Star Metro - Gratomic Inc. Provides Corporate Update for Shareholders

The Board of Directors, currently comprising of Charles Clifford Bream, Arnoldus Brand, Executive Chair, and Manie Silver, Chief Executive Officer, is working diligently to set a corrective course for the business. The Board recognizes that shareholders have endured a difficult and uncertain period, and the Company is committed to improving transparency, restoring regulatory compliance, advancing the Aukam graphite project, and establishing a practical path forward for the Company and its Namibian operations.

These have been very challenging times for management and the Board. The Company has had limited financial support available to carry the business forward, while simultaneously working to address outstanding financial reporting obligations and stabilize the Company's operating and corporate position. Despite these constraints, the Board and management have continued to work tirelessly to bring the Company's financial reporting up to date.

The Company also wishes to acknowledge the personal sacrifices made by members of management during this period. Manie Silver and Arnoldus Brand have not taken compensation from the Company for more than two years. In addition, Arnoldus Brand, in his capacity as Chairman, has forgone his compensation since April 1, 2024 with the intention of preserving available capital for essential operations, creditor obligations, regulatory matters, audit work, and payables. The Board believes it is important for shareholders to understand that management has not been drawing cash from the business during this period of financial constraint. On the contrary, without capital and support injected by management, the Company would likely not have been able to continue to preserve its corporate existence, maintain its Namibian operations, and work toward restoring its financial reporting and regulatory standing.

The Company is currently nearing completion of its audit for the year ended December 31, 2024. In addition, the Company estimates that approximately 67% of the audit work for the 2025 financial year has been completed. The Company continues to work with its auditors, accounting advisors, finance team, and Audit Committee to complete the remaining work as efficiently and responsibly as possible.

The Company's financial reporting records and related accounting transition matters required substantial review, reconciliation, and corrective work. This process has required management to address historical deficiencies, organize and validate supporting documentation, and ensure that the Company's financial disclosure is completed to the appropriate standard. While this has taken longer than anticipated, the Board believes that the process must be completed properly in order to restore confidence and place the Company on a more stable foundation.

Management is reporting to the Board on a regular basis to review progress, assess support requirements, monitor the audit and reporting process, and evaluate the steps required to stabilize and advance the business. These meetings are focused on financial reporting, regulatory compliance, operational standing in Namibia, financing options, asset-level strategy, and the Company's broader corporate path forward.

Management has multiple immediate objectives, including restoring regulatory compliance, completing the outstanding audits, improving financial controls, preserving the Company's Aukam graphite project, and evaluating strategic alternatives. However, the Board wishes to stress that the central operational objective remains clear: the Aukam graphite mine must be brought into production by any viable and responsible means available to the Company.

Given the Company's current financial circumstances, the limited availability of corporate-level capital, and the importance of keeping the Namibian operations in good standing, the Board believes that a restructuring of the corporation at the asset level is likely the most realistic opportunity to achieve this objective. This may include a structured business combination, asset-level restructuring, strategic partnership, project-level financing, joint venture, or similar transaction designed to provide the Aukam graphite project with the capital, technical support, and operating structure required to move toward production.

The Company is currently in discussions with multiple banking and advisory firms regarding potential strategic alternatives and the most effective structure to support the long-term advancement of the Aukam graphite project. The Board believes that the Aukam project requires a structure that can properly support mine development, production readiness, working capital, operational execution, and stakeholder obligations in Namibia.

No definitive transaction has been agreed to at this time, and there can be no assurance that any business combination, restructuring, financing, strategic partnership, joint venture, or other transaction will be completed. However, the Board believes it is prudent and necessary to evaluate all credible options that may preserve and enhance shareholder value, provide the Aukam graphite project with a stronger financial footing, and create a pathway toward renewed operational momentum and production.

Given the efforts of management, who have continued to offer their time and support without compensation during this period, the Board respectfully asks shareholders to remain patient and open to constructive dialogue as the Company unfolds and evaluates its business strategies. The Board believes that these strategies are being pursued with the objective of benefiting shareholders, preserving the corporation, and positioning the Aukam graphite asset for a more sustainable path forward.

The Company remains focused on four immediate priorities:

1. completing the outstanding financial reporting process;

2. maintaining the Company's Namibian operations and the Aukam graphite project in good standing;

3. evaluating strategic alternatives that may provide the Company and the Aukam graphite project with the financial and operational support required to move forward; and

4. advancing a realistic pathway to bring the Aukam graphite mine into production.

The Board thanks shareholders, employees, consultants, creditors, service providers, and stakeholders in Namibia for their continued patience and support during this difficult period. The Company understands the importance of timely communication and intends to provide further updates as material developments occur.

Gratomic wishes to emphasize that no Preliminary Economic Analysis, Preliminary Feasibility Study or Feasibility Study has been completed to support any level of production. In fact, no mineral resources let alone mineral reserves demonstrating economic viability and technical feasibility, have been delineated on the Aukam property.

The Company intends to complete a Feasibility Study (FS) or equivalent study on the Aukam Property. The study, its recommendations, and their subsequent implementation, will provide conclusions and recommendations at a FS level of comfort about scaling up the existing processing plant at Aukam to a commercial scale processing facility capable of producing the desired concentrate grades and production rates.

Gratomic wishes to emphasize that the supply of graphite is conditional on Gratomic being able to bring the Aukam project into a production phase, and for any graphite being produced to meet certain technical and mineralization requirements.

Risk Factors

No mineral resources, let alone mineral reserves demonstrating economic viability and technical feasibility, have been delineated on the Aukam Property. The Company is not in a position to demonstrate or disclose any capital and/or operating costs that may be associated with the processing plant until a FS is completed.

The Company advises that it has not based its production decision on even the existence of mineral resources let alone on a Preliminary Feasibility Study or FS of mineral reserves, demonstrating economic and technical viability, and, as a result, there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially mineable deposit.

Historically, such projects have a much higher risk of economic and technical failure. There is no guarantee that production will begin as anticipated or at all or that anticipated production costs will be achieved.

Failure to commence production would have a material adverse impact on the Company's ability to generate revenue and cash flow to fund operations. Failure to achieve the anticipated production costs would have a material adverse impact on the Company's cash flow and future profitability.

About Gratomic

Gratomic Inc. is a graphite company focused on the advancement of its Aukam graphite project in Namibia. The Company's objective is to develop Aukam as a source of high-quality graphite products while maintaining a disciplined approach to regulatory compliance, financial reporting, corporate governance, and long-term shareholder value creation.

For more information

Contact: Arno Brand at (416) 561- 4095 [email protected] or Manie Silver at +27 716821730 or [email protected]

"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."

Forward-Looking Statements

This news release contains forward-looking statements and forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements in this news release include, but are not limited to, statements regarding the completion of the Company's audits and financial reporting, the Company's ability to restore regulatory compliance, the potential advancement of the Aukam graphite project, the Company's ability to maintain its Namibian operations in good standing, the evaluation of strategic alternatives, the possibility of bringing the Aukam graphite mine into production, and the possibility of a structured business combination, asset-level restructuring, strategic partnership, project-level financing, joint venture, or other transaction.

Forward-looking statements are based on management's current expectations, assumptions, estimates, and projections, including assumptions regarding the availability and sufficiency of audit evidence, the timing of auditor review, the ability of the Company to secure financial support, regulatory requirements, stakeholder support, the Company's ability to complete outstanding filings, the availability of project-level financing or strategic partners, and the Company's ability to evaluate and complete strategic alternatives. Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause actual results, events, or developments to differ materially from those expressed or implied by such forward-looking statements.

There can be no assurance that the Company will complete its audits or financial filings within any particular timeframe, that regulatory compliance will be restored, that any cease trade order or trading suspension will be revoked, that the Company will secure financing, that the Aukam graphite mine will be brought into production, or that any business combination, restructuring, strategic partnership, project-level financing, joint venture, or other transaction will be completed. Readers are cautioned not to place undue reliance on forward-looking statements. Except as required by applicable securities laws, the Company does not undertake any obligation to update or revise forward-looking statements.

All the forward-looking statements made in this press release are qualified by these cautionary statements and by those made in our filings with SEDAR+ in Canada (available at www.sedarplus.com).

SOURCE: Gratomic Inc.

View the original press release on ACCESS Newswire

A.Bergeron--SMC