Tax Convention Signed Between Canada and Madagascar - DNI to Form Mauritian Company - DNI Saprolite Graphite Advantage

1. A tax treaty has been signed between Canada and Madagascar, see details below.
   
   
2. Royalties for mining assets in Madagascar are as follows:
   
   a) 2 percent of gross exports of raw commodities
   
   b) 1 percent if minerals are processed locally before export
   
   

3. DNI has started the process of forming a Mauritian company, in which ownership of DNI Metals Madagascar SARL, will be transferred to the Mauritian entity. The benefits are twofold:

   1. Mauritius and Madagascar have an Investment Promotion and Protection Agreement ("IPPA") in place since late 2010. See details below
   
   2. A double-taxation treaty is in force between Madagascar and Mauritius

4. The Definitive Agreement "DA" was finalized and signed on Friday March 24, 2017 with Cougar Metals in which Cougar can earn into 50% of DNI's Madagascar Graphite Project, once Cougar
   
   

   a) Completes a NI 43-101 Resource Report by June 30, 201

   
   b) Completes a NI 43-101 PEA (Preliminary Economic Assessment) by October 31, 2017.

Tax Convention Signed Between Canada and Madagascar

A Convention between Canada and the Republic of Madagascar for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income was signed in Antananarivo, the capital of Madagascar, on 24 November 2016.

The Convention limits the rate of withholding tax to 5% for dividends paid to a company that holds directly or indirectly at least 25% of the voting power of the company that pays the dividends, to 15% for dividends paid in all other cases, and to 10% for payments of interest and royalties. The Convention also exempts from withholding tax certain payments of interest and limits the rate of withholding tax to 5% on certain payments of royalties.

The Convention includes provisions reflecting the standard developed by the Organization for Economic Co-operation and Development for the exchange of information for tax purposes.

The Convention will enter into force once Canada and the Republic of Madagascar have notified each other that the procedures required by their laws for the bringing into force of the Convention have been completed. The Convention will have effect in accordance with Article 28 of the Convention.

For further information contact:

Tax Legislation Division of the Canadian Government

Phone: (613) 369-4081

For information concerning the interpretation and application of Canada's tax treaties, please contact the Canada Revenue Agency (CRA). Contact information is available on the CRA website. The CRA website has information concerning tax treaties and other information concerning international tax issues.

Mauritius Investment Promotion and Protection Agreements

While much of Mauritius' success as a well-established international financial center can be attributed to its continually expanding network of double taxation avoidance agreements ("DTAAs"), there is another significant advantage to investing through Mauritius. Mauritius has entered into Investment Promotion and Protection Agreements ("IPPAs") with various African countries that, while less well-known than DTAAs, are potentially of great importance to investors seeking to invest in the developing markets of Asia and Africa.

What are IPPAs? IPPAs are bilateral agreements between countries designed to promote and protect the interests of investors from one country in the territory of the country where the investment is being made. Among other things, IPPAs increase investor confidence by ensuring a fair and equitable protection of investments. Mauritius has concluded 34 IPPAs, of which 18 are in force.

Each agreement provides the following guarantees to investors:

1. Fair and equitable protection of investments

2. Fair and equitable treatment of investments and returns of investors

3. Free transfer of monies relating to investments and returns

4. Expropriation guarantee — investments shall not be nationalized, expropriated or subjected to measures (having effects equivalent to nationalization or expropriation) except for public purposes, under due process of law, on a non- discriminatory basis and against prompt, adequate and effective compensation (which shall be made without delay, and be effectively realizable)

5. Most favoured nation rule with respect to treatment of investments and compensation for losses (in case of war or armed conflict, revolution, a state of national emergency, revolt, insurrection or riot) — investors who, suffer losses in the territory of the other contracting party resulting from the following shall be accorded restitution or adequate compensation:
   
   

   a) requisitioning of their property by the forces or authorities of the latter contracting part
   
   b) destruction of their property by the forces or authorities of the latter contracting party, which was not caused in combat action or was not required by the necessity of the situation of the observance of any legal requirement

6. Provisions for settlement of disputes between investors and the contracting states.

7. Provisions for settlement of disputes between contracting states

Mauritius' network of IPPAs with various African countries makes it an ideal investment platform. In these countries, there is often pressure to redistribute wealth to local indigenous populations, which have historically been both politically and economically disenfranchised. This has resulted in a perceived threat of nationalization of assets (such as mines and natural resources) in certain of these countries. In these circumstances, it is useful to invest via a country that has an IPPA with the relevant African country, in order to take advantage of the guarantees offered by the IPPA.

Source: Conyers Dill & Pearman

Madagascar and Mauritius entered into and IPAA titled: « Accord De Promotion et de Protection Réciproque des Investissements entre le Gouvernement de la République de Maurice et le Gouvernement de la République de Madagascar » on 06th April 2004. The IPAA was fully ratified by both countries at the end of 2010. This instrument utilises the International Centre for Settlement of Investment Disputes (ICSID) for dispute resolution. It has been proven to be an effective recourse for investors in Madagascar.

About DNI Metals

Certain advisors and directors of DNI have significant operational experience at historical hard rock graphite mines in Canada (e.g. Ontario and Quebec) and Australia. Between them, they have built three (3) processing plants and designed two (2) others; all, which were shut down in the 1990,'s due to increased Chinese competition. Keith Minty, director, worked at Cal Graphite near Kearny, Ontario.

It was our team's understanding of the high production and capital expenditure costs associated with so-called "hard rock" graphite mining that inspired DNI to search for saprolite-hosted graphite deposits.

Certain parts Madagascar and Brazil, produce graphite from weathered material called saprolite.

According to Dictionary.com, saprolite is described as:

"Soft, thoroughly decomposed and porous rock, often rich in clay, formed by the in place chemical weathering of igneous, metamorphic, or sedimentary rocks. Saprolite is especially common in humid and tropical climates. It is usually reddish brown or grayish white and contains those structures (such as cross-stratification) that were present in the original rock from which it formed."

DNI owns a commercially permitted, saprolite-hosted graphite deposit in Madagascar; located 50kms from the country's main seaport. The deposit is located less than two (2) kms from the paved national highway. DNI intends to develop the Vohitsara project, should the economic viability and technical feasibility be established. DNI has not yet established mineral resources or mineral reserves supported by a PEA or mining study (PFS or FS).

DNI has a graphite wholesale business, in which it buys and sells high quality graphite. This business has shown a steady increase in volume over the past year.

Steven Goertz (MAusIMM, MAIG), who is a qualified person, approved the technical disclosure in this news release.

DNI — Canadian Securities
DG7N — Frankfurt
DMNKF - OTC Pink
Issued: 40,558,775

For further information, contact:
DNI Metals Inc. — Dan Weir, CEO 416-595-1195
DanWeir@dnimetals.com
Also visit www.dnimetals.com

We seek Safe Harbour. This announcement may include forward looking statements. While these statements represent DNI's best current judgment, they are subject to risks and uncertainties that could cause actual results to vary, including risk factors listed in DNI's Annual Information Form and its MD&A's, all of which are available from SEDAR and on its website.