Raising Our Fair Value Estimate on Transformational Resource Upgrade

• High-Grade, Low-Cost Advantage - The deposit averages 10.2% graphite carbon, well above the typical 3–8% range for graphite projects. Higher-grade deposits are generally associated with stronger economics, and lower OPEX.
• Next steps: FMS plans to conduct metallurgical testing to determine recovery rates, supporting an independent Preliminary Economic Assessment (PEA) evaluating the project’s economic viability.
• Flagship Lac Knife - Advanced, High-Grade Asset: FMS is also advancing its flagship Lac Knife graphite project in Quebec. It is one of the world’s highest-grade graphite deposits, supported by an advanced independent feasibility study. The study estimates an after-tax NPV8% of $286M, while FMS trades at a $42M MCAP, an 84% discount, suggesting the market is not fully reflecting Lac Knife’s value, and assigning no value to Tétépisca. We believe both projects have the scale to operate as standalone companies.
• Clear Undervaluation vs Peers: Despite attractive projects in a prime jurisdiction, FMS is trading at $4/t graphite vs a sector average of $23/t, an 87% discount. This reinforces the view that the market has yet to fully recognize the value of FMS’ portfolio.
• Attractive Strategic Target: We continue to view FMS as an attractive acquisition target for mining and technology companies seeking stable, long-term North American graphite supply.

Price and Volume (1-year)

* Sprott Critical Materials ETF

* Qualified Person: Réjean Girard, P.Geo. (QC), President of IOS Geosciences Inc., a consultant to Focus Graphite. Focus Graphite Inc. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in C$; commodity prices in US$.

Aims to supply graphite anodes for lithium-ion batteries in North America

Portfolio Summary 

FMS vs Graphite Juniors

Source: S&P Capital IQ / Various / FRC

In December 2025, FMS received $14M in non-repayable government funding to build a high-purity graphite plant for military, defence, aerospace, and advanced technology applications

FMS stands out among comparable projects for its superior resource scale and grade, combined with below-average projected CAPEX and OPEX

Source: FRC

FMS is up 333% YoY, significantly outperforming the comparables average gain of 33%

Tétépisca Graphite Project (100% owned)

The updated resource estimate incorporates drilling since 2022, expanding the database to 150 holes (26,095 m) from 106 holes (16,467 m).

Source: Company / FRC

We believe this upgrade is transformational, positioning Tétépisca among the world’s largest and highest-grade graphite projects

Indicated resources (higher-confidence category) increased 96%; Inferred resources (lower-confidence) increased 49% 

Indicated resources now account for 84% of total resources (previously 80%), reflecting higher confidence 

Block Model

* Red shows high-grade areas, while orange/yellow and green represent mid-to-high and moderate grades

Source: Company

Grades declined by 0.5 pp to 10.2%, but remain well above the typical 3–8% range for graphite projects

 High-grade deposits are preferred due to their potential for stronger economics and lower operating costs 

Next steps:  FMS plans to conduct metallurgical testing to determine recovery rates, which will support an independent economic study (PEA) evaluating the project’s economic viability.

Lac Knife Graphite Project (100% owned)

FMS is also simultaneously advancing its flagship Lac Knife graphite project, a more advanced-stage asset. Next steps include product testing with potential buyers, securing supply agreements, completing the environmental assessment (now in its final stages), permitting, and project financing.

With a 25+ year mine life, the project offers potential for long-term, stable graphite supply for prospective buyers

Recent Developments

Source: FRC

If successful, these programs could support future partnerships, customer engagement, funding opportunities, and commercialization efforts

Project Development Stages

Permitting underway; production expected by 2028-2029

2023 Resource Estimate (4.0% Cg cut-off)

Source: Company

Ideal for open-pit mining, with one of the world’s highest graphite grades at 15% Cg

2023 Feasibility Study Highlights

Source: Company / FRC

After-tax NPV8% of $286M, and IRR of 23%; we view an IRR above 20% as very attractive

FMS’s MCAP is only $42M, suggesting the market is undervaluing Lac Knife, and assigning no value to Tétépisca

The study used a weighted average product price of $1,679/t vs the current spot price of $1,000-$1,500/t

Financials

Healthy balance sheet, with in-the-money options and warrants that could add up to $5M 

Source: FRC / Company

FRC Comparables Valuation

Source: S&P Capital IQ / Various / FRC

Despite attractive project metrics (large tonnage, high grade, and low costs), FMS is trading at just $3/t (previously $4/t), compared with the sector average of $23/t (previously $21/t)

Applying the sector average to FMS’s resources, we arrived at a comparables valuation of $2.78/share (previously $1.53/share)

Source: FRC

The average of our DCF and comparables valuation is $2.03/share (previously $1.27/share)

We reiterate our BUY rating, and raise our fair value estimate from $1.27 to $2.03/share,  reflecting the significant resource growth at Tétépisca. FMS is advancing two large-scale, high-grade graphite projects in Quebec, highlighted by a transformational resource expansion at Tétépisca, and continued progress at the flagship Lac Knife project. Despite the scale and quality of its assets, the company trades at a significant discount to its comparables.

Risks

We believe the company is exposed to the following key risks (not exhaustive): 

• The value of the company depends on graphite prices 
• Permitting
• Access to capital and share dilution
• No assurance that the company can advance its projects simultaneously

We are maintaining our risk rating of 5 (Highly Speculative)