Perth, May 26, 2017 AEST (ABN Newswire) - Graphex Mining (ASX:GPX) has signed a non-binding term sheet with a Chinese syndicate of investors, setting out a number of the key commercial terms relating to the proposed joint venture, offtake and financing for the Chilalo Graphite Project.

Highlights include:

- The Syndicate will make an equity investment of US$18-20M (A$24-27M) for a 50% interest in the Chilalo Project;

- Debt guarantees provided for the targeted project finance of up to 65%;

- Offtake agreement for a minimum of 50% of the Chilalo product at market prices;

- Both Graphex and CN Docking to exercise best endeavours to conclude formal legal documents within three months; and

- HK$100M (US$13M) is to be deposited into a nominated bank account within 10 days.

Analyst Comment: This is an excellent achievement for Graphex, and ground breaking for a junior ASX listed company given the terms of the proposed transaction and the stature of the parties involved in the Chinese Syndicate. The syndicate is led by CN Docking, a subsidiary of CNBM (China National Building Materials) a global fortune 500 company who are responsible for producing more than 50% of China's building materials.

Essentially, this transaction will see Graphex fully funded through to the commencement of production at the Chilalo Graphite project (TSI estimate - 1Q19), through the project level equity investment (US$18 to US$20m) by the syndicate as well as their commitment for a debt guarantee of up to 65% of the capital development costs (likely to decrease).

Just as important as the project's funding, is that 50% of the project's production has guaranteed offtake through the syndicate. We understand that the syndicate was prepared to take a greater amount of the project's offtake however, by selling to third-parties outside the syndicate, there is greater transparency as well as increased pricing tension ensuring maximum revenues for Graphex.

Whilst there is a degree of risk as the terms remain non-binding until the conclusion of the binding documents (TSI estimate - mid-August), we have confidence that this transaction will be completed within the time-frame. This is based on: the significant time invested to get to this stage of negotiation (2+ years), the commitment to a HK$100M bank deposit within 10 days, and the inclusion of a break-fee. These are all terms that we have not previously witnessed with non-binding announcements made by other ASX listed companies.

This information should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.

Valuation: We have increased our valuation to $1.61 / share (share price $0.43). The change in our valuation is due to lowering our discount rate (current 11%; previous 12%) as well as adjusting our project financing terms in line with the Term Sheet.

The information is general information only. Any advice is general advice only. Neither your personal objectives, financial situation or needs have not been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice. Adam Kiley (AR No. 458224) is an authorised representative of Intelligent Financial Markets Pty Ltd (AFSL No. 426359).

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About Graphex Mining Ltd

Graphex Mining LtdGraphex Mining Limited (ASX:GPX) is an Australian resources company listed on the Australian Securities Exchange under stock code GPX. Graphex owns the world-class, coarse flake Chilalo Graphite Project, located in south-east Tanzania, which is an outstanding development ready opportunity.



Graphex Mining Ltd
T: +61 8 9200 4960
F: +61 8 9200 4961
E: info@graphexmining.com.au
WWW: www.graphexmining.com.au

TSI Capital Pty Ltd
M: +61 404 945 234

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