Now that the BFS has been filed and the SP has crawled back to above 1 dollar ( $1.09). It would be worth while reviewing the situation, at least to put the facts on the table. Here is a summary of the conference call on 10 July following the release of the BFS on 9 July 2012. Please feel free to correct any factual error in the summary below.

Overview by NGC CEO Greg Bowes and President Don Baxter and answers to questions from callers are given below.

- BFS: A bit late due to the workload at SGS Lakefield, but results are not out of line with expectation

Capex: 93.5 + 9.4 (10%) contingency = $102.9M. May not need the contingency amount but it would be prudent being conservative to avoid unpleasant surprises. Lesson learned: in mining business things tend to get late, and capital requirement may be much higher than expected, especially if the mine is located at a remote location (no infreastructure to support the development). Note: Bissett Creek is located near the TransCanada Hwy, electrical power and natural pipeline corridors. It's also situated near North Bay, a large mining town, and between Mattawa (West) and Deep River (East) where labour and housing accommodation are available. For NGC Bissett Creak the capex was expected to be about $90M, so $93.9M is not too bad a number.

Capex versus Operating cost: Company has an option to choose between higher up-front capex for lower operating cost. One example is the choice of a natural gas pipeline (from the main trunk line) for power generation (with the waste heat for the drying operation). Diesel generator would be cheaper, but the operating cost would be higher (could add $200/tonne to the operating cost?)

Used equipment and leasing: Used equipement, especially high cost items, and leasing of equipment could be an option to reduce the capex requirement

Indicated versus inferred: As a rule, the independent onsulting firms doing the BFS would use conservative values to protect their reputation (low-balled capex is not good for their and cause unpleasant surprises to the clients). For the BFS they only used the "indicated" resource and throw away the sizable "inferred" resource and essentially treat this as waste, even though the grade is high.

Mill performance: The BFS used the results from the bulk sample tests, however the locked cycle results would give significant improvement (12% higher). Fresh ore would respond better than the ore used in bulk samples which have been partially weathered.

Own fleet of trucks and excavator: This would result in a reduction in operating cost by $50/tonne during the first 5 years (high grades) bringing the cost down from about $850/tonne to $800/tonne.

Inferred Resource: The business plan also considers the utilization of the high grade "inferred" resource outside the current mine plan to extend the high grade operation beyond 5 years. This would require a small low-cost drill program to upgrade the inferred to the indicated category. A ball parkfigure would be 20-50 shallow in-fill drilling would be required. Since the deposit is a flat line and tabular, the depth would be about 50-80 m. This could be done fairly quicky, could start in Q3 2012 even though not require right away.

Current game plan: To get the processing facility up and running ASAP to produce high purity and large flake concentrate at Bissett Creek. NGC has plan for the upgrader to produce higher quality graphite (fetch premium price), but they will have this done later in a modular fashion, i.e. using a fraction of the concentrate output rather than the entire output. This is a "walk-before-you-run strategy" so that they don't have to face a high initial capex. Besides, their concentrate coming out of Bissett Creek has quite high purity and about 50% of the flakes is classified as extra large and jumbo.

Scalability/Expandability: The current design for the Bissett Creek facility has a larger floor space than required to accommodate extra equipment (e.g. flotation collumns). The SAG mill is over-sized to take more load than 2500 tonne of ore /day. The upgrader is expandable with its modular design (at a ball-park figure of $10M for about 1/4 of Bissett Creek concentrate output).

Upgrader Pilot Plant: Coming soon

Cost and profit margin: Game plan calls for operating cost about $800/tonne and keep it there beyond the 5 year period. This would yield acceptable profit margin considering Bissett Creek concetrate flake size and purity which can fetch premium price (20-30% more than the regular large flake

Product from the upgrader would cost an extra $1000/tonne to produce but the profit margin is much higher (e.g. $8000 -1800/tonne).

Competition with China: Cost of graphite from China is lower (about $300/tonne), but transportation cost to North American is high (anout $500/tonne). The total cost is competitive. There is indication that Bissett Creek product is superior in flake size and purity which is more amenable to upgrading and production of sherical graphite (loss from 30-50% compared to loss of about 70% for lower quality and smaller flake graphite.

Large flakes and high purity products: Partner with a local firm who has extensive contacts with the Li-ion batterry circle (military, medical, e-car, power tools, cell phones). This company would be useful in opening doors to those contacts.

Cash situation: NGC has $10M in the bank. Enough to cover detailed enginering cost ($4M) and some major equipment cost (some would require advance order), e.g the SAG mill would cost about $2.5 M.

Mine Closure Plan: The MCP is in fact an amendment to a previous one (old mine was ther before). Would require about $1-2M. This could be put in trust in instalments over time.

Financing: Capex could be financed by could be a combination of equity and debt (could be 0-50%) with the balance on debt from bank or from offtake partners. Aim is to avoid significant dilution.

Timeline: Permitting Q3, Financing end of Q3 2012, 1 year required to build plant. Plant up and running Q1 2014, followin a 4-6 week commisioning run.

goldhunter