Peninsula Mines Ltd. has signed a non-binding Memorandum of Understanding agreement with DNI Metals Inc. that envisages the formation of a cooperative joint venture to supply (and potentially develop and produce), initially up to 20,000 tonnes per year of large-flake graphite concentrate to South Korean ("Korean") end-users. The MOU includes the following terms: PSM and DNI agree to cooperate with respect to supply and potential development and production of initially up to 20,000 tonnes per annum ("TPA") of >180 micron, >95% Total Graphitic Carbon ("TGC") flake graphite concentrate from calendar 2018. The Parties agree to identify scope to significantly increase supply to meet projected demand for large-flake graphite concentrate to supply expandable graphite and/or other graphite products production in South Korea.

Under this agreement the two Company's together aim to initially supply large-flake graphite concentrate from Madagascar, or elsewhere, to meet the required specifications for production of expandable graphite, as defined in the offtake agreements to be entered into by the parties, including the criteria as stipulated in the offtake Memorandum of Understanding ("offtake MOU") signed by Peninsula with Korean expandable graphite producer, Graphene Korea Co. Ltd. ("Graphene Korea"). The MOU is intended to form the basis of a binding flake graphite concentrate supply/offtake joint venture agreement ("Binding Supply Agreement") that the parties will use their best to complete within 6 months of signing this MOU.