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Zentek and 1329307 BC Ltd. Sign Letter of Intent to Spin Out Albany Graphite Deposit

Feb 15, 2023


Zentek Ltd. an intellectual property development and commercialization company, and 1329307 BC Ltd. have signed a non-binding letter of intent dated February 13, 2023 (the “LOI”), in which the parties agreed to negotiate a transaction involving the transfer of Zentek’s Albany Graphite Deposit in northern Ontario to an entity (“SpinCo”) that will be listed on a recognized Canadian stock exchange. 

The structure of the transaction will be determined following consultation with tax, securities and corporate advisors. Following completion of the transaction, Zentek will retain a majority direct equity interest in SpinCo.

Transferring the Albany Graphite Deposit asset to a separate entity will enable the Albany Graphite project to move forward with the second year of environmental baseline and hydrogeology studies, with the aim to eventually complete a prefeasibility study.

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 Management of Zentek believes that Zentek’s current share price does not fully recognize the value of the Albany Graphite Deposit, and that, by completing the transaction, Zentek, and its shareholders, will benefit from realizing the value of the asset.

“With significant production shortfalls anticipated in the next decade, and the limited number of producing mines and graphite deposits in geopolitically stable countries, the importance of North American graphite and our Albany Deposit is growing by the day,” said Greg Fenton, CEO of Zentek.

 “Amidst this backdrop, we believe our strategy of using a separate entity to move Albany forward and pursuing funding directly for it gives us a compelling pathway to help unlock the value of our wholly owned deposit for shareholders in the near and longer term,” Fenton explained

The LOI was approved by the board of directors of Zentek and 1329307 BC Ltd. If and when a definitive binding agreement to consummate the transaction is executed, Zentek and 1329307 BC Ltd. will issue a subsequent news release containing the details of the definitive agreement and other matters of material significance. 

While each of Zentek and 1329307 BC Ltd. currently expects to complete the transaction, the completion of the transaction will be subject to several conditions, including but not limited to, receiving all required shareholder, regulatory, stock exchange and other corporate and third-party approvals. As such, there can be no assurance that the transaction will be completed at all.

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Graphite to Graphene
Graphene is a single layer of graphite or carbon atoms arranged in a honeycomb lattice. More importantly, it is one of the most promising nanomaterials ever to be discovered.

What makes graphene unique? It is:
-200 times stronger than steel
-1 millionth the thickness of human hair
-Absorbs only 2.3% visible light, making it nearly invisible
-Can be stretched up to 120% of its initial size without breaking
-Graphene has extremely high surface area-to-mass ratio – each gram of graphene has a surface area more than 2,600 square meters. 2 grams of graphene has nearly the same surface area as a regulation NFL football field.

Zentek's focus is commercializing very few layer graphene and developing technology to produce monolayer graphene. We also have a unique graphite deposit ideally suited for making high-quality graphene for unique and highly technical uses. The most important properties for graphene production are exfoliation and dispersion. Albany has a unique combination of graphite purity, particle size and consistency, which give it a significant advantage in both areas.

What can graphene do?
The possibilities for graphene are nearly limitless:

It can be added to plastics, metals and many other materials to make them stronger, lighter, more durable and more conductive

Thanks to its large surface area, other elements – like the antimicrobial agent in our ZenGUARD™ technology – can be attached to the surface of graphene, which can then be used to protect against pathogens and treat disease in crops, livestock and humans

Graphene also has the ability to greatly advance energy storage and microchip technology because of its extremely high capacity and electron mobility.

Albany Graphite Deposit

Zentek currently owns 100% of the Albany Graphite Deposit. The determination by Zentek to proceed with the transfer of the Albany Graphite Deposit to SpinCo follows the expiration of the agreement with The Benchmark Company, originally announced on April 18, 2022. Benchmark was retained to explore strategic alternatives to unlock the value of the Albany Graphite Deposit. Given the acute focus on the development of domestic, critical mineral supply chains, it was determined that transferring the Albany Graphite Deposit from Zentek to a separate entity as described above was the optimal path. A separate entity holding the asset will allow the value of the Albany Graphite Deposit to be defined, and will provide a vehicle to advance the project, independent of Zentek’s core intellectual property development business.

About Zentek

Zentek is an IP development and commercialization company focused on the research, development and commercialization of novel products using graphene and nanomaterials for use in the healthcare industry and beyond.

Zentek’s patented ZenGUARD™ coating is shown to have 99% antimicrobial activity and to significantly increase the bacterial and viral filtration efficiency of both surgical masks and HVAC systems. Zentek's ZenGUARD™ production facility is in Guelph, Ontario.

For further information:

Mitch Swergold, Director of Investor Relations
Tel: (917) 930-8723
Email: mswergold@zentek.com

Dr. Francis Dubé, Executive Chairman
Tel: (289) 821-2820



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