Ceylon Graphite Announces Closing of $365,000 Convertible Debenture Financing and Extension of Convertible Debenture - Seite 2

The Company also announces that it expects to amend the terms of certain convertible debentures (the “2018 Convertible Debentures”) that were issued by the Company on May 23, 2018. The 2018 Convertible Debentures currently entitle the holders thereof to convert an aggregate principal balance of $1,850,000 into common shares (“2018 Debenture Shares”) of the Company at a price of $0.25 per 2018 Convertible Debenture Share at any time prior to November 23, 2023. The Company intends to amend the conversion price of the 2018 Convertible Debentures to $0.15 per 2018 Debenture Share and amend the maturity date of the 2018 Convertible Debentures to November 23, 2024 (the “Amendments”). In addition, the Company expects to issue up to 6,166,666 warrants of the Company (the “Replacement Warrants”) to the holders of 2018 Convertible Debentures to replace the warrants originally issued together with the 2018 Convertible Debentures and which are set to expire on November 23, 2023. Each Replacement Warrant is exercisable for one Common Share (a “Replacement Warrant Share”) at a price of $0.15 per Replacement Warrant Share at any time for until November 23, 2024. The Company is not receiving any additional funds in connection with the Amendments or issuance of the Replacement Warrants.

The Financing, Amendments and issuance of the Replacement Warrants are subject to the final approval of the TSX Venture Exchange. All securities issued and issuable in connection with the Financing and the Replacement Warrants are subject to a four month and one day hold period from the dated of issuance in accordance with Canadian securities laws.

In connection with the above transactions a company controlled by Sasha Jacob, CEO of the Company, and holder of a principal amount of $1,000,000 of the 2018 Debentures, is anticipated to receive 3,333,332 Replacement Warrants, and Mr. Jacob has subscribed for 40 Debenture Units (the “Insider Participation”). The Insider Participation constitutes a “related party transaction” as such term is defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on an exemption from the formal valuation and minority shareholder approval requirements provided under MI 61-101 pursuant to section 5.5(a) and section 5.7(1)(a) of MI 61-101, on the basis that the Insider Participation does not exceed 25% of the fair market value of the Company’s market capitalization.