Canada Carbon Inc.dqkjwx3xr6pzf.cloudfront.net/c106630/CCB_-_10282014.pdfLuisa Moreno, PhD, MEng |...

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28 October 2014 CCB-TSX.V: $0.22

Luisa Moreno, PhD, MEng | 416.933.3352 | [email protected] www.epccm.ca

Canada Carbon Inc. Site Visit to the Historic Lump/Vein Graphite Mine

Event: We recently visited Canada Carbon’s Miller hydrothermal lump/vein graphite deposit.

Vein-type Graphite Mineralization: The Miller deposit and surrounding satellite graphite showings have been identified as having a lump or vein type graphite. Commercial deposits of non-amorphous vein graphite are extremely rare. Although vein graphite occurrences have been reported in a number of countries, it is only commercially mined in Sri Lanka. The lump/vein graphite has been defined as having hydrothermal origins and occurring in fissure veins or fractures typically 0.01 to 1 metre wide. Vein graphite is characterized by high grade material which can be found with a carbon content above 90% Ct. The Miller deposit has a similar mineralization, which is believed to be hydrothermal and shows a number of graphite veins and a very coarse flake graphite. The Company has reported high grade veins grading between 30% and 90% Ct. The Company is also investigating the possibility of bulk mining instead of selective vein mining.

Promising Preliminary Pilot Plant Scale Metallurgical Testwork: Under a bulk sample permit issued by the Quebec government, Canada Carbon has commissioned SGS Canada Inc. (Lakefield) to conduct a pilot plant scale flotation concentration metallurgy program. Optimization trials on composite samples have yielded seven particle size classes, ranging from +200 to +32 mesh, grading 99.38-99.74% C(t) by GDMS, and each meeting the EBC nuclear purity standards (i.e., less than 5 ppm Equivalent Boron Content, or EBC). To our knowledge, Canada Carbon is the first junior company reporting these results, which seem to be unique in the natural graphite space.

Good Infrastructure: The Miller property is located ~80km west of the major city of Montreal in the province of Quebec, Canada. The deposit is only 5km north of the town of Grenville, and 89km east of the city Gatineau, and only a few kilometres from a major highway. The site is directly accessible by paved roads, which connect to bush roads leading to the Miller pit and showings. There are rail and power lines approximately 0.5km from the deposit.

By-products Potential to Strengthen Project Economics: A number of other minerals and rocks have been identified in the Miller property, including wollastonite and marble, which may be economic to extract.

Targeting High-end Markets: Preliminary metallurgical tests have yielded large flake graphite concentrate with high purity, and with characteristics similar to certain types of synthetic graphite. Thus, if the ongoing pilot test confirms that high purity, large flake graphite can be recovered from the bulk mining ore, Canada Carbon will be closer to developing a graphite operation to supply the high value graphite markets, for prices potentially above $3,000/tonne.

Potential Shorter Path to Production Option: Canada Carbon is in talks with quarry operators in the area to secure crushing capacity and experienced labour. Assuming small production permits can be obtained in a timely manner, the Company may have the option to initiate small scale production once a limited resource has been defined.

Catalysts: The potential catalysts for the stock include: positive exploration results confirming extension of the mineralized zones; positive metallurgical test results with consistent high grade flotation concentrate, good flake size distribution, and strong recoveries; a NI 43-101 compliant Resource Estimate; and PEA related announcements.

Industrial Minerals

Not Rated Rating Not Rated Target Price Projected Return: N/A

Market DataMarket Capitalization 18.1Net Debt (0.8)Cash & Equivalents 0.8Debt 0.0Enterprise Value 17.3Basic Shares O/S 84.2Avg. Daily Volume (K) 660.452 Week Range $0.10 - $0.30

Risks Events/CatalystsExploration Risk Exploration ResulsFinancing Risk Metallurgical Results

NI 43-101 Resource

Company DescriptionCanada Carbon Inc., a junior natural resource company,engages in the acquisition and exploration of mineralproperties in Canada and the United States. It primarilyexplores for graphite, gold, base metals, and rare earthelement properties. The company main asset is its 100%owned Miller lump-vein graphite property, which includesCanada's oldest historical graphite mine. The companyalso owns the Asbury graphite property and the dunRaven graphite mine project, which has historic reservesof 571,532 tons at 4.72% graphite.

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CCB-TSX | 28 October 2014

Luisa Moreno, PhD, MEng | 416.933.3352 | [email protected]

Company Description Canada Carbon Inc. is a junior natural resource company. Its flagship asset is the 100% owned Miller graphite mine and surrounding properties covering approximately 100 square kilometres. The Miller property includes the historic Miller mine which has the hydrothermal lump-vein graphite type. Canada Carbon also has two other graphite properties, the Asbury Graphite Mine located 8.1km northeast of Notre-Dame-Du-Laus in the Laurentides Region of southern Quebec; and the Dun Raven graphite deposit with historic reserves of 571,532 tons at 4.72% graphite. The Company is currently focused on the development of the Miller property but is planning to also advance the Dun Raven and Asbury properties to become major graphite producers in the future.

Located Within a Historic Mining District with Good Logistics Graphite extraction in the Miller deposit area started in 1845 and is believed to have been the first graphite operation in Canada. The mine operated for a number of years; it was inactive for about 25 years and restarted again in 1870. Historical records show that graphite from this area was considered similar to that of Sri Lanka (or Ceylon, as Sri Lanka was previously known). The Miller mine closed down before 1910, seemingly for reasons unrelated to either the availability of mineable graphite resources, or outside market conditions. Extensive stockpiles of graphitic material, both selected high-grade vein and disseminated graphite, have been discovered in a number of locations on the property, giving the appearance that the mining process was halted abruptly. Currently the only graphite mine in operation in Canada is owned by Timcal Graphite Canada (Private) and is located 25km south of Mont-Laurier, in Quebec. The deposit has similar graphite in marble geology to that of the Miller deposit, and has been in operation since 1989.

The Miller deposit is located in the province of Quebec, Canada, and is ~80km west of the major city of Montreal. The property is only 5km north from the town of Grenville, and 89km east of the city Gatineau. The deposit is only a few kilometres north from Highway-50 (Exhibit 1), which is a modern four-lane limited-access transportation corridor. The site is directly accessible by paved secondary roads, which connect to numerous bush roads (~4km) that are linked to the deposit and extend across the property. A rail line is running 500 metres south of the highway. There is a power line approximately 500 metres south of the Miller deposit. Access to the property during the snow season, which is usually between November and early spring, would require snow removal work. A number of small lakes are found within and near the property, and water is accessible 250 metres north of the Miller mine pit.

Exhibit 1 – Miller Graphite Property Location

Source: Company Reports

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Exploration Work – Discovering New Zones Canada Carbon’s initial prospecting work was to verify the historical data, which was then followed by airborne (TDEM) and ground (MaxMin, VLF, IP, ground TDEM) geophysical surveys to identify additional anomalies.

In the historic Miller mine pit, Canada Carbon has identified graphite veins with widths varying from 10-60cm. The graphite veins are estimated to have average grades of 30% to 90% Ct. The deposit has extremely coarse flake graphite crystals of 0.5mm to many centimetres across (Exhibit 2). The graphite veins are hosted in a marble unit close to pegmatite and paragneiss units. A number of other minerals have been found, including wollastonite, apatite, garnet, diopside, sphene, vesuvianite, and zircon. Canada Carbon has also identified graphite vein mineralization associated with graphite-wollastonite pods.

Exhibit 2 – Graphite Sample from the Miller Property

Source: Euro Pacific Canada

Through trenching and selective drilling of the most interesting electro-magnetic (EM) anomalies, the Company has identified a number of other prospective graphite showings which have been labelled as VN (for “veins”) with numbers 1-6 (Exhibit 3). Most of the exploration work has been focused on these new showings.

Exhibit 3 – Schematic of the Relative Position of VN Showings


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We have visited the Miller pit and the VN3, VN4, and VN6 areas. The VN3 showing has a distinct graphite vein 2m thick by 5m long, hosted in unaltered marble. The VN3 area was further defined by six shallow drill holes that targeted the vein at depth and along its projected strike and depth extensions.

The VN4 area had visible high grade, very coarsely crystalline-flake material that had been exposed during the trenching work (Exhibit 4).

Exhibit 4 – Samples of High Grade Graphite blocks at the VN4 Showing


In the VN6 area we observed a number of graphite veins adjacent to clear, high value marble rocks. The area was first identified by ground geophysics, which was followed by extensive trenching, and is now the Company’s main exploration zone. Drilling is underway, to sample the mineralization at depth. In Exhibit 5, the graphite and marble formations seem to be folded.

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Exhibit 5 – Vein Graphite at the Miller Property and Profile Cut of the Rock Sample (below)


The VN4 and VN6 showings were discovered this summer and are about 350m south-east of the Miller pit, and located between the Miller pit and the VN3 showing. While the VN6 area has been reported as having a previously unreported skarn style of mineralization in which the graphite appears to replace marble horizons, resulting in multiple layers of graphitic marble bands, the VN4 showing consists of graphite veins similar to those found at the VN3 showing.

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Metallurgical Work – High Purity Results From Flotation Work Canada Carbon has commissioned SGS Canada Ltd. (Lakefield) to conduct pilot plant scale metallurgical tests on the graphite from the Miller property. The Company initially sent a 25-tonne bulk sample of high grade material to SGS to initiate the commissioning of the pilot plant. The first bulk sample contained graphitic material from multiple showings, which were selected by visual examination. Approximately 5 tonnes of the material were graphitic blocks obtained from trenching work at VN1 and VN2 showings, ~150 metres from the Miller pit, ~5 tonnes comprised of 0.3-1 m graphitic blocks from the VN3 showing, ~500m to the south-east of the Miller pit, and the remaining ~15 tonnes were obtained from the Miller pit’s historical stockpiles. SGS used about 50% of the initial bulk sample for wet commissioning of the flotation pilot plant, and the remainder was blended with a subsequent 102 tonnes bulk sample which has been sent to SGS for the full pilot plant tests (Exhibit 6). The pilot plant is set up to process 500 kg/h; the test work is ongoing and should take five to seven weeks to complete.

Exhibit 6 – Bulk Sample of 102 tonnes


The second bulk sample was different from the first, as the graphitic blocks (10cm to 2m) were selected based on the criterion that they would have graphite concentrations of 5% or more, to represent average grade material present on the property. The pilot scale test work will investigate the potential for bulk mining the orebody to include disseminated graphite mineralization, rather than just mining the higher grade graphite veins selectively. The average head grade of the bulk sample material was 8% Ct. This second bulk sample was again selected through visual examination, and contains ~61 tonnes of the material from the historical stockpiles at Miller pit, ~26 tonnes from VN6 showing trenching work, and the remaining ~15 tonnes from the VN4 showings. As the samples being processed (first and second bulk samples combined) include material from all the showings uncovered to date, Canada Carbon feels that the bulk sample material currently being processed fully represents the hydrothermal graphite mineralization of the property and its approximate average grade.

The primary objectives of the pilot plant work are to produce samples of graphite concentrate by flotation concentration, for evaluation by potential downstream end-users, and provide data for a Preliminary Economic Assessment (PEA) study. The Company will also be able to determine if the results previously obtained in bench scale testing with higher grade material can be replicated with the lower grade material which might arise from bulk mining the deposit.

Preliminary results obtained from the pilot plant flotation metallurgy program suggest that the Miller hydrothermal graphite can be upgraded to unprecedented purity, with only this basic concentration process. Seven particle size classes, ranging from +200 to +32 mesh, graded 99.38-99.74% C(t) by GDMS (See Exhibit 7 below). Moreover, each particle class also met the standard for nuclear purity, which is defined as an Equivalent Boron Concentration (EBC) of less than 5 parts per million (ppm) – as per the American Society for Testing and Materials (ASTM) C1233-09.

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Exhibit 7 – Grades of Fractions obtained from Bench and Pilot test Flotation


Prior to initiating the pilot plant scale flotation program, Canada Carbon had conducted extensive bench-scale research to determine the characteristics of its hydrothermal graphite. Early on, hydrometallurgical upgrading (caustic roasting and acid leach) had been applied to the graphite. Samples of that heavily processed material were determined to be of nuclear purity, based on the results of the highly sensitive glow discharge mass spectrometry (GDMS) elemental analysis conducted by Evans Analytical Group, of Liverpool, NY. Evans also exposed a sample of this hydrometallurgically processed graphite to brief high temperature conditions in an inert atmosphere, which yielded a graphite purity of 99.9978% C(t).

Later, a 50kg high-grade (45% C(t)) composite sample of the Miller graphite was submitted to SGS Lakefield for bench-scale optimization of the flotation concentration process, which was conducted in 2kg batches. Some large particle samples were obtained which graded up to ~100.0%Ct by LECO, with a measurement uncertainty of 1.4%, which means a reported assay value of 99.0% Ct could therefore range between 97.6% and 100.0% Ct as measured by a LECO. When those flotation concentrates were submitted for GDMS analysis, they too met the purity standard for nuclear graphite, despite not having been exposed to secondary upgrading. Overall purities were found to range from 99.75-99.90% C(t).

The metallurgical advantage of the Canada Carbon Miller graphite comes from its natural high grade coarse lump structure, and the potential for bulk extraction methods. Simply milling and floating the material to produce high grade large flake material of high purity, may lead to competitive margins. Even if hydrometallurgical or thermal upgrading is contemplated for the Miller graphite, the Company anticipates that cost would be competitive and lower than those of most other graphite companies, given the low impurity burden to be removed. Furthermore, preliminary evidence suggests that the relatively inert impurities which are present in the Miller graphite are not intercalated (intergrown) with the graphite crystals, but instead are on the crystal surfaces. This characteristic should also serve to minimize treatment conditions required to further upgrade the graphite.

Investigating High Value Markets and Fast Track to Production Canada Carbon’s preliminary pilot scale flotation tests have yielded results with good percentage recoveries of large and jumbo flakes contained in a high grade concentrate. The Company’s bench-scale flotation tests on a 50kg composite of the Miller graphite samples resulted in 40% of the graphite concentrate reporting to the +80 mesh to +32 mesh sizes (i.e., large to super-jumbo graphite flake sizes), which typically command a market premium. The Company expects to replicate or improve upon the recoveries further through the ongoing pilot plant work. Furthermore, GDMS assays on pilot plant graphite concentrate, processed by flotation alone, have shown 99.3+% purity in seven particle classes, from +200 to +32 mesh. Preliminary characterization of the samples suggests that the quality is comparable with that of synthetic graphite.

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Thus, if Canada Carbon’s final pilot scale flotation metallurgy results confirm what the preliminary tests have shown, i.e., that the Company could recover good percentages of large flake graphite of high purity and comparable in quality with synthetic graphite from bulk mined ore, that could be significantly profitable. Synthetic graphite material for high end applications can be sold for $3,000 - 20,000/t.

The future operating costs of Canada Carbon are not known, but mineralization is near surface and of relatively high grade. Most listed graphite companies with an economic study have estimated operating costs below $500/t. Thus, given the mineralization, infrastructure and logistics of the Miller project we believe that Canada Carbon’s operating costs could be competitive. If the Company decides to start operations with a small production of 5,000 tonnes of graphite concentrate per year, and recovered about 40% of that as large flake high purity graphite that could be sold for at least $3,000/t, and the remaining 60% at a conservative average price of $1,000/t, the Company could achieve initial gross margins of $9M or $1,800/t.

One of the high value markets that Canada Carbon has shown interest in is the nuclear grade graphite market also dominated by synthetics. This graphite, which is used in nuclear reactors and other high tech applications, is said to carry a high value of >$15,000/t. Canada Carbon believes it could potentially achieve the high grade and quality of nuclear grade graphite at lower operating cost relative to synthetic graphite producers. The Company’s natural graphite would likely require additional processing following simple flotation concentration, which should lead to higher capital and cash costs, which are not yet known. However, the Company expects that it would be in the lower level of a potential cost curve, due to the low contaminant burden in the flotation concentrate.

Another important aspect of the Miller deposit is the potential for by-products such as marble and wollastonite. The Company is currently investigating the possibility of selling the marble to local quarry operators. We visited one of the quarry operations near the site (Exhibit 8). An agreement with the quarry operator for leasing of equipment, quarry operations at the Miller property, and for the sale of marble would facilitate the management of aggregate material and likely reduce overall costs. In essence, to fast-track the project to production, the Company may pursue an initial quarry type operation to generate cash flow to advance the project with minimum external financing and low share dilution.

Exhibit 8 – Crushing and Screening Equipment at the Quarry Operations Near the Miller Property


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Conclusions During our visit to the historic Miller graphite property, we were able to see numerous showings with vein type graphite, and can attest to the good infrastructure surrounding the property. For a number of months, the Company has been chasing veins, exposing them, and processing the graphitic material, which yielded exceptional flotation concentrate grades and purity test results. More recently, under the guidance of SGS Lakefield, the Company started to explore the potential for bulk mining instead of selective vein mining, as is done in Sri Lanka.

The challenge embodied in selective mining is the need to define the resource contained in the veins for which the orientation and positioning is difficult to predict. Nonetheless, the vein deposits in Sri Lanka have been successfully mined for over a century. The miners usually define a “rolling resource”, sufficient for them to plan for short-term production targets, while continuously exploring ahead. As they mine out the known resource, they expand the exploration program to find more graphite for future production. For example, AMG Advanced Metallurgical Group (AMS:AMG, NR), through its subsidiary Graphit Kropfmühl, has been producing ~3,000 tonnes/yr at its Bogola mine in Sri Lanka for decades, using this production model.

A similar “rolling resource” production model may well be possible for Canada Carbon; in such case, a formal reporting of resources or economic projections under NI 43-101 may be unnecessary. On the other hand, if the Company decides to employ a bulk mining strategy, a broader resource estimate may be achievable in the near term, but average grades will likely fall to 5-10% Ct. The ongoing pilot plant tests should help the Company determine which mining method is more economic for graphite production in the Miller deposit today. Also, a favourable deal with local quarry operators may help fast track the project to small scale production. Canada Carbon has identified highly prospective hydrothermal graphite showings, and will be performing an extensive drill program to enable it to estimate a resource. Once a resource is defined, we expect the Company to commission a PEA to establish the preliminary economics of the Miller project, while continuing to explore the potential for small scale production.

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Management and Board of Directors Mr. R. Bruce Duncan, Executive Chairman & Chief Executive Officer

Mr. Duncan has over 30 years of experience in the capital markets and brokerage industry. He is the Principal of West Oak Capital Partners Inc. where his client base has included financial services, aviation, mining, oil and gas, logistics, and retail industries. Mr. Duncan currently sits on the boards of several private companies and is the CEO of Evolving Gold Corp., Executive Chairman of Canada Coal Inc., an Independent Director of GeoNovus Minerals Corp. He is also the former CEO and Director of Prosperity Goldfields Corp.

Olga Nikitovic, CPA, CA, Chief Financial Officer

Ms. Nikitovic is a Chartered Accountant and management consultant with over 28 years of work experience. She worked at PricewaterhouseCoopers for nine years in the audit and management consulting departments and specialized in re-engineering and cost management while consulting. After leaving PWC, Ms. Nikitovic held senior management positions with two of Canada’s largest retailers. She is currently the CFO for several private and public mining companies and has been the CFO of Canada Carbon since 2007.

Board of Directors

Mr. R. Bruce Duncan; Executive Chairman & Chief Executive Officer

Mr. Greg Lipton, P.Geo

Mr. Lipton is a registered Professional Geoscientist with the Association of Professional Geoscientists of Ontario (APGO), and a member of the Prospectors and Developers Association of Canada (PDAC). He has over 33 years of field experience in international exploration for base metal, precious metal, diamond, and industrial mineral deposits, mostly with BHP International and Utah International as a Senior Geologist. He has worked varied geologic environments including porphyry, epithermal, VMS, MVT, BHT, and Sedex types in several global locations. He has been a frequent speaker at professional conferences and seminars, and has authored and co-authored numerous technical papers. Since 2004, Mr. Lipton has been the President, CEO, and Director of Metallum Resources Inc.

Mr. Bruce Coventry

Mr. Coventry has over 35 years of experience in the automobile industry. He graduated from Kettering University in 1975 and received an MBA from Michigan State University in 1991. He has held senior management positions with General Motors, Ford, Chrysler, Global Electric Motorcars and Dresser, Inc. and is currently the CEO of Nostrum Motors. Recently, he was VP Operations, Electrovaya Inc. From 2005 to 2009, Mr. Coventry held a Board position with Global Engine Manufacturing Alliance, a joint venture between Chrysler, Hyundai and Mitsubishi. He currently sits on the Board of Trustees of Kettering University.

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Hydrothermal

Exchange:Ticker TSXV:FDR TSXV:NGC TSXV:FMS TSXV:LLG TSX:EGZ TSXV:GPH ASX:SYR ASX:TLG TSXV:CCB TSXV:SJL TSXV:ERA TSXV:ZEN

Company NameFlinders

Resources Limited

Northern Graphite

Corporation

Focus Graphite Inc.

Mason Graphite Inc.

Energizer Resources Inc.

Graphite One Resources Inc.

Syrah Resources Limited

Talga Resources Limited

Canada Carbon Inc.

Saint Jean Carbon Inc.

Elcora Resources Corp.

Zenyatta Ventures Ltd

Primary Project(s) Woxna Bissett Creek Lac Knife Lac Gueret Green Giant Graphite Creek Balama Graphite Nunasvaara/Raitajarvi

Miller Graphite Walker Mine Ragedara Albany

Geography Sweden North Bay, Ontario Quebec, Canada Quebec, Canada Madagascar Alaska Mozambique Sweden Quebec, Canada Quebec, Canada Sri Lanka Ontario, Canada

Current Share Price: $0.61 $0.75 $0.45 $0.61 $0.16 $0.12 $3.61 $0.41 $0.22 $0.02 $0.19 $2.2052 Week Range $0.32 - $1.18 $0.60 - $1.44 $0.25 - $0.69 $0.26 - $1.08 $0.11 - $0.31 $0.11 - $0.25 $2.36 - $5.99 $0.05 - $0.49 $0.10 - $0.30 $0.01 - $0.07 $0.10 - $0.49 $1.48 - $3.6% Range 34% 18% 45% 43% 28% 4% 34% 81% 58% 8% 23% 34%Trading Currency CAD CAD CAD CAD CAD CAD AUD AUD CAD CAD CAD CADAverage Volume (3m) 105,060 123,550 212,280 134,040 572,880 884,000 460,390 440,200 660,380 395,540 68,460 219,780Basic Shares Outstanding (M) 46.8 49.2 110.9 85.8 303.5 144.2 164.1 124.6 84.2 82.6 41.7 55.610

Market Capitalization ($M) 28.6 36.9 49.9 52.3 48.6 16.6 592.5 50.5 18.1 1.2 7.9 122.3Cash & Equivalents ($M) 7.3 2.5 2.1 14.4 1.3 0.2 28.6 4.3 0.8 0.0 1.0 1.9Net Debt ($M) -7.3 -2.5 -2.1 -5.1 -1.3 -0.2 -28.6 -4.3 -0.8 0.7 -1.0 -1.9

Enterprise Value ($M) 14.0 31.9 45.8 32.8 45.9 16.1 535.4 41.9 16.5 1.9 5.9 118.6Resource Cut-Off (%Cg) 7.0% 1.0% 3.0% 5.0% 2.0%-4.0% 3.0% - 10.0% - - - 0.60%Net Resources (Mt):

Measured 1.00 - 0.43 4.52 23.62 - - - - - - -Measured & Indicated 2.80 69.79 9.58 50.02 100.37 - - 5.60 - - - 25.10Inferred - 24.04 3.10 11.86 40.91 186.86 1150.00 2.50 - - 3.35 20.10

Total 2.80 93.83 12.68 61.89 141.28 186.86 1150.00 8.10 - - 3.35 45.20Resource Grade (% Cg):

Measured 10.70% - 23.66% 15.50% 6.32% - - - - - - -Measured & Indicated 10.70% 1.74% 14.77% 15.59% 6.27% - - 24.60% - - - 3.89%Inferred - 1.65% 13.25% 17.10% 5.78% 5.54% 10.20% 21.36% - - 90.00% 2.20%

Average Grade M&I,I 10.70% 1.72% 14.40% 15.88% 6.13% 5.54% 10.20% 23.60% - - 90.00% 3.14%Contained Graphite (Mt)

Measured 0.11 - 0.10 0.70 1.49 - - - - - - -Measured & Indicated 0.19 1.21 1.31 7.10 4.80 - - 1.38 - - - 0.98Inferred - 0.40 0.41 2.03 2.36 10.35 117.30 0.53 - - 3.02 0.44

Total M&I Contained Graphite (Mt) 0.19 1.21 1.31 7.10 4.80 - - 1.38 - - - 0.98Total Contained Graphite (Mt) 0.19 1.61 1.72 9.13 7.16 10.35 117.30 1.91 - - 3.02 1.42

EV / Contained M&I Graphite ($/t) $72.91 $26.24 $34.87 $4.63 $9.57 - - $30.38 - - - $121.42EV / Contained Total Graphite ($/t) $72.91 $19.78 $26.56 $3.60 $6.41 $1.56 $4.56 $21.90 - - $1.97 $83.62

Project Economics (1)

Capital Expenditure ($M) $16.7 $134.1 $166.0 $140.5 $162.0 - US$92.0 - - - $5.0 -Operating Cost ($/t) $662.0 $736.0 $441.0 $389.6 $418.5 - US$198.0 - - - $1,250.0 -Graphite Price ($/t) $1,199.0 $1,800.0 $1,713.0 $1,525.0 $1,526.0 - - - - - $1.0 -Pre-Tax NPV ($M @ 8% Disc.) $26.6 $264.7 $383.0 $363.7 $421.0 @ 10% - - - - - - -Pre-Tax IRR 34.0% 31.7% 30.1% 33.7% 48.0% - - - - - 0.0% -Payback Years 3.9 - 3.0 2.5 3.0 - - - - - 0.0 -Annual Production Capacity (t) 16,600 44,200 44,300 50,000 84,000 - 220,000 80-100,000 - - 100,000 -

Capex/Production Capacity ($/t) $1,006.0 $3,033.9 $3,747.2 $2,809.3 $1,928.6 - - - - - $50.0 -

Resource Type NI43-101 NI 43-101 NI 43-101 NI 43-101 NI 43-101 NI 43-101 JORC JORC - - Non-NI 43-101 NI 43-101Flake Size (S/M/L&XL) 32%/28%/40% 19%/5%/76% 36%/30%/34% 57%/14%/29% 19%/52%/29% 5%/1%/94% 59%/16%/25% 13%/38%/49% - - - -Stage of Development Construction Financing Bankable Feas Bankable Feas Bankable Feas PEA Feasibility Scoping/Metallu Drilling/Res. Est. Drilling/Res. Est. Production PEA

Target Completion H1 2014 H2 2014 Completed Q3 2014 Q4 2014 2014 Q2 2014 2014 H2 2014 2014 In Production Q2 2014Target Production Start-Up Q2 2014 2016 2016 2016 2016 2016 2016 2016 2016 2016 In Production -Mine Life 13 Years 21 Years 25 Years 22 Years 27 Years - 25 Years 10 Years - - - -(1) Historical estimates as indicated by the company's management Source: Company Reports, Corporate Presentations, Capital IQ

Lump GraphiteFlake Graphite

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Euro Pacific Canada Inc. Research Disclosures

Analyst Certification

Company: Canada Carbon Inc. Ticker: CCB-TSX.V

I, Luisa Moreno, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.

http://research.europac.ca/research/disclosures.php

COMPANY SPECIFIC DISCLOSURES

Is this an issuer related or industry related publication? Issuer

Does the Analyst or any member of the Analyst’s household have a financial interest in the securities of the subject issuer? If Yes: 1) Is it a long or short position? NA; and, 2) What type of security is it? NA

No

Does the Analyst or household member serve as a Director or Officer or Advisory Board Member of the issuer? No

Does Euro Pacific Canada Inc. or the Analyst have any actual material conflicts of interest with the issuer? No

Does Euro Pacific Canada Inc. and/or one or more entities affiliated with Euro Pacific Canada Inc. beneficially own common shares (or any other class of common equity securities) of this issuer which constitutes more than 1% of the presently issued and outstanding shares of the issuer?

No

During the last 12 months, has Euro Pacific Canada Inc. provided financial advice to and/or, either on its own or as a syndicate member, participated in a public offering, or private placement of securities of this issuer?

No

During the last 12 months, has Euro Pacific Canada Inc. received compensation for having provided investment banking or related services to this Issuer?

No

Has the Analyst had an onsite visit with the Issuer within the last 12 months? Yes

Has the Analyst been compensated for travel expenses incurred as a result of an onsite visit with the Issuer within the last 12 months? No

Has the Analyst received any compensation from the subject company in the past 12 months? No

Is Euro Pacific Canada Inc. a market maker in the issuer’s securities at the date of this report? No

U.K. DISCLOSURES

This research report was prepared by Euro Pacific Canada Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund

EURO PACIFIC CANADA INC. IS NOT SUBJECT TO U.K. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS.

The contents hereof are intended solely for the use of, and may only be issued or passed onto persons described in part VI of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein.

U.S. DISCLOSURES

This research report was prepared by Euro Pacific Canada Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Euro Pacific Canada Inc. is not registered as a broker-dealer in the United States. The firm that prepared this report may not be subject to U.S. rules regarding the preparation of research reports and the independence of research analysts.

Toronto

150 York Street, Suite 1100

Toronto, ON, M5H 3S5

416-649-4273 | 888-216-9779

Montreal

1501 McGill College Avenue Suite 1450

Montréal, Québec H3A 3M8

514-940-5096 | 888-216-9779

Vancouver

900 West Hastings Street, Suite 710

Vancouver, BC, V6C 1E5

604-453-1382 | 888-216-9779
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Canada Carbon Inc.dqkjwx3xr6pzf.cloudfront.net/c106630/CCB_-_10282014.pdfLuisa Moreno, PhD, MEng |...

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