MARVEL GOLD LIMITED — Capital/Financing Update 2016

Jun 13, 2016

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14 June 2016

Dear Shareholders of Graphex Mining Limited,

I wanted to personally write a letter welcoming you as a shareholder of Graphex Mining Limited (‘ Graphex ’). I am incredibly excited to be your Managing Director during what I expect to be a period of rapid yet sustainable success.

Capital raising

The completion of a heavily oversubscribed capital raising of $7 million demonstrates the attractiveness of the Graphex investment proposition and gives the Company a solid platform from which to grow. The support from IMX shareholders vastly exceeded expectations and we thank you for your continued support. The demand from new investors was extremely strong and being able to attract a number of high quality institutional investors was particularly encouraging.

Graphex – a differentiated story

One of the consistent themes from the investor marketing roadshow we undertook during the recent IPO process was that the Graphex story had a real point-of-difference within the graphite industry. Australian investors are well aware of the expected growth in graphite demand based on its use in lithium-ion batteries for electric vehicles and energy storage. However, having spent more than 80 days in China since the beginning of 2015, I firmly believe that the most compelling market opportunity for potential graphite producers is in the expandable graphite market in China.

Quite simply, high quality coarse flake graphite, like that found at Graphex’s Chilalo Project, when mixed with acid and heated expands to many times its original size. This expanded graphite has unique heatresistant properties and is used widely to produce products like graphite foil and paper. In addition, and more significantly, are recent recommendations made by the Chinese government relating to building construction that will see the demand for expandable graphite in flame retardant building materials rival the demand growth in lithium-ion batteries. With market-leading expandability, Graphex is ideally placed to benefit from this growth potential.

Near-term catalyst – securing offtake

Converting a high quality graphite project into long term shareholder returns is only achievable if a credible offtake partner can be secured.

Within months of listing, we are confident of being able t to conclude a binding transaction for offtake and financing with China Gold and China National Building Materials (CNBM). This would represent a significant milestone for Graphex, and we expect the successful completion of this transaction will underpin the development of the world-class Chilalo project. Following are some key points to note about the relationship with China Gold and CNBM and the potential deal:

• China Gold spent 7 months conducting testwork and due diligence prior to signing an MOU with IMX. Their interest and enthusiasm for this project has been unwavering.

• China Gold is an extremely large company, controlled by the Chinese central government. China Gold dominates the Chinese gold industry as well as being the dominant player in other nonferrous metals.

• CNBM is also an extremely large company, controlled by the Chinese central government. CNBM controls the building materials market in China and their interest in Chilalo stems from the suitability of the product to production of flame retardant building materials.

• We expect China Gold / CNBM to demonstrate their interest in the project by investing directly in project equity (ie. contributing funding towards project development to earn an interest in Graphex’s project subsidiary).

• China Gold and CNBM are also likely to assist with facilitating project debt financing.

Representatives from China Gold, CNBM and the Suzhou testing authority are visiting site on 21 June 2016 with a view to completing their due diligence activities. We look forward to the opportunity to welcome China Gold and CNBM as our partners in the months following listing.

Chilalo’s high quality product

The success of a graphite project comes down to having a high quality product. Quality can mean many things because there are a lot of niche graphite markets. Higher graphite prices are achieved from either coarse flake graphite, ultra-high purity graphite, and/or demonstrating that your graphite product is amenable to the downstream value-added products (expandable, spherical, micronized and purified graphite as well as graphene).

Not only does Chilalo have a very large proportion of coarse flake graphite (> 180 microns), it has demonstrated through testwork conducted by China Gold that it has market-leading expandability (see figure below).

Published Expansion Rates (mL/g)

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This exceptional expandability provides Chilalo with optionality – it opens up the markets that Graphex can access:

• Graphite >300 microns is primarily sold into the expandable graphite market. As a result, we will be at the front of the queue and/or achieve higher prices for these flake sizes than our peers.

• Chilalo’s small to medium flake graphite has also demonstrated its expandability. It can produce expandable graphite for flame retardant building materials rather than relying on selling it into the spherical graphite market.

Next steps – near term catalysts with quick timeframe to production

Soon after listing, we expect to make our application for a mining licence at Chilalo which is expected to be granted in the coming months. This should allow us to finalise any agreement we are able to reach with China Gold / CNBM and set Graphex on the path to developing and constructing a world-class graphite mine in Tanzania. Given the proposed small-scale operation, Graphex anticipates a rapid development timeline that could see it become one of the first ASX-listed graphite projects to production.

Analyst coverage

Graphex will have analyst coverage from three independent analysts from Pulse Markets (Chris Baker), Palladion Partners (David Greenwood) and RM Research (Guy Le Page). These will be made available on the website as and when produced.

Roadshow and Proactive Investors luncheon series

I will be conducting an investor roadshow in the week commencing 4 July 2016 and would welcome the opportunity to meet brokers and investors who are interested in Graphex. My schedule is as follows:

• Sydney (4-5 July 2016)

• Melbourne (6-7 July 2016)

• I will also be presenting at the Proactive Investors luncheon series at the following times:

  • Radisson Blu Hotel, Cnr Pitt & O’Connell Street, Sydney (Marble Room), 11:30 – 14:00, 5 July 2016

  • CQ Melbourne, 113 Queen Street, Melbourne (Level 1), 11:30 – 14:00, 6 July 2016

Loyalty options

I would also like to remind shareholders who participated in the capital raising that the vesting of your allocated loyalty options remains subject to holding your shares for the first 3 months. The Company expects that it will list these options subject to satisfying the listing criteria post-vesting.

Once again, I would like to reiterate how excited I am to be leading Graphex into what I expect will be an extremely prosperous future, and I look forward to your continued support.

Yours sincerely

Phil Hoskins Managing Director Graphex Mining Limited