redox batteries and nuclear energy Supply concerns as 80% of world production comes from China and its production/exports are expected to decline, as export tax and licensing system imposed and restrictions on new graphite mines proposed Both EU and USA have named graphite a supply critical mineral Large flake, high purity, scalable deposit Close to infrastructure and markets, simple mining and metallurgy, Bankable Feasibility Study completed and permitting expected in 4Q/2012

The New Strategic Mineral

Graphite demand has increased 5% per year for the past decade due to strong demand from traditional steel and automotive markets and the ongoing industrialization of India, China and other emerging economies. Substantial incremental demand will also be generated by emerging applications such as Li ion batteries which take 30 to 40 times more graphite than lithium to make. Annual flake graphite production will have to increase substantially to meet forecast battery demand with only moderate acceptance of EVs and HEVs. China, which produces of 80% of the worlds supply, is seeing costs increasing, production and export growth leveling off, and quality declining. As a result, export duties and licenses have been imposed and restrictions on new mines have been proposed. After 15 years of flat prices there are very few projects in the development pipeline and accordingly, graphite represents an undervalued commodity in the context of the current super cycle.

Congressional stimulus bill includes tens of billions of dollars in loans, grants, and tax incentives for battery and HEV research and manufacture to jump-start US industry..Michigan awards $544M in tax credits to four Li ion battery companies with plans to invest more than $1.7 billion in manufacturing facilities. Samsung predicts global lithium ion battery market will swell to $32 billion in 2015 from $ 11billion last year, plans to spend $359 million on battery production this year
Li ion batteries are only one of a number of emerging technologies that will drive future graphite demand: Graphite is a major component in fuel cellslarge-scale fuel-cell applications are being developed that could consume as much graphite as all other uses combined. USGS, 2009...Toyota sees a clear path to the commercial introduction of fuel cell vehicles by 2015 Pebble bed nuclear reactors are small, efficient and safe. Every 1,000MW requires 3,000t of graphite at start up and 600-1000t per year to operate. China has an operating prototype, two under construction and plans for 30 by 2020. Vanadium redox batteries are a leading candidate to provide storage for energy from intermittent sources such as wind and solar. Every 1 Mwh VRB needs 300kgs of graphite!

NGC:TSXV
Capital Structure Shares Outstanding Warrants Options 46,873,138 2,279,623 3,500,000

Fully Diluted 52,652,761 -10% owned by management and insiders -$10M in cash, no debt

What is Graphite?
Graphite and diamonds are the only two naturally formed polymers of carbon. Graphite is an excellent conductor of heat and electricity and has the highest natural strength and stiffness of any material. It maintains its strength and stability to temperatures in excess of 3,600C and is very resistant to chemical attack. At the same time it is one of the lightest of all reinforcing agents and has high natural lubricity.

What is graphite used for?

Traditional demand for graphite is largely tied to the steel industry where it is used as a liner for ladles and crucibles, as a component in bricks which line furnaces (refractories), and as an agent to increase the carbon content of steel. In the automotive industry it is used in brake linings, gaskets and clutch materials. Graphite also has a myriad of other uses in batteries, electric motors, lubricants, fire retardants, and reinforcements in plastics. However, the future demand for graphite will be driven by a number of green initiatives including Li ion batteries, fuel cells, vanadium redox batteries and solar and nuclear energy. The market for graphite exceeds one million tonnes per year (Mtpy) of which 60% is low value amorphous and 40% is higher value, higher growth flake graphite. Only flake graphite which can be upgraded to 99.9% purity is suitable for making Li ion batteries. The graphite market not quite as large as the nickel market (1.8 Mtpy) but is larger than the markets for molybdenum, tungsten, cobalt, vanadium, uranium, lithium and rare earths combined. China produces 80% of the worlds graphite and has instituted export taxes and licenses. There is only significant North American producer and its mine is getting older, deeper and higher cost.

How is graphite priced?

There is no spot or futures market for graphite. Transactions are largely based on direct negotiations between the buyer and seller. Industrial Minerals magazine polls end users every month and publishes price ranges for the most common grades. Prices are a function of flake size and purity with the premium product being large flake (+80 mesh), high carbon (+94%) graphite. Prices for this grade exceeded US$1,300/t in the late 80s but crashed to US$600-750t in the 90s as Chinese producers dumped product on the market. Graphite prices did not start to recover until 2005 and exceeded $3,000/t. Prices have since moderated due to softening demand from the Chinese steel industry. Chinese graphite is declining in quality and costs are increasing due to the effects of high grading and to tightening labor and environmental standards. China has now instituted export duties and licenses, the largest Chinese graphite producer has publicly asked for Rare Earth type protection and restrictions on new mines have been proposed. China has announced its intention to create monopoly in the amorphous graphite market which increases the probability it will do something similar in the higher value flake market.
As a result of increasing regulation in China and a corresponding shortage of raw material, the market for natural graphite is dramatically changing. Demand is increasing and significant price increases can be observed. Graphit Kropfmhl AG

(US$/tonne

The Asset

The Bissett Creek property is located between the cities of Ottawa and North Bay, Ontario Canada, approximately 15 km from the Trans Canada highway. It has good access and is close to infrastructure. A full feasibility study was completed on the property in 1989 and concluded that the project was economic but it was not developed due to a subsequent decline in graphite prices. Over 8,000 meters of drilling had been completed in 242 holes and a large resource with a low strip ratio was identified, including a proven and probable reserve (historical information has been presented for information purposes only. The feasibility study and reserve estimates were not completed in accordance with NI 43-101 and therefore should not be relied upon). A NI 43-101 preliminary assessment was completed in 2010 and subsequently a 2,900m infill and expansion drilling program was completed and resources were significantly increased. Using a cut off of 0.986% graphitic carbon (Cg), resources now total 25,983,000 tonnes grading 1.81% Cg in the indicated category (470,300 tonnes of contained graphite) and inferred resources total 55,038,000 tonnes grading 1.57% Cg (864,100 tonnes of contained graphite). As a result, the potential exists to substantially increase production in the future if warranted by graphite demand. (Mineral resources that are not
mineral reserves do not have demonstrated economic viability).

Bissett Creek is not an exploration concept. It is an advanced stage, predevelopment project. A new full bankable feasibility study (FS) was completed in July, 2012 and environmental and mine permitting are expected to be completed in the 4Q/2012 following which the Company will be in a position to begin construction, subject to financing. Construction will take approximately one year to complete. The FS estimated a probable reserve of 19 million tonnes grading 1.89% Cg based on indicated resources only and contemplated a 23 year operation which would produce up to 20,000 tonnes of graphite concentrate per year. The waste to ore ratio is 0.50 and operating costs over the first five years of operation are $851/tonne of concentrate. Based on a weighted average price of $2,600 per tonne for the sizes and grades of graphite that will be produced, the pre tax IRR is 23.1% and the NPV is $151 million (@8%). The capital cost of the mine is $102.9 million including a $9.4 million contingency. Almost all production will be high carbon, +80 mesh large flake and over 50% will be +48 and +32 mesh jumbo sized flake, resulting in premium pricing. There are a number of low risk opportunities to further enhance the economics of the deposit including using owner rather than contract mining, upgrading some of the inferred resources to indicated, and expanding the mine. It also appears that the resource grade is conservative and potentially understated as extensive metallurgical work, including a pilot plant and bulk sample and locked cycle tests, indicated that the recovered grade is consistently 412% higher than predicted by the head grade.

Management and Directors

Gregory Bowes, B.Sc. (geology), MBA Don Baxter, P.Eng Stephen Thompson CA CPA (Illinois) Ron Little, P.Eng Iain Scarr, B.Sc. (geology), MBA CEO and Director President, formerly President Ontario Graphite Corporation Chief Financial Officer, formerly VP Finance, Hydro Ottawa Director, President & CEO, Orezone Gold Corporation (ORE:TSX) Director, Formerly, Commercial Director, Rio Tinto Industrial Minerals Division, VP Corporate Development, Lithium One (Li:TSXV) Director, Independent Mining Consultant Director, CFO, Solvista Gold Director, President, Western Lithium Corp. (WLC:TSXV) Technical Advisor 40 years of experience in industrial minerals research, process and product development and market analysis

K. Sethu Raman PhD Donald Christie CA Jay Chmelauskas B.A.Sc., MBA George Hawley