First Graphene Ltd. — Capital/Financing Update 2013

Jun 18, 2013

ASX Release19 June 2013Mongolian Resources LimitedACN 007 870 760ABN 50 007 870 760Registered OfficeSuites 6 & 761 Hampden RoadNedlands WA 6009Tel+61 1300 660 448Fax+61 1300 855 044DirectorsPeter ReillyCraig Robert McGuckinPeter Richard YoudCompany SecretaryNerida SchmidtEmail:info@mrltd.com.auWeb Site: www.mrltd.com.auASX SymbolMRF, MRFO, MRFOA

Share Sale Deed Executed andDD completed on Sri LankanGraphite acquisitionFurther to the update provided on the 15thMay the Directors of MongolianResources Ltd (MRL) are pleased to announce the successful completion ofthe due diligence on the Sri Lankan graphite and the execution of the ShareSale Agreement.The conclusion of the formal acquisition process now provides MRL a clearpath to progressively unlock the exciting graphite potential existing withinits license areas.MRL has made significant progress towards the commencement ofoperations. Quotations for detailed surveying, geological mapping andprogressive clean out of existing workings on two sites have been receivedand are being reviewed. It is expected operations will commence in lateJuly.Due to the numerous historical workings available MRL, in combinationwith Geological Survey and Mines Department (GSMB), have chosen twosites at Pandeniya and Wallagala to begin initial operations.MRL have identified a number of employees and contractors with significantexperience in graphite geology and mining to assist in the safeestablishment of operations within Sri Lanka.Background on Sri Lankan GraphiteSri Lanka is perhaps one of the most promising new frontiers in the graphitesector. The Asian nation currently produces a very small amount ofgraphite - approximately 4,000 metric tonnes (MT) yearly, according to theUS Geological Survey (USGS). Sri Lanka has a long history in mininggraphite and has the unique position of being the only producer ofcrystalline vein graphite. In 1916, 35% of the world’s graphite consumption(33,411 metric tonnes) was exported from Sri Lanka.Vein & flake graphite are the highest-value natural graphite products foundglobally, the USGS notes. In 2012, prices for Sri Lankan vein and flakegraphite averaged between US$1,900 to US$3,500 per tonne, significantlyhigher than prices reported for other graphite products, such as amorphousgraphite.Sri Lanka is a vibrant fast growing economy following from the 26 yearconflict which ended in May 2009. The country’s GDP has grownconsistently at a rate of 6.5% - 8% from 2010 – 12. Infrastructure in theareas of interest is excellent with suitable power, water, communicationsand a ready work force available.Sri Lanka has a favourable investment and tax regime for the import ofcapital equipment and foreign investment in natural resources including thepotential for a tax free holiday period of up to 10 years upon an investmentagreement being approved by the Board of Investment (BOI). The legalsystem is based on the British common law system.The country has a population of approximately 20 million people and a highliteracy rate approaching 92%. As a Member of the Commonwealth Englishis taught and spokenas a secondlanguage.

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Through a subsidiary company MRL holds exploration licences totalling 45km[2] in what has been described by the Sri Lankan Geological Survey and Mining Bureau (GSMB) as the best graphite areas. All grid areas have numerous old workings dating back as far as the 1880s and have not been worked since the 1930s. Mining techniques were rudimentary and mining ceased at the water table (approximately 25m). The use of modern mining equipment, pumps and ventilation may allow deeper portions of the vein structures to be mined.

This transaction provides a significant opportunity for MRL to reopen areas of the Sri Lankan graphite industry and provide future upside in multiple locations. The potential also exists for small scale production to begin in the medium term following the refurbishment of existing underground workings at certain locations following conversion from exploration to mining. The Company will be actively applying for further license areas adjacent to those held.

What is Graphite

Graphite is a low density allotrope of the element carbon. This naturally occurring element is soft to touch, has a melting point of 3,600 degrees Celsius and is a black colour. In its innate form it is used as a dry lubricant. The electric conductivity of graphite makes it a popular choice for electrodes. Natural graphite comes in several forms: amorphous, flake and lump or vein graphite. Vein graphite is the purest and most expensive form of natural graphite. Sri Lanka is the only country producing vein graphite.

Graphite Applications

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• Steelmaking / Refractories

• Graphite in Lithium Ion Batteries & Fuel Cells

• Brake Linings

• Lubricants

• Pebble Bed Nuclear Reactors (PBNR)

• Pencils

World natural graphite production is approximately 1.6 million tonnes per year, and is a similar quantity to the annual production of nickel.

Natural Graphite Production by country

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MRL’s Strategy

 MRL’s projects are expected to have a low operating cost, capital cost and discovery cost.

• Near term production potential.

• Great in country infrastructure with low operating costs

• High grade graphite, such as that at MRL’s projects is a premium product with a premium price tag.

• Graphite demand is increasing with uses in re-chargeable technologies being significant.

• Large unexplored regional potential, ability to grow footprint.

• High volume news flow will include;

  • opening up existing artisanal workings

  • detailed mapping of graphite vein structure

  • identification of all historical workings

• diamond drilling results

• securing additional licences

Mongolian Update

MRL has completed an independent review of geophysical data collected during the 2012 year. The results indicate potential coal bearing measures have reasonably high surface cover and would require deeper drilling than anticipated.

The board of MRL have decided to halt any further exploration activities until there is clarity regarding the SEFIL law and a resolution to the Draft Mining Act. MRL has received a spurious arbitration claim from a shareholder of Khangi Prospecting LLC. MRL is working through this issue and will defend its position. Although the area investigated to date only represents approximately 14% of each license the board does not believe further exploration is the best use of shareholders’ funds at this time.

MRL’s intention at this time is to maintain the licenses in good order for the foreseeable future and there is no obligation for any expenditure until midDecember 2013.

MRL Managing Director Mr Craig McGuckin commented:

“The Board of MRL is excited to have completed the transaction to purchase the assets and enter the Sri Lankan graphite industry through the purchase of the subsidiary company from The Supreme Group.

This represents a significant milestone for MRL, the company is well advanced towards implementing its work programmes. The acquisition has the potential to provide significant additional shareholder value.”

MRL Graphite Locations

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----- Start of picture text ----- Pandeniya & Wallagala----- End of picture text -----

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Pandeniya and Wallagala planned initial work locations

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----- Start of picture text ----- Pandeniya and Wallagala planned initial work locationsPandeniyaLarge collapsed shaft at WallagalaWallagalaApprox 650m----- End of picture text -----

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----- Start of picture text ----- Main audit at Wallagala----- End of picture text -----

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