The-assay-the-assay-battery-materials.pdf

THE ASSAY 121 GROUP MINING MAGAZINE

www.theassay.com

Battery Materials Edition | February 2018

BATTERY MATERIALS EDITION SIMON MOORES Benchmark Mineral Intelligence “There is, no doubt, huge growth on the horizon.”

CHRIS BERRY House Mountain Partners “…it’s not just battery manufacturers that are looking at locking down long term supply of these metals”

ANTHONY MILEWSKI Cobalt 27 “...we may need double the world’s cobalt supply, with a majority of it going into EV batteries.”

WILLEM MIDDELKOOP Co-Author, The Tesla Revolution “The transformation of our energy systems is here to stay.”

COMPANY PROFILES

INVESTOR INSIGHTS

ANALYST REVIEWS

INVESTMENT EXPERTISE

5 CITIES 7 EVENTS 450 CORPORATES 1500 INVESTORS

23-24 APRIL 2018 HONG KONG and 9-10 OCTOBER 2018

17-18 MAY 2018 LONDON and 20-21 NOVEMBER 2018

23-24 MAY 2018 SINGAPORE

5-6 JUNE 2018 NEW YORK

FEBRUARY 2019 CAPE TOWN

To become a corporate presenter at a 121 INVESTMENT SUMMIT event please email: APAC: [email protected] EMA: [email protected] Americas: [email protected] For investor passes: [email protected]

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www.psl.com.au

Leading arranger of equity capital in the Australian resources sector. Patersons has ranked

1

Patersons has over

#

85,000

by number of equity issues in Australia every year since 2003 by reference to Thomson Reuters League Tables

clients with Funds Under Management and Advice of

$13.6 billion

Aaron Constantine [email protected] +61 8 9263 1267 +61 418 920 294

Gavin Wates [email protected] +61 8 9263 1258 +61 417 096 585

George Garnett [email protected] +61 8 9263 1617 +61 401 626 202 Patersons Securities Limited ABN 69 008 896 311 AFSL No. 239 052

19/f, FWD Financial Centre, 308 Des Veoux Road Central, Sheung Wan, Hong Kong

The Team Editorial

Sales

Marketing

Andrew Krelle T: +852 5936 4081 E: [email protected] Michael Poulos T: +852 3628 2483 E: [email protected] Kevin Ward T: +852 3628 2488 E: [email protected]

Contributors Many thanks to our contributors for this issue of The Assay: Anthony Milewski, Charles Whitfield, Chris Berry, Gavin Wendt, George Heppel, Simon Moores, Willem Middelkoop

Website

All articles and company profiles available at: www.theassay.com

The information and materials contained in this publication and online at www.theassay.com are not, and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, any regulated products, securities or investments. The publishers of The Assay do not, and should not be construed as acting to, sponsor, advocate, endorse or promote any regulated products, securities or investments. The information and materials in this booklet and online at www.theassay.com do not, and shall not be construed as, making any recommendation or providing any investment or other advice with respect to the purchase, sale or other disposition of any regulated products, securities or investments, including, without limitation, any advice to the effect that any mining or metals related transaction is appropriate or suitable for any investment objective or financial situation of a prospective investor. A decision to invest in any regulated products, securities or investments should not be made in reliance on any of the information or materials in this publication or online at www.theassay.com. Before making any investment decision, prospective investors should seek advice from their financial, legal, tax and accounting advisers. The publishers of The Assay do not have any license, nor do we hold out to have a license from the Securities and Futures Commission (SFC) to carry out any regulated activity or functions in Hong Kong. All data provided by S&P Global Market Intelligence unless otherwise stated.

WELCOME TO THE ASSAY

T

he Assay is a 121 Group initiative that provides a print and online

platform for leading fund managers and analysts to share their investment outlooks and market insights.

Each edition of the Assay showcases a range of exploration, development

and production assets, providing both private and publicly-listed companies year-round global exposure to the institutional mining investor community.

In this edition we look at ‘Battery Materials’. With Tesla leading the charge, the electric vehicle market is on the verge of massive expansion. The falling

cost of solar panels and wind turbines means that renewable energies are finally becoming cost competitive. Environmental concerns (particularly in

China) are driving a dynamic shift from hydrocarbon-dependent economies towards a renewable energy future. However, neither EVs nor renewable

power generation is possible without effective battery storage, and vast

quantities of raw materials will be required to meet the demand for batteries to support the world’s energy future.

Read on for a wide range of mining companies looking to supply the “battery

revolution” and expert analysis on the key metals that will contribute to this fast expanding market.

On behalf of 121 Group, we hope you enjoy this First Edition of The Assay.

Andrew Krelle

Editor

Company Profiles 8. Lithium Australia

10. Nemaska Lithium 12. Neometals Ltd

14. Neo Lithium Corp. 20. Piedmont Lithium

22. Infinity Lithium Corp.

24. Consolidated Nickel Mines 26. Cobalt 27 36. TNG Ltd

42. Battery Minerals 44. Talga Resources

46. Leading Edge Minerals 52. Alabama Graphite

Insights 6. The Tesla Revolution - Willem Middelkoop 16. Cobalt: Chasing Electric Dreams - Anthony Milewski 28. Cobalt Shifts From Metal to Chemical Markets - George Heppel

31. Vanadium - Another Important Battery Option - Gavin Wendt

54. Baby Steps Into The World of New Battery Investing- Charles Whitfield

Interviews 38. Financing Battery Material Projects - Chris Berry 48. Understanding Battery Chemistries - Simon Moores

The Tesla Revolution

By Willem Middelkoop, Founder, Commodity Discovery Fund & Co-Author, The Tesla Revolution

W

Willem Middelkoop (Geneva, 1962) is founder of the Commodity Discovery Fund, and is a writer. He became a wellknown personality through his work as stock market commentator for the Dutch business television channel RTLZ. Middelkoop predicted the onset of the credit crisis in his book “Als de dollar valt” (If the dollar falls) – 2007. Subsequent publications were “De permanente oliecrisis” (The permanent oil crisis) – 2008, “Overleef de kredietcrisis” (Surviving the credit crisis) – 2009, “Goud en het geheim van geld” (Gold and the secret of money) – 2012, and The Big Reset – 2013. In total, he sold more than 100,000 copies of his books.

e have consumed the planet’s oil so quickly

taken for granted in high income countries. The supply chains of

changing to a post-fossil-fuel age, very fast. Ever cheaper and

are used to outages of electricity. The majority of factories today

that the era of cheap oil is now over. Tesla’s

natural gas or coal ensure power plants are able to deliver almost-

rapid success shows the world of energy is

constant cheap electricity. In less-developed countries, people

more efficient solar cells and wind farms are now the pillars of

operate continuously thanks to the automation of most processes

a renewable energy revolution. This will reshape economies,

combined with 24/7 power.

upset global power relations, and impact our own daily lives.

With a rising middle class worldwide from one billion to over

The world is all about energy. Cheap electricity has become the

two billion people, it is clear that the need for energy will keep

backbone of our economy. We need power 24 hours, seven days a

rising - just like it did in the last 200 years. We can only hope that

week. Society breaks down when power is lost. No TV, internet, or

transition to renewable energy will be completed before we lose

cooling drives most people mad in a few hours.

oil as our main source. Probably well before 2030 the energy to produce a barrel of oil will be higher than the energy delivered by

The availability of cheap electricity on a continuous basis is

that same barrel. At that point we have reached the end of our oil-

6

www.theassay.com

based society and we will have entered a whole

a few days for its Model 3 electric car in early

We have burned half of all easily accessed and

One of the biggest challenges is meeting

new era.

cheap fossil fuels. A strong global movement has emerged. Many politicians, businesses and citizens are working towards a fully-renewable

energy system. Their motivation can be found in a mixture of concerns over climate change,

air pollution (especially in Asia), and worries over fossil fuel supply security.

In the 2015 Paris Agreement, nearly 200 governments present agreed to move towards

low-carbon energy systems so as to reduce greenhouse gas emissions as fast as possible. Even the Saudi and Russian governments are on board: as Russian President Vladimir Putin said, “our ability to successfully address climate

2016. The energy revolution has started.

our 24/7 demand for electricity, given the fluctuating sources of solar and wind. The end

of cheap oil and increasing needs of electric transport makes the challenge even bigger. After

writing

The

Tesla

Revolution

we

understand much better why demand for copper will keep growing, why platinum is needed for future fuel cell production, and why

oil under $50 is not sustainable. The world of energy is changing fast and we will see many

more changes arriving soon. It’s time to prepare accordingly - for companies and investors.

change will determine the quality of life for all people on the planet.”

The transformation of our energy infrastructure is here to stay. It can easily be grasped from the investment numbers in electricity systems.

In 2015 a total of $329bn was invested in

renewable generation, versus only $130bn allocated to new coal and gas-fired power. We can also see it from the words of oil and coal chief executives who have accepted the new

reality. In 2009, the then chief of Shell Jeroen van de Veer stated on television his disbelief in

solar: “I need to become older than 100 years for solar panels to pay back their investment.”

In 2015 Ben van Beurden, the current chief, showed how the company had changed its mind, saying solar energy “will be the dominant

backbone of our energy system, certainly of the electricity system.”

The development of renewables can be seen in tender price agreements. In the Middle East,

tenders delivered solar energy production streams for $0.03 per kWh, and in Morocco and

Texas similar price levels have been reached for onshore wind turbines. This marks the tipping

point for clean energy. Tesla Motors completed $14bn of sales reservations worldwide in just

7

"The transformation of our energy systems is here to stay. "

COMPANY EXPOSURE

COMPANY LISTING

Lithium and Processing Technology

STOCK CODE

Lithium Australia

LITHIUM AUSTRALIA

ASX:LIT

COMPANY OVERVIEW

TEAM

Lithium Australia NL believes disruptive lithium chemical production will power the energy revolution that’s transforming the world as we know it. To that end, the Company has developed SiLeach®, an exclusive technology that can process all lithium silicates into battery-grade materials without the need for ‘roasting’. This advance on traditional processing methods is a world first. Lithium Australia NL (‘LIT’) has one over-arching goal: the application of its disruptive processing technologies to the production of lithium chemicals on a commercial scale and at an operating cost in the lowest quartile.

Adrian Griffin – Managing Director

To achieve its ends, LIT is: • procuring access to feed materials with low exposure to mining costs; • processing materials considered waste by other operators; • developing strong strategic partnerships, and • maintaining equity in resource projects globally.

CAPITAL STRUCTURE AND SHAREHOLDERS Top 10 holders at 28 July 2017

Barry Woodhouse – Company Secretary & CFO George Bauk – Non-Executive Chairman

LATEST ANNOUNCEMENTS 11/01/2018 28/12/2017 13/12/2017 07/12/2017

SiLeach process is novel, inventive and patentable Graphite spinout BEM receives conditional ASX approval Commences drilling at Sadisdorf, Germany Maiden lithium Mineral Resource estimate at Sadisdorf, Germany 01/11/2017 VSPC cathode product passes major milestone 06/07/2017 Large Scale Pilot Plant study exceeds design criteria

KEY FINANCIALS (JANUARY 2018)

22.2%

JP Morgan Nominees

Bryan Dixon – Non-Executive Director

4.76

Citicorp Nominees

3.66

Adrian Griffin

3.01

Parkway Minerals NL

2.57

Horn Resources

1.97

Alan Jenks

1.32

Apollinax Inc.

1.15

TA Securities Berhad

1.1

Gasmere Pty Ltd

Share Price

A$0.21

Shares Outstanding

343.5m

Market Capital

A$70.43m

Cash

A$15.69m

Debt

Nil

Year High-Low

SHARE PRICE PERFORMANCE

1.06

BNP Paribas

1.06

Shareholder structure Retail 77.03%

Top ten inside holders 16.95%

Institutional ownership 6.02%

PROJECTS North America

Australia

Metals Tech – Quebec, Canada

Goldfields region, Western Australia

Electra project – Sonora, Mexico, Europe

Sadisdorf – Saxony, Germany

Pilbara region, Western Australia Cape York region, Queensland Bynoe, Northern Territory

Kangaroo Island, South Australia PROJECTS

A$0.27 - 0.07

From alpha-spodumene to zinnwaldite: SiLeach ® is the ultimate processing solution SILEACH ® – THE FUNDAMENTALS

Before SiLeach

SiLeach® is a hydrometallurgical process, so no roasting is required. It uses a combination of sulphuric acid (to break weak chemical bonds) and halides (fluoride in particular) to dissociate the strong bonds that act as the glue in silicate lattices. Reactions occur rapidly at about 90˚C, which is a distinct advantage in terms of constraining plant footprint and reducing capital costs. Now that SiLeach® has been independently pilot-tested by ANSTO Minerals, one of Australia’s premier research organisations, further optimisation of the process is under way, with a view to committing to the construction of a Large Scale Pilot Plant (LSPP) by the end of calendar 2017.

STRATEGIC POSITIONS IN LITHIUM HOT SPOTS •

• • •

• • •

Resource security is a commercial imperative One of LIT‘s prime objectives is processing third-party ore, where much of the mining cost has already been absorbed during the extraction of other commodities.

After SiLeach

To ensure such security, LIT has taken positions in major lithium provinces around the globe. LIT has drill-tested the Agua Fria deposit in Mexico, and Ravensthorpe in Western Australia and is planning its drilling programme for Sadisdorf in Germany.

 IT is negotiating farm-out positions on a number of its L exploration properties in return for first right of refusal on product generated from those areas, thereby retaining access to the supply chain without spending high-risk exploration dollars to realise reserves.

SiLeach® optimisation remains LIT’s highest priority, with a view to commercialising the process and advancing towards production.

EFFICACY OF THE SILEACH ® PROCESS SiLeach® does not incorporate a roasting phase to extract lithium and can potentially derive all its energy requirements from waste heat generated in the production of sulphuric acid. Therefore, operating inputs could be quite low. This is in vast contrast to attempts to recover lithium from micas using conventional processing (see China (lepidolite) in the graph below).

Metallurgical assessment of the Agua Fria deposit is underway, to identify a beneficiation path that elevates feed grades and improves the value of the project.

Exploration at Ravensthorpe and Sadisdorf has commenced and preliminary indications of the resource potential of Lake Johnston are very promising; the latter area will undergo more intensive exploration later in the year.

Operating costs for production scale, accounting for by-product credits, should place SiLeach®-based lithium carbonate production near the bottom end of the cost curve (see Target hydrometallurgical costs).

9

WWW.LITHIUM-AU.COM

COMPANY EXPOSURE

COMPANY LISTING

Lithium Mine Development and Processing Facility

STOCK CODE

Nemaska Lithium

NEMASKA LITHIUM

TEAM

COMPANY OVERVIEW

Nemaska Lithium (TSX:NMX and OTCQX:NMKEF) is building North America’s richest and largest hard rock lithium project and lithium salts (LiOH and Li2CO3) processing facility through a unique deposit in Nemaska and a state-of-the-art transformation plant in Shawinigan, both located in the province of Québec, Canada. The project is fully permitted and construction has begun, making it one of the next fully integrated lithium salts suppliers in the world. Once in commercial production, Nemaska Lithium is projecting to be one of the lowest cost producers of lithium hydroxide and lithium carbonate in the world. (source - NI43-101 compliant feasibility study of January 8, 2018)

The Company is well positioned to enter the chain of supply with lithium concentrate by 2018 and lithium salts by 2019. Qualification of Nemaska Lithium’s lithium salts with key customers began in 2017.

CAPITAL STRUCTURE AND SHAREHOLDERS Investissement Québec Inc.

7.35%

BlackRock Investment Management (UK) Ltd.

4.45%

TQC Group (Netherlands) Cooperatief UA Global X Management Co. LLC RobecoSAM AG

Fidelity (Canada) Asset Management ULC Van Eck Associates Corp.

Hauck & Aufhäuser Privatbankiers AG

4.77% 3.16% 1.25% 1.18% 1.08% 0.97%

OFI Global Asset Management, Inc.

0.93%

Baring Asset Management Ltd.

0.66% Shareholder structure

Top Ten Shareholders 25%

TSX: NMX, OTCQX:NMKEF

Michel Baril – Chairman of the Board Guy Bourassa – President & CEO François Biron – Director Paul-Henri Couture – Director René Lessard – Director

LATEST ANNOUNCEMENTS

09/01/2018 Nemaska Lithium releases 2018 feasibility study

08/01/2018 Nemaska Lithium delivers second shipment of battery grade lithium hydroxide from Whabouchi Concentrate and releases product purity specifications 19/12/2017

Nemaska Lithium makes reclamation bond installment for Whabouchi Mine and announces exercise of warrant and options

14/12/2017 Nemaska Lithium signs deal for sale of Sirmac property to Abe resources and receives mining lease for Whabouchi Lithium mine 04/11/2017 Nemaska Lithium confirms first delivery of battery grade lithium hydroxide from Whabouchi Mine concentrate

KEY FINANCIALS (JANUARY 2018) Share Price

Shares Outstanding Market Capital Cash

Debt

Year High-Low

SHARE PRICE PERFORMANCE

C$1.85

401.6m

C$743m C$40m $0

C$2.44-0.95

Management and Employees 7% Others 68%

PROJECTS Nemaska Whabouchi Project •

H2-2018: Commissioning of Commercial Mine and Concentrator

Shawinigan Hydromet Plant • •

Q4 2017: Phase 1 Plant to produce, commercial lithium salts samples H2-2019 Commissioning of Hydromet plant

STRATEGIC OFFTAKE CUSTOMERS •

FMC

• •

Combination of fixed and market pricing Investment grade counterparties

• •

Johnson Matthey

Multi-year contracts for Quantities - this accounts for ~42% of annual production

Nemaska Lithium is committed to a low carbon footprint, environmentally responsible production model throughout its process from concentrate to finished lithium salts. GREEN LITHIUM PRODUCTION

At both the Hydromet plant and mine site the Company has designed a project that takes into account the goal of minimising the project footprint and recycling where possible. Initiatives include: • co-disposal of filter-pressed tailings with waste rocks at the mine site; • almost-100% process water reuse at both sites, • low GHG emissions due to use of electrolysis with hydroelectricity • valorization of all side products with the result of having no waste at Hydromet site.

LITHIUM HYDROXIDE PRODUCTION

Nemaska Lithium has developed an innovative method of producing lithium hydroxide via membrane electrolysis. This process was modified from an industrial process used for years in the chlor alkali industry. The key operating cost of this method of production is electricity which, in Quebec is contracted long term for $0.03 kWh, giving Nemaska Lithium visibility into its cost structure over the life of the project.

WHABOUCHI MINE: HIGH QUALITY LOW COST LITHIUM SPODUMENE CONCENTR ATE - 2016 FEASIBILITY RESULTS Expected Mine Life and Payback Period 33 years with 2.9 year payback period

LOW COST VERTICALLY INTEGRATED PRODUCER

NPV $3.3B (US$2.5B) 8% Discount (pre-tax) $2.4B (US$1.8B) 8% Discount (after tax)

Life of Mine Revenue $19.2B (US$14.8B) (average of $581M/yr for 33 years) Internal Rate of Return (IRR) 34.4% (pre-tax) Undiscounted Cash Flow $13.2B (US$10.2B) (pre-tax) $9.6B (US$7.4B) (after tax)

Notes : 1 – Combined technical - and battery - grades - SQM, Rockwood and FMC costs assume lithium carbonate procured internally at cost; Tianqi, Other China and Ganfeng mineral conversion assumes US$430/t CIF spodumene concentrate from Talison Lithium

Total Initial Capital Costs $801M (US$616M) in CAPEX including contingency

EXISTING INFRASTRUCTURE

Average Cost Per Tonne - Spodumene Concentrate $285/t (US$219/t) FOB Mine

Nemaska will mine its own source of lithium which is the 100% owned Whabouchi Lithium mine located in northern Quebec Canada.

Cost Per Tonne - Lithium Hydroxide $3,655/t (US$2,811/t) FOB Shawinigan low cost producer

The mine site is well serviced with existing infrastructure including: • year round road access • commercial airport • electricity • lodging • local workforce

Average Cost Per Tonne - Lithium Carbonate 99.99% $4,424/t (US$3,403/t) FOB Shawinigan low cost producer

Yearly Average Production Mine ≈ 1.1Mt of ore at 1.5% Li2O; ≈ 213,000 tonnes of concentrate (6.25% Li2O) Hydromet plant ≈ 23,000 t of lithium hydroxide; ≈ 11,000 t of lithium carbonate

WHABOUCHI LITHIUM MINE EXCEPTIONAL CHARACTERISTICS: • • •

Note: Sales Prices FOB Shawinigan Lithium Hydroxide USD$14,000/t, Lithium Carbonate USD$9,500/t for first 5 years and USD$12,000t thereafter

WHABOUCHI MINE TO SHAWINIGAN HYDROMET PLANT

High-grade reserve Easily mined open pit Low strip ratio

1.  Mine and concentrator located in Eeyou Istchee James Bay region, 300 km north of Chibougamau • 1.1MT/y ore • 213kt/y 6.25% Li2O concentrate • 130 employees

Low cost concentrate is crucial in hard rock production, as it takes 7.5t of concentrate to produce 1 tonne of lithium carbonate equivalent (LCE). Controlling the raw material provides a cost advantage over the Chinese producers who are all sourcing their concentrate from mines in Australia through contracted prices, not at cost, as is the case for Nemaska Lithium.

2.

3.

ON-SITE BATTERY POWERED MACHINERY Nemaska Lithium is planning to use a fleet of electric utility vehicles at both the mine and Hydromet facilities. Charging stations have already been installed at Shawinigan facility with plans to install them at the mine site.

11

Transport by road to Chibougamau and 555 km by rail (CN) to Shawinigan • 8 railcars / 3 days

Hydromet Plant in Shawinigan as per Feasibility Study • 23kt/y LiOH.H2O • 11kt/y Li2Co3 • 86 employees

WWW.NEMASKALITHIUM.COM

COMPANY EXPOSURE

COMPANY LISTING

Lithium

STOCK CODE

ASX:NMT, OTC:RDRUY

Neometals Ltd

NEOMETALS LTD THE EVOLUTION OF LITHIUM COMPANY OVERVIEW

TEAM

Neometals Ltd (ASX: NMT, OTC: RDRUY) is a Western Australian minerals project developer with interests in lithium, titanium, vanadium and nickel projects. The Company is primarily focused on its Mount Marion and Barrambie projects. Neometals is developing itself in multiple positions in the Lithium-Ion battery commodities supply chain through its 3 key business units – Lithium, Titanium, and Technology.

Steven Cole – Chairman Christopher Reed – Managing Director David Reed – Non-Executive Director Natalia Streltsova – Non-Executive Director Doug Ritchie – Non-Executive Director

INVESTMENT PROPOSITION • • •

Undervalued lithium producer Expected re-rating with consistent steady-state production Cash, cash flow & growth »» 13.8% cash flow from Mt Marion concentrates »» Downstream conversion to LiOH »» Technology: developing a diversified portfolio, licence potential »» Secured strong partners for Neomet process »» Titanium: The Big One, completed BFS

Shares Outstanding

3.12%

Top 20 Shareholders

38.2%

CORPORATE STRATEGY Combining innovative cost advantages and strong partners

Into lower-risk, long-life, highmargin operations to optimise stakeholder returns

To develop a portfolio of globally significant mineral resources

PROJECTS SUMMARY PROJECT

BUSINESS UNIT

Mt Marion Lithium Operation

Lithium

13.8%

Titanium

100%

WA Lithium Hydroxide Project Barrambie Titanium Project

Lithium

OWNERSHIP 100%

100% Commercialisation Rights; 50% IP

Lithium Battery Recycling Technology

Technology

Neomet Process Technology

Technology

25% Net Profit Interest

Technology

100%

Lithium Titanate Research Project

Lithium Hydroxide Processing Technology - ELi Process Lithium Brine Processing Technology - Dexter Process

Technology Technology

Update on downstream lithium projects Neometals admitted to NASDAQ international designation Neometals’ Mike Tamlin on increased production at Mt Marion Barrambie Titanium Project - update Neometals features in 60 Minutes story on batteries

Share Price

11.09%

Global Lithium ETF

12/12/17 06/12/17 17/11/17 08/11/17 31/10/17

KEY FINANCIALS (JANUARY 2018)

MAJOR SHAREHOLDERS David Reed

COMPANY ANNOUNCEMENTS

100% 70%

Market Capital Cash/Equiv Debt

Year High-Low

SHARE PRICE PERFORMANCE

A$0.43

543.5m

 A$249m

 A$42.1m 0

A$0.50-0.24

PRODUCTION - Mt Marion Lithium Operation •

Mt Marion Lithium Project is located approximately 40km south west of Kalgoorlie, Western Australia

•

400kt concentrates per year (~50kt LCE)

• •

• • •

Jointly owned by Neometals Ltd (13.8%), China’s lithium producer Jiangxi Ganfeng Lithium Co., Ltd (43.1%) and a local mining services business (43.1%). JORC Resource 77.8Mt @ 1.37% Li2O* across 6 deposits 2HFY17 Production 156,000 dmt

1QFY18 Production +100,000 wmt

FY18 Forecast 450,000t of 6% & 4% Li2O

•

1HFY18 EBITDA A$72M** (100% basis)

•

LOM Take or Pay Contract*

• • •

C1 costs A$369/t CIF (~US$290/t)

Total costs A$460/t CIF (~US$360/t)

Price linked to International LCE price

DOWNSTREAM PROCESSING -Kalgoorlie Lithium Hydroxide Facility • • • • •

Mt Marion Aerial January 2017 First ore to beneficiation

Conduct assessment of the technical and commercial feasibility of the construction and operation of a lithium chemical plant in the Eastern Goldfields of WA Nameplate capacity of 20,000 tpa of lithium carbonate equivalent production, although smaller capacity is being assessed Local plant to minimise transport from Mt Marion – 7t spodumene concentrate needed for 1t of LiOH

Conventional flowsheet – remove technology risk – speed to market Utilise local natural gas, sulfuric acid, and workforce

GLOBALLY SIGNIFICANT TITANIUM RESOURCE

TITANIUM - Barrambie Titanium Vanadium Iron Project • •

• •

•

•

GLOBALLY SIGNIFICANT OPERATION – 400KT CONCENTRATES PA (~50KT LCE)

Plans to exploit one of the world’s highest grade hard rock titanium deposits

Beneficiate with a proprietary acid leach process to produce high purity TiO2, Fe2O3 and V2O5 from the Barrambie deposit. The process route shows potential to operate at lowest quartile costs. JORC Resource 48Mt @ 22% TiO2

Formal laboratory-scale test work in Canada has confirmed high-purity (>99%) TiO2 can be precipitated selectively from a leach solution at recoveries >90% NEOMET PROCESS: 3 Product Efficiency

TECHNOLOGY - Lithium Hydroxide Processing Technology – ELi Process •

• • • • •

• • •

Purified LiCl is electrolysed using NMT’s 70% owned and patented “ELi Process” to produce battery quality LiOH. Potential to operate at lowest quartile costs for LiOH. Input: 147,000t of 6.0% Li2O Output: 10,000t of Battery Grade LiOH, and 8,810t of Battery Grade Li2CO3 Cost: US$83m (located in Malaysia) NPV: US$321m using 12% discount rate, IRR: 94%, payback: ~2 years OPEX: LiOH US$3,800/t – Li2CO3 US$4,500/t Potential to deploy on both hard rock and brines Potential licence income

CONTACT

13

Chris Reed Managing Director T+61 8 9322 1182 [email protected]

WWW.NEOMETALS.COM.AU

COMPANY EXPOSURE

Lithium Brine

COMPANY LISTING

STOCK CODE

TSX.V:NLC; OTCQX:NTTHF; FSE:NE2

Neo Lithium Corp

NEO LITHIUM CORP THE NEXT MAJOR LITHIUM DISCOVERY COMPANY OVERVIEW

Neo Lithium Corp (TSX.V:NLC; OTCQX:NTTHF; FSE:NE2) is quickly becoming the most prominent new name in lithium brine exploration by virtue of its quality team and project. Already well capitalised, Neo Lithium is rapidly advancing its newly discovered Tres Quebradas (3Q) project - a high-grade lithium brine reservoir and salar complex in the Lithium Triangle.

MAJOR SHAREHOLDERS BlackRock Inc.

M&G Investment Management Ltd. JP Morgan Asset Management Connor Clark & Lund RBIM

Mackenzie Financial Corp. Manulife

Dynamic Resource Fund Extract Capital

Primevest Fund

Total Institutional Ownership Insider Ownership

WHY NEO LITHIUM? • • • • •

13.0% 10.2% 5.8% 3.4% 3.3% 2.9% 1.8% 1.5% 1.3% 1.2%

~45% ~16%

One of the highest-grade lithium brine assets in the world combined with the lowest critical impurity content of any known salar making it ideal for well-known and simple evaporation processing 8th largest resource of lithium carbonate after one season of drilling with significant potential for upside

100% ownership - the only Lithium company that owns an entire salar of this size without competitors or third parties PEA completed in Q4 2017 - US$1.2 billion after-tax NPV at 8%; IRR of 27.9%; Payback: 1 year and 8 months; OPEX: $2,791/t of Lithium Carbonate; CAPEX: $490.2 million

TEAM Waldo A Perez – President & CEO Constantine Karayannopoulos – Chairman Carlos Vicens – Chief Financial Officer Thomas Pladsen – Director Gabriel Pindar – COO & Director Paul Fornazzari – Director

COMPANY ANNOUNCEMENTS 08/01/18

04/12/17

21/11/17

01/11/17

31/10/17 30/10/17 06/09/17

Neo Lithium appoints Chief Operating Officer and expands engineering team Neo Lithium provides exploration update; receives C$15.6M from the acceleration of outstanding warrants Neo Lithium announces cosing of $30 million bought deal private placement Neo Lithium Corp. increases bought deal financing to $30 million Neo Lithium Corp. announces $20 million bought deal financing Neo Lithium Corp. announces positive preliminary economic assessment results on its 3Q Project Neo Lithium announces PEA to be based on 35,000 tonnes of lithium carbonate per year; provides progress report On 3Q Lithium Project 

KEY FINANCIALS (JANUARY 2018) Share Price

Shares Outstanding Market Capital Cash/Equiv Debt

Year High-Low

SHARE PRICE PERFORMANCE

C$1.90

117.1m

 C$227.6m  C$65m 0

C$2.75-0.85

Strong cash position and robust shareholder register

TRES QUEBRADAS (3Q) LITHIUM PROJECT 3Q is the most recent high-grade lithium brine lake and salar complex discovery in the lithium triangle. • • • •

Located in the southwestern portion of the Catamarca Province of Argentina - the largest lithium producer province of Argentina. Project located 30km from the Chilean border with direct road to Pacific ports 100% ownership of the entire salar complex

Fully permitted to feasibility - EIA well advanced and expected to be finalised in Q1/ Q2 2018

THE3QPROJECT

GEOLOGY & RESOURCES • Most recent high-grade lithium brine lake and salar complex discovery in the lithium triangle • Maiden Resource Estimate developed and announced after first drilling season »» 2.1 Mt lithium carbonate @ 716 mg/L Li (at 520 mg/L Li cut-off) »» 3.5Mt lithium carbonate @ 567 mg/L Li (at 400 mg/L Li cut-off) • High-grade / low impurities In only one drilling • Production rate of 35kt/year of Lithium Carbonate • Simple, proven solar evaporation technology season Neo Lithium • Mine life of 20 years with a 3 year ramp up was able to announce • •

its maiden resource estimate for the 3Q Project.

3.5 Million Tons Lithium Carbonate @ 567 mg/l Li

Measured and Indicated 1.22 Million Tons Lithium Carbonate @ 567 mg/l Li

3Q PROJECT - PRELIMINARY ECONOMIC ASSESSMENT (PEA) • • •

The economic analysis of the PEA is based on Construction commencing in 2019 with a three year ramp-up All numbers based on a constant U.S. dollar basis Average lithium carbonate pricing over the life of mine is ~US$11,760/t CAPEX

PEA Highlights & Results

After-Tax Net Present Value (“NPV”) @ 8% Discount Rate

US$1,200 million

Capital Expenditures

US$490.2 million

After-Tax Internal Rate of Return (“IRR”) Cash Operating Costs (per tonne of LCE)

Steady-State Annual Production (lithium carbonate) Mine Life

Steady-State Annual EBITDA* (nameplate production) Payback Period (from commencement of production)

US$ Million

Direct Costs

$321.4

Total Initial Capital Costs

$490.2

Indirect Costs

27.9%

US$2,791

$88.5

OPEX

35,000

20 years

US$000/yr

Direct Costs

$96,317

$2,752

Production Total Costs

$97,677

$2,791

General & Administration

US$310.1 million

1 year 8 months

US$/t Li2CO3

$1,359

$39

OPERATIONS & PROCESSING Salar Complex Evaporation Plant- 3 step process.

Fiambala Lithium Carbonate Plant

1. 2. 3.

•

Pre-concentration ponds Conditioning brine Post-concentration ponds

•

Finishing a battery grade lithium carbonate product Pilot plant construction planned to commence Q1 2018, for operations in Q3 2018

DEVELOPMENT PROGRAMME 2018 • • • •

Drilling campaign will be double the previous drilling programme Aquifer pump testing with large diameter production wells will continue Hydrogeology: hydrogeological model with reserve and potential resource expansion estimation expected in early Q2 2018 DFS: Definitive Feasibility Study estimated between Q4 2018 and Q1 2019

CONTACT

Carlos Vicens Chief Financial Officer

[email protected]

15

WWW.NEOLITHIUM.CA

Cobalt - Chasing Electric Dreams By Anthony Milewski, Chairman, Cobalt 27

A

Anthony’s career in the mining industry includes time spent as a company director, advisor, founder and investor. Anthony has managed numerous mining investments at various stages of development and across a broad range of commodities. Prior to joining Pala, Anthony worked at Firebird Management, where he focused on natural resource investments in Africa, Central Asia and the Former Soviet Union. Anthony previously worked at Renaissance Capital and Skadden, Arps in Moscow and has lived and worked in Africa and Russia, including a year as a Fulbright scholar. day hardly passes without news of the future

will win the race. Will Tesla or Ford sell the most EVs? Whose

sales, the creation of entire fleets of EVs, or new electric grid

but there is one thing investors can be sure of. If you believe

of electric vehicles (EVs) and battery storage.

lithium ion battery will have the most efficient chemistry?

Whether you read about countries mandating EV

Should I own a publicly traded chipmaker? Hard to answer,

storage innovations, there’s a lot to contemplate.

that consumers are going to buy EVs and home storage battery systems, basic materials will be a winner.

In fact, we are looking at a structural change in both the energy market and the automobile industry. Over the next decade we

The key basic materials that comprise the lithium ion battery

will see a decrease in terminal value of energy stocks and a

and the industrial revolution now underway include, copper,

complete upheaval in the car industry.

nickel, cobalt, graphite, and manganese. In the next decade the impact of

Investors often point out that they are confident about EV

penetration rates over the next few years and the expansion

of grid storage. However, they do not necessarily know who

16

www.theassay.com

"To understand the future of cobalt you need to understand its past."

being expanded. This is in stark contrast to uranium where the

EVs and battery storage on these commodities will unfold in

jump to about $50 per pound. Immediately, anyone that could

planned reactors were not being built at the rates anticipated.

To understand the future of cobalt you need to understand its past. In 2008, war in the DRC caused the price of cobalt to

use cobalt more sparingly in their industrial process did so.

dramatic fashion.

Around the time of the spike in cobalt prices the global financial

In the early years of the cycle cobalt and lithium are most

crisis struck, precipitating a significant decrease in the price of

impacted by the adoption of new technology. As battery

many metals, including cobalt. There were other reasons for the

chemistries change and penetration rates accelerate, nickel

subsequent decrease in price, including the tail end of a Chinese

will become more exciting. We have already started to see a

boom that saw more nickel mines (which create cobalt as a

bifurcation of the nickel market that will accelerate and result

byproduct), and more artisanal miners in the DRC.

in several distinct markets. Finally copper, the largest and most

The price of cobalt is currently around $30 per pound. Most of

liquid of these commodities, will be affected due to increased

the reduction in usage that can occur with cobalt happened a

need for both the grid and EVs. Of these metals, however, I’m

decade ago. End users such as airplane makers that make up

going to look at cobalt.

20 per cent of the cobalt market are not interested in saving a few dollars to eliminate cobalt and make their hundred million

Why Cobalt?

dollar planes less safe.

Times have also changed for artisanal miners in the DRC.

Annual cobalt production is approximately 100,000 tonnes,

Companies such as Apple and Tesla are requiring suppliers to

with over half coming from the Democratic Republic of the

show sourcing data to avoid negative publicity associated with

Congo (DRC). Half of it is used in the broader battery industry

child labour. Even if the cobalt price goes higher it is unlikely

in one form or another (including the cellphone market). The

that cellphone and carmakers are willing to buy and use conflict

amount of cobalt required to supply expected future demand

cobalt, so there will be a far smaller corresponding increase in

is staggering. Analysts are not great at predicting future

artisanal mining compared to 2008.

penetration and adoption rates for new consumer products. But, if we take their projected rates as a guide, the cobalt market

Will someone invent a new battery and ‘engineer out’ cobalt,

will need to expand dramatically between now and 2025. Bank

as sometimes suggested? This is nonsense. Carmakers say that

analysts have 2025 EV penetration rates at anywhere from a

even if a new battery was invented today we would not see it in

few per cent to upwards of 15 per cent. If we imagine a world

an electric car for at least eight years.

in 2025 with 10 per cent EV penetration we may need double

That is not to say that scientists are not working on new battery

the world’s cobalt supply, with a majority of it going into EV

technology. Instead, it highlights the time it takes to create a

batteries.

new battery, make it cost effective and then convince carmakers

Perhaps this all sounds like the bull markets that precipitated

and regulators it is safe enough to be in a car. I am reminded of

huge spikes in the uranium price and the rare earths market at

Betamax v VHS. The argument about which format was better

various points over the past decade. Should we worry?

was largely academic. VHS was the format of choice for the film

industry and crushed Betamax. The same is true of the lithium

First and foremost, a critical distinction between cobalt and

ion battery. The market has chosen the lithium ion battery as the

uranium/rare earths is that unlike the “if you build it they

winner for a decade.

will come” mentality that surrounded both of those latter

commodities, the gigafactories of the world are currently being

There are other aspects of the cobalt market to consider: battery

built. The industrial capacity that requires cobalt exists and is

chemistry changes; new projects coming into production; and

17

THE ASSAY

the possibility of collecting additional material from existing

The world needs more cobalt. Around 98 per cent of the world’s

operations and tailings.

cobalt is a byproduct of copper or nickel. This makes increasing supply difficult. That said, cobalt is like all other commodities –

Lithium ion battery chemistry will change in the next five years.

there is a price point which acts as an incentive to bring on new

The two most common chemistries are the NCA (a combination

supply. The current cobalt price is just off the 20-year inflation-

of lithium with nickel, cobalt, aluminum oxide, used by Tesla)

adjusted average, and in my opinion a long way from the

and NMC (lithium with nickel, manganese and cobalt oxide,

incentive price. When the price of cobalt is high enough there

used by most everyone else).

are mines in North America, Africa, Russia, Cuba, and Australia that can and will be built.

The NMC configuration is a ratio of 5-2-3 of nickel, manganese and cobalt. A 6-2-2 configuration is being rolled out and

If history is a guide, the market will go well past the incentive

companies are working on an 8-1-1 configuration, which is

price for new cobalt production, sparking investment in new

probably four or five years away. I would note that all of these

mines. There are few large-scale new mines with significant

changes in chemistries are built in supply demand models and

cobalt credits that I can think of that will be in production in

are expected. Even the lithium air battery, a decade out, contains

the next three years, and the timeline for most mines is more

cobalt. If the price goes high enough you may see companies put

like four to six years. The two obvious cobalt producers that will

more scientists on the task of changing the chemistry to the 8-1-

enter the market are Katanga and ERG’s mine.

1 and so theoretically this could be brought forward a few years.

18

www.theassay.com

"The world needs more cobalt. Around ninety eight percent of the world’s cobalt is a byproduct of copper or nickel."

When a commodity moves sharply the market

possible to engineer-out at this time. Cobalt’s

adding or changing a circuit at an HPAL (High

price for new mines.

always seems to manage to find units in forgotten places. That may come in the form of Pressure Acid Leach) facility, or optimising a

current process for cobalt. There are tailings in places such as the DRC that could be brought on faster than a new mine.

In a nutshell: cobalt has a new and massive source of demand in the form of the EV. Cobalt is a byproduct and so there are not many, if any,

mines that can quickly and easily be brought into production, so the supply response will

be muted and slow. It is a critical element of the lithium ion battery and not technologically

19

price at $30 per pound is less than 1 per cent of

the price of an EV and well below the incentive Investing in cobalt producers and the metal is

an exciting pure play on the EV adoption trend.

COMPANY EXPOSURE

Lithium

COMPANY LISTING

STOCK CODE

ASX:PLL, OTC.PLLLY

Piedmont Lithium

PIEDMONT LITHIUM

THE WORLD’S BEST-LOCATED LITHIUM PROJECT COMPANY OVERVIEW

TEAM

Piedmont Lithium is an emerging lithium company focused on the development of its 100%-owned Piedmont Lithium Project in North Carolina, with the goal of becoming a strategic domestic supplier of lithium to the increasing electric vehicle and battery storage markets in the U.S. The Piedmont Lithium Project is located in one of the premier regions in the world for lithium exploration given its favourable geology and ideal location with easy access to infrastructure, power, R&D centers for lithium and battery storage and major high-tech population centres.

Ian Middlemas – Chairman Keith D. Phillips – President & CEO Anastasios (Taso) Arima – Executive Director Robert Behets – Non-Executive Director Levi Mochkin – Non-Executive Director Mark Pearce – Non-Executive Director

MAJOR SHAREHOLDERS

NASDAQ Securities Australia Pty Ltd.

9.48%

Ian Middlemas

3.61%

AustralianSuper Pty Ltd Sapphire Chip Pty Ltd Top 20 Shareholders

Officers and Directors

WHY PIEDMONT? • •

•

•

•

5.64% 1.87%

50.50% 14.20%

Project That “Checks All The Boxes” – the world’s best located lithium project with strong project fundamentals and ability to rapidly develop the high-grade deposit Solid Shareholder Base – major shareholders who share the vision for Piedmont to become a new strategic supplier of lithium to the highgrowth US market Maiden Resource - Expected Q2 2018

PIEDMONT LITHIUM PROJECT

24/01/18

17/01/18

09/01/18 12/12/17 28/11/17

14/11/17 03/11/17 01/11/17 11/10/17

High-Growth Sector – lithium is a high-growth sector for both consumer products and investors

Strong Board – extremely well credentialled Board with a proven history of developing mineral resource projects and delivering shareholder value

COMPANY ANNOUNCEMENTS

05/10/17 26/09/17

13/09/17

Piedmont launches Scoping Study with the appointment of Primero and CSA US Policy changes on critical minerals and corporate taxes reinforce core advantages of the Piedmont Lithium Project Piedmont enhances Senior US Executive team Comprehensive Drilling Programme commences at The Piedmont Lithium Project Further High-Grade Assay results continue to extend mineralisation at The Piedmont Lithium Project Piedmont continues aggressive land strategy Completion of institutional placement raising A$16m Phase 2 Drilling Programme completed and further High-Grade Assay results Piedmont commences trading in The United States and admitted to Nasdaq International Designation Piedmont Lithium to present at the Cathodes 2017 Conference Four Kilometres of mineralisation confirmed at the Piedmont Lithium Project Piedmont secures additional Lithium Mineral Rights

KEY FINANCIALS (JANUARY 2018) Share Price

Shares/ADRs Outstanding Market Capital Cash/Equiv Debt

A$0.21/ US$16.70 554.0m/5.54m

 A$116m/ US$92.5m  US$14.0m

SHARE PRICE PERFORMANCE

PROJECT ADVANTAGES • Proximity to downstream markets – located within 15 miles of the only two large scale lithium processing facilities in the U.S. providing potential cost savings and certainty of supply;

• Existing infrastructure – ready access to high quality roads and rail, low-cost power and skilled labour force; and • Stable and investment friendly jurisdiction – stable legal regime, established 9 month permitting process for mining operations with low taxes and no state mining royalties

0

PROJECTS

INFRASTRUCTURE

•

•

100% interest in the Piedmont Lithium Project

•

Located approximately 40 kilometres west of Charlotte, North Carolina

•

Along trend to the Hallman Beam and Kings Mountain mines, provided most of the western world’s lithium between 1950 and 1990

•

•

Located within the world-class Carolina Tin-Spodumene Belt (“TSB”) The TSB has been described as one of the largest lithium provinces in the world

Good access to established infrastructure and labour market

»» Access to labour is a significant strategic advantage for Piedmont located outside Charlotte

•

»» McGuire Nuclear Power Station (2.3 GW)

•

»» I-85 Interstate Highway

•

11.5 GW of large scale power within 50 km of the project

»» Transcontinental Natural Gas Pipeline

A major highway just south of the project

Two nearby railways with access to major international ports, and a major international airport »» Charlotte/Douglas Int. Airport

EXPLORATION AND GEOLOGY • • • • • • • •

4 high-grade Li corridors identified Property consists of 530 contiguous acres Historic drilling (2009/2010) consisted of 19 holes totaling ~1,200 m Phase 1 drilling programme consisted of 12 holes totaling ~1,500 m of drilling and identified 4 corridors or groups of pegmatite swarms within the property 4+ kilometres strike length Pegmatite dikes generally strike northeast with a moderate southeast dip and range in thickness between 5-25m Phase 2 drilling extended a further 3,000m from the initial 9,400m campaign Exploration Target anticipated by year-end

Drillholes Hole 17-BD-21 Hole 17-BD-22 Hole 17-BD-23 Hole 17-BD-50

Hole 17-BD-53

Hole 17-BD-29

Hole 17-BD-62

Assay Results 28.9m @ 0.94% Li2O from 35m including 6.0m @ 1.72% Li2O

from 55m

11.3m @ 1.10% Li2O from 62m including 4.3m @ 1.55% Li2O from 67m

22.9m @ 1.02% Li2O from 38m including 5.0m @ 1.90% Li2O from 41m

17.8m @ 1.04% Li2O from 107m and 2.8m @ 1.35% Li2O

from 94m

10.5m @ 1.06% Li2O from 56m and 5.5m @ 1.39% Li2O from 5.0m @ 1.44% Li2O from 30m and 3.0m @ 1.26% Li2O from 16.2m @ 1.72% Li2O from 109m

2018 WORK PLAN AND EXPECTED NEWS FLOW • • • • • •

CONTACT

Comprehensive 20,000m drill programme underway Maiden Resource anticipated Q2 2018 Scoping Study commenced January 2018 and results expected Q3 2018 Metallurgical studies underway at North Carolina State Mineral Research Laboratory Initial permitting work in process and submissions expected Q4 2018 Land consolidation strategy ongoing

Keith D. Phillips President & CEO [email protected] +1 973 809 0505

Anastasios (Taso) Arima Executive Director [email protected] +1 347 899 1522

21

WWW.PIEDMONTLITHIUM.COM

COMPANY EXPOSURE

Lithium

COMPANY LISTING

STOCK CODE

Infinity Lithium Corp.

ASX:PLH

(formerly Plymouth Minerals Ltd)

INFINITY LITHIUM CORP. (FORMERLY PLYMOUTH MINERALS LTD) DEVELOPING THE WORLD CLASS SAN JOSE LITHIUM-TIN DEPOSIT IN EUROPE

TEAM

COMPANY OVERVIEW

Infinity Lithium Corp. (formerly Plymouth Minerals Ltd) is an ASX-listed company developing the San Jose Lithium-Tin Project in JV with Spanish company Valoriza Mineria (Sacyr). The Project is located in the mining friendly Extremadura province of Western Spain. Previous worker Tolsa drilled and commenced feasibility studies on the project n the 1990s. Infinity Lithium has progressed from here with further drilling, metallurgical test work programmes and completed a Scoping Study that details a large, long-life, open-pit development with strong economics that will produce 15,000 tonnes of lithium carbonate per annum from the mine and on-site refinery.

MAJOR SHAREHOLDERS Morgan Stanley

4.99%

A22 Pty Ltd.

2.06%

Adrian P. Byass

Eric Vernon Lilford Christian Cordier

Management Ownership Top 20

INVESTMENT HIGHLIGHTS • • • • •

3.27% 1.75% 1.70% 7.40% 61%

World-class project, development and technical partners Scoping Study completed in Q4 2017 - US$401 million pre-tax NPV at 8%; IRR of 28%; Payback Period: 2.7 years; CAPEX (Incl. 10% contingency): US$273 million; OPEX (Years 1-10): US$4,763/t of Lithium Carbonate AU$6.5m raised to complete Feasibility Study 2018 – currently underway Proven +99.9% LC battery grade product Feasibility Study Due QY CY2018

Adrian Byass – Managing Director Humphrey Hale – Non-Executive Director Eric Lilford – Non-Executive Director Christian Cordier – Non-Executive Director Kevin Tomlinson – Non-Executive Chairman

COMPANY ANNOUNCEMENTS 10/01/18 13/12/17 07/12/17

05/12/17

18/10/17

San Jose lithium-tin project update $6.5m capital raising to complete feasibility study and advance the San Jose Lithium-Tin Project First btch from bulksampling programme to major Chinese lithium producer Updated mineral resource establishes San Jose Lithium-Tin Deposit as one of the largest in Europe Scoping study demonstrates robust economics for the San Jose Lithium-Tin Project

KEY FINANCIALS (JANUARY 2018) Share Price

A$0.16

Market Capital

 A$31m

Year High-Low

A$0.29-0.15

Shares Outstanding

189m

Debt

0

SHARE PRICE PERFORMANCE

SAN JOSE LITHIUM-TIN PROJECT

“A MAJOR, NEAR-TERM, BROWNFIELDS LITHIUM DEVELOPMENT OPPORTUNITY” • • • •

Located in the brownfields, proactive mining region of Extremadura in Spain Tender awarded by Government for development

One of the largest lithium deposits in Europe Excellent supporting infrastructure

CONTACT Adrian Byass CEO, Managing Director T: +61 (0) 410 305 685 E: [email protected]

“UPDATED MINERAL RESOURCE ESTABLISHES SAN JOSE LITHIUM-TIN DEPOSIT AS ONE OF THE LARGEST IN EUROPE” GEOLOGY & RESOURCES • San Jose Lithium-Tin Deposit contains an estimated +1.6Mt of Lithium Carbonate Equivalent (LCE) – one of the largest in Europe • 112Mt @ 0.61% Li2O (lithium oxide) and 0.02% Sn (tin) (at 0.10% Li cut-off) • 25.2Mt @ 0.9% Li2O (lithium oxide) and 0.03% Sn (tin) (at 0.35% Li cut-off) • Initial mine life of 24.1 years potential • Resource open in all directions

MINING & PROCESSING • Memorandum of Agreement (MoA) with major Chinese lithium carbonate producer Shandong Ruifu Lithium Company (Shandong Ruifu) • Proven, simple process flow sheet and metallurgy to produce saleable Lithium Carbonate (LC) • Initial process test work proved battery grade LC +99.5% purity

• Additional process test work for Feasibility Study 2018 currently underway in at Shandong Ruifu’s production facilities in China • Process flowsheet- Proven Simple and Cheap

SCOPING STUDY 2017 Scoping Study Highlights & Results NPV (8%) @ US10,000/t LC

US$401m

Project IRR

28%

Payback from Commencement of Production

2.7 years

CAPEX (including 10% contingency)

US$273m

Grade - Lithium Carbonate LOM

1.7%

Potential Annual Production

15,000tpa LC +99.5%

Average C1 Cost - Year 1-10 (without credit*)

US$4,763/t

Average Gross Operating Cash flow Per Annum - Year 1-10

DEVELOPMENT PROGRAMME

Project Milestones Activity Feasibility Study

Beneficiation Test Work

Geotechnical & Metallurgical Drilling Campaign Delivery of Feasibility Study Earn 75% Project Interest

Product Offtake & Strategic Partner

Permitting, Financing, Construction & Commissioning

US$74.8m

Underway

“INFINITY LITHIUM IS ON TRACK TO ACQUIRING A 75% INTEREST IN THE SAN JOSE LITHIUM-TIN PROJECT THROUGH THE COMPLETION OF THE FEASIBILITY STUDY”

Underway

•

Expected Q4 2018

• • •

Status Underway

Expected Q4 2018 Planned 2018

Planned 2019/2020

Feasibility Study: currently underway and expected to be completed by Q4 2018 – earning Plymouth Minerals 75% project interest Process Test Work: currently being conducted by lithium producer in China Drilling: geotechnical and metallurgical drilling campaign commencing January 2018 Development: permitting, financing, construction and commissioning of San Jose planned for 2019/2020

23

WWW.PLYMOUTHMINERALS.COM

COMPANY EXPOSURE

Nickel Producer

COMPANY LISTING

STOCK CODE

Consolidated Nickel Mines

PRIVATE

CONSOLIDATED NICKEL MINES

MUNALI NICKEL MINE ZAMBIA NEAR TERM PRODUCTION COMPANY OVERVIEW

Consolidated Nickel Mines (CNM) is a private nickel developer focused on the Munali Nickel Project 70km South West of Lusaka, Zambia. Operations at Munali ceased in November 2011 due to low nickel prices and poor operational performance by previous owners, Jinchuan. CNM acquired the rights to use all of Munali’s mine resources and infrastructure through a leasing arrangement from the previous owners. CNM believe the company is well positioned to develop the mine at a lower cost level than the previous owners and is well positioned to produce a Nickel Sulphate NiSO4 product that will supply the developing battery market.

COMPANY STRATEGY CNM’s strategy is to acquire underperforming base metal assets and apply modern mining methods and novel applications of metallurgy to improve the economic performance of mines that have had significant capital invested.

CNM have recently raised US$20m and is seeking a further US$40m through equity and debt instruments to commence mining at Munali.

MINING IN ZAMBIA Country Background •

Zambia has a proven, democratic tradition of transfer of power

•

More than 80 years of established mining operations

• • •

Mining has been economic and social backbone of Zambia

Mining is a significant contributor to employment (direct and indirect) Highly-trained and well-educated mining workforce

TEAM

Simon Purkiss – Chief Executive Officer Craig Bailey – Chief Operating Officer

MUNALI MINE ROBUST PROJECT RETURNS •

S hort-run to cash flow positive driven by competitive operating costs and low start-up capex requirement

•

Saleable products: 12% Ni Conc :4,500tpa Ni, 200tpa Cu, 200tpa Co, 6,400oz PGM 25% Cu Conc : 500tpa Cu, 6,300oz PGM

•

Estimated US$40m to commence start-up within 6 months

• • • • • • •

Targeting low cost 30-40kt/pa Ni concentrate over >7yr LoM Forecast Opex costs of approx. US$ 7,000/t nickel produced

Targeted annual revenue of US$56m (Ni price US$15,000/t) NPV8% - US$36.7m and IRR – 33.5% (7yr LoM) NPV8% - US$74m and IRR – 39.8% (10yr LoM) Free to sell nickel concentrate off-take contract

Potential to further beneficiate to sulphate or metal

RE-START STRATEGY AND STRATEGIC RELATIONSHIPS Current Position •

Ongoing care and maintenance costs at current staffing level $5m per annum

•

Decision made to finance re-start at $40m capital

•

Project cash positive at current nickel prices

Infrastructure

Financing options

•

•

Mining fleet financing in advanced discussion

Taxes

•

Offtake finance $20m under discussion with traders

•

5% Mineral Royalty Tax for nickel operations

•

•

30% Corporation Tax

•

• •

Well-established transport and communications network

Further capital development underway (railway, power stations)

Sliding scale for copper 4-6% depending on copper price

• •

Light vehicle financing in advanced discussion

Offtake finance and nickel sulphate project finance under discussion Equity finance – private

Ministry (Mines and Finance)

STRATEGIC SHAREHOLDERS • •

CE Mining

CE Mining II

“demand for nickel could reach 400,000 tonnes should electric vehicles reach 10 per cent of the global fleet, enough to cause a supply deficit” Glencore Chief Executive Ivan Glasenberg INCREASED DEMAND-ELECTRIC VEHICLE (EV) GROWTH •

•

• •

Market in deficit 2016 onwards – Supply closures on ferronickel side – Chinese stainless demand strong – Stock reducing from highs

New demand source – batteries – 20% growth in battery demand 2016 – EVs 40kg nickel per car (80kg copper) – 5m EVs in China within 5 years – 400kt of new nickel required – 5m EVs in ROW? – Renewable storage batteries? – Battery grade nickel from sulphides

Reducing supply from current mines (grade, tonnes)

Forecast 20% sulphide supply to batteries within 5 years

SUPPLY – LIMITS TO NPI MARKETS

• • • • •

NICKEL SULPHATE NISO4 – MARKET OPPORTUNITY

High grade ore, Indonesia, produces HG NPI, direct 300 stainless feed Low grade ore, Indonesia and Philippines produces LG NPI, partial feed to 300 stainless

Balance made up of other nickel sources such as scrap and refined nickel

Limit to amount of LG NPI that can be consumed in stainless process so limit to amount of utilised LG Ore LG Ore price to decouple from nickel price, dampening rising nickel price affect on Chinese stainless steel cost

•

Lithium Ion (Li) batteries are used for storage of energy, for plug-in electric vehicle (PEV) and static storage markets

•

Nickel-containing battery technology, specifically battery cathodes, is an essential component in the development of electric vehicles

• • • • •

Nickel will play a key role in developing battery technology due to high energy density.

Nickel Sulphate is the primary nickel product to meet this demand (most laterite, NPI and FeNi will not be able to produce a competitive nickel product). Nickel Sulphate currently trading at a premium to LME nickel prices.

Tesla expects to produce 35 GWh worth of batteries/Energy storage in 2018, if one assumes 2kg of Nickel per kwh, that would mean a 70k ton demand for Nickel Sulphate just for Tesla. Battery size range for fully Electric from 6kwh (Renault Twizy) to 100kwh (Tesla S) - Averaging around 25Kwh

INVESTMENT SUMMARY •

Leveraging off US$180m historical spend on mine, plant and infrastructure

•

Company de-risked with CSR commitments cleared, water security improved, costs reduced

• • • • • • •

Strong Government and Community support with all key mine infrastructure and permits in place Key technical operating management in place at site

Robust project returns with short-run to cash flow positive, driven by competitive operating costs and low start-up Capex requirement (US$40m) Exploration potential both down-dip and in region

Value add product of metal or battery-grade sulphate demonstrated and pilot and feasibility study step to start. Separate financing planned

Expert project development team with African operating experience, proven mine restart capabilities and a track record of delivering superior shareholder returns Financing of restart underway

25

WWW.CNMPLC.CO.UK

COMPANY EXPOSURE

Pure-Play Exposure To Cobalt

COMPANY LISTING

Cobalt 27

COBALT 27

Cobalt 27 Capital Corp. (“Cobalt 27”) is a minerals company that offers pureplay exposure to cobalt, an integral element in key technologies of the electric vehicle and battery energy storage markets. Cobalt 27 has acquired one of the world’s largest stockpiles of physical cobalt and intends to manage and grow a cobalt-focused portfolio of streams, royalties and direct interests in mineral properties containing cobalt. Cobalt 27 identified cobalt as a commodity with attractive supply-and-demand fundamentals driven by the rapidly growing electric vehicle and battery energy storage markets.

Cobalt 27’s management team evaluated various opportunities to invest in cobalt and decided the most attractive structure would be to create a company with an asset base underpinned by physical cobalt material and enhanced with growth opportunities in the form of streams, royalties and direct interests in mineral properties containing cobalt.

COBALT 27 STRATEGY Cobalt 27’s strategy of holding physical cobalt, streams and royalties will avoid the operational, environmental, closure, capital risks and the binary upside/downside associated with typical mining companies. Similarly, Cobalt 27 will not be exposed to any operational and competitive risks borne by the automakers and battery producers. By holding physical cobalt and cobalt streams and royalties, the Company will be able to participate in cobalt price appreciation while minimising exposure to risks.

CAPITAL STRUCTURE AND SHAREHOLDERS

Portal Capital  Blackrock

18.6% 11.1% 8.8%

Fir Tree Partners

Sovereign Wealth Fund

INVESTMENT HIGHLIGHTS

3.7% 2.9%

Physical cobalt position with stream royalty upside potential PURE PLAY COBALT

INVESTMENT VEHICLE STRONG COBALT

FUNDAMENTALS-

DIRECT EXPOSURE TO EV ADOPTION

GROWTH THROUGH STREAMS AND ROYALTIES

TRANSPARENT PLAN TO BE EXECUTED

BY EXPEREINCED MANAGEMENT

TSX: KBLT

TEAM

COMPANY OVERVIEW

Pala Investments Ltd. (Switzerland)

STOCK CODE

• Direct leverage through physical cobalt • Growth through streams and royalties • Limited exposure to operational and capital risks • Few investment alternatives providing exposure to cobalt • Growing demand for electric vehicles (EVs) and energy storage expected to drive demand for battery materials, particularly cobalt. • Strong cobalt demand coupled with challenged supply supports potential cobalt price appreciation

• Opportunity to accretively  grow value of cobalt holdings and cash flow per share • Agreements to acquire cobalt royalities on 8 properties • Ongoing discussions with potential streaming counterparties • Intends to hold physical cobalt and grow a portfolio of streams and royalties • Experienced management team and Board with significant streaming, royalty and capital raising experience; advisory board and industry experts • Low overhead expenses

Anthony Milewski – Chairman, CEO & Director  Justin Cochrane – President & COO Cindy Davis – CFO  Frank Estergaard – Director Nick French – Director John Kanellitsas – Director Candace MacGibbon – Director

ADVISORY BOARD

Jonathan Hykawy – Managing Director, Stormcrow Phil Day – 20 years focused on mining operations and design Andrew Ferguson – Executive Director and CEO of APAC Resource Robert Mitchell – Managing Member of Portal Capital, Portfolio Manager of Green Energy Metals Fund and Co. , and Odysseus Fund Neil Warburton – Non-Executive Director at Independence Group Vincent Metcalfe - Vice President at Osisko Gold Royalties Ltd. Ted Miller - Ford Motor Co. senior manager of energy storage and materials strategy and research Mark Selby - President & CEO of RNC Minerals Dr. Prabhakar Patil - Former CEO of LG Chem Power Inc. Andrew Ham - PhD Structural Geology; 20+ years mining investment

LATEST ANNOUNCEMENTS 11/01/18 22/12/17 21/12/17

Cobalt 27 announces Andrew Ham joins advisory board Cobalt 27 announces full exercise of over-allotment option Cobalt 27 appoints two new directors as it focuses on streaming 19/12/17 Cobalt 27 closes $85M bought deal offering 11/12/17 Cobalt 27 announces filing of prospectus supplement and purchase of additional cobalt 07/12/17 Cobalt 27 announces $85M bought deal offering of common shares

KEY FINANCIALS (JANUARY 2018) Share Price

Shares Outstanding Market Capital Cash

Debt

Year High-Low

SHARE PRICE PERFORMANCE

C$13.12 34.35m

 C$450.6m  C$20m 0

C$13.75-7.42

Physical Cobalt Material

INCREASING COLBALT DEMAND

Cobalt 27 Focus

•

Majority of cobalt’s expected demand growth is attributable to rechargeable batteries

•

Requires an increase of >4x current annual cobalt production

• • •

STREAMS AND ROYALITES Cobalt 27 intends to enhance its exposure to cobalt through the acquisition of new or existing streams and royalties in producing mines, development projects and exploration properties. Cobalt 27’s management has significant streaming and royalty experience and is actively pursuing streams and additional royalties. The focus will be on streaming opportunities that could provide the Company with near-term cash flow and royalties on exploration-stage cobalt properties that will provide longer-term optionality on the price of cobalt.

100 million EVs by 2030 targeted by the Paris Declaration on ElectroMobility and Climate Change Robust demand expected — forecasted 6.9% CAGR from 2016 to 2020

Cobalt demand in Li-ion batteries is expected to grow at a 11.7% CAGR from 2016 to 2022

The Company has acquired seven net smelter return (NSR) royalties on exploration-stage properties containing cobalt. These royalties on potential future cobalt (Co) production are summarised in the following table:

PHYSICAL COBALT MATERIAL • •

Property

Cobalt 27 provides an investment alternative for investors interested in investing directly in cobalt.

North Canol Properties*

Cobalt 27 invests in physical cobalt and does not intend to actively speculate with regard to short-term changes in cobalt prices.

Triangle

Property

PHYSICAL COBALT HOLDINGS •

Cobalt 27 currently holds 2,158 tonnes of physical cobalt at C$185million

•

671 tonnes of standard-grade cobalt

• • •

Direct Interests in Properties Containing Cobalt

Streams & Royalties

Gold Corp.

New Found

Property

Gold Corp.

Gold Corp. Three

individual

Location

2% Co NSR

Ontario

2% Co NSR

Ontario

2% Co NSR

Ontario

2% Co NSR

British

Columbia

CORPOR ATE OFFICE Cobalt 27 Capital Corp. 4 King Street West, Suite 401 Toronto, Ontario Canada, M5H 1B6

27

Royalty

Yukon

*two separate mineral properties to which a Co NSR applies

MINERALS PROPERTIES Cobalt 27’s initial growth strategy will focus on physical cobalt, streams and royalties; however, the Company may also seek the acquisition of interests in producing mines, development projects or exploration properties. Interests may be pursued in both primary cobalt deposits, as well as properties in which cobalt is a by-product or co-product with other metals.  The Company believes investments in such properties could leverage the Company’s industry expertise and broaden the scope of potential growth opportunities. 

New Found

Professor

Sunset Mineral

Warehouses are certified by the London Metal Exchange and meet its international standards of warehousing. These standards provide requirements for security, size, rates, logistics, accessibility, material handling, delivery points, and permitting.

Resources Ltd.

New Found

& Waldman

All cobalt owned by Cobalt 27 is insured and stored at secure warehouses located in Baltimore, Antwerp and Rotterdam.

Golden Ridge

Rusty Lake Property

1,487 tonnes of premium-grade cobalt

Owner

Tel: +1 604.410.2277 Fax: +1 604.410.2275 Email: [email protected]

WWW.CO27.COM

2% Co NSR

Cobalt Shifts From Metal To Chemical Markets By George Heppel, Consultant, CRU International

C

George joined CRU in 2017 as a Consultant within the Nickel, Stainless Steel and Special Alloys team. He is responsible for reporting on the Cobalt and Molybdenum markets, including annual market outlooks, quarterly updates and monthly monitors. George worked in pricing analysis and forecasting in the energy industry, focusing on sulphur and its end-use markets. After that, he moved into the minor metals trading sector with a primary focus on nickel-cobalt superalloys, as well as alloy addition elements (Re, Ta, Hf, W, Mo) and rare earth elements. George has experience working with minor metals in the USA and the UK, and his scientific background has been a particular benefit in analysing minor metal end-use markets. George has Masters in materials science from Oxford University. obalt demand is expected to exceed 100kt

The Cobalt Market Has Two Main Categories

this year, and CRU forecasts total demand of

cobalt materials to increase at a CAGR of 11.6%

over the next ten years. Alongside this large increase in

Metallic cobalt is used for the manufacture of

shift in cobalt demand from metallic products to chemical

applications. It is normally sold in the form of 99.8% and

high-temperature superalloys, stainless steels, medical

demand, CRU also expects changes to the way refined

prosthetics, hard-facing products and other niche

cobalt is traded and produced. This is primarily due to a

99.3% purity cobalt ingot or cut cathode on the LME, or

products.

priced according to price discovery from a wide range of sources.

Cobalt chemicals have many applications, but their most prominent use is in the manufacture of Li-ion batteries.

28

www.theassay.com

Other key uses include the manufacture of catalysts,

How will the market adjust to this change?

cobalt acetate, as well as other more niche compounds for

Despite the increasing importance of chemicals in the

pigments, polymers and tyres. The most widely used cobalt chemicals are cobalt oxide, cobalt sulphate and

cobalt market, there is currently no widely-accepted

rarer applications.

benchmark price for any refined cobalt chemical products. The majority of cobalt chemical manufacturing occurs in

How Is This Likely To Change In The Future?

China, where concentrates are imported primarily from

the DRC, processed into chemicals and intermediates and then sold on into various sectors. Chemical manufacturers

Cobalt metal has historically been the largest traded

without the ability to process cobalt concentrates are

segment of cobalt products due to its application in

forced to purchase 99.3% cobalt ingot or broken cathode

aerospace and performance steels. However, in the

and then use acid dissolution techniques to form cobalt

past ten years cobalt chemicals have eclipsed cobalt

intermediates.

metal in terms of total demand, primarily due to the

As battery chemistries become standardised across the

standardisation of Li-ion batteries across consumer

EV market, we believe that cobalt chemicals will begin to

electronics – most notably in the market for electric

vehicles. In 2009, refined chemicals comprised 55% of total cobalt demand, with cobalt metal making up the rest. In 2017, CRU estimates that they will comprise 63% of the

market, and this is expected to steadily increase to over two thirds of the market by 2026.

Due to this strong increase in cobalt demand for chemical applications, CRU estimates that in 2017 there will be a

world deficit of 4,000 tonnes for refined cobalt chemicals

become commoditised and more widely traded as opposed to cobalt in metal form. In addition to this, we believe that many integrated production projects will begin to shift from producing metallic cobalt to producing cobalt

chemicals. Assuming that these producers can supply the

chemicals to a standardised commodity grade which is accepted in the market (in the same way that 99.8% cobalt

metal is widely accepted), this could effectively simplify

and over 1,000 tonnes for cobalt metal. CRU expects

the supply chain and allow producers to trade directly

that the cobalt metal deficit will narrow in the mid-term

with end users in the battery and chemicals industry.

(2017-2021), while the refined cobalt chemical deficit will remain at high levels. The relative availability of cobalt

metal compared with cobalt chemicals over the next five years could result in a price arbitrage opening between the two products, as current acid dissolution capacity struggles to meet chemical demand.

29

THE ASSAY

Which Cobalt Chemicals Are Best Suited to Commoditisation?

"...we believe that cobalt chemicals will begin to become commoditised and more widely traded as opposed to cobalt in metal form"

Most cobalt chemical demand in recent years has come from

the handheld electronics industry for high-charge density

applications such as mobile phones, tablets, laptops and other electronics. The industry standard battery chemistry for these applications is LCO (lithium cobalt oxide) which uses cobalt

oxide as a raw material, and as a result cobalt oxide currently represents over half of all cobalt chemical demand.

Conclusion

However, the electric vehicle and energy storage system markets

The increasing importance of cobalt chemicals for the battery

are expected to be the principle drivers of cobalt demand growth

sector has led to a substantial market deficit in 2017, as well as

over the next ten years. These industries require much larger

strong price increases y/y. The current cobalt supply chain of

battery sizes and as a result, manufacturers are keen to limit

producers selling broken cathode to third parties for dissolution

cobalt dependency in order to reduce costs and limit the risk

is inefficient, and some producers may seek to produce refined

of running into issues acquiring raw materials. Consequently,

cobalt chemicals in the mid- to long-term.

NCA (Nickel Cobalt Aluminium) is fast becoming the industry standard for EVs and ESS as opposed to LCO for conventional

This smoothing of the supply chain may lead to the

electronics. NCA chemistries typically have a far lower cobalt

commoditisation of several key cobalt chemicals, as chemical

content by weight and require cobalt sulphate as a raw material

trading volumes begin to eclipse metal trading.

- as opposed to cobalt oxide for LCO.

CRU believes that cobalt sulphate is the most viable cobalt

As a result, CRU expects cobalt sulphate to be the most widely

intermediate for commoditisation due to its importance in

traded cobalt chemical in the long-term, with total demand

battery chemistries associated with EVs and ESS. CRU estimates

reaching just under 60,000 tonnes by 2026.

that total cobalt sulphate demand will reach just under 60,000 tonnes in 2026.

30

Vanadium Another Important Battery Option By Gavin Wendt, Founding Director & Senior Resource Analyst, MineLife

Gavin is the Founder of MineLife and the Senior Resource Analyst. He is the author of both the Resource Bulletins and the Weekly Reports. Gavin has been involved in the Australian share market for the past 20 years as a resource analyst, employed in the stockbroking and finance industries. He specialises in researching and evaluating mining and energy companies for clients of all types.

Firstly, Why Vanadium? Well you would almost certainly have heard a lot about lithium

of renewable energy over recent years, especially wind and

vehicles (EVs), or the numerous mentions that lithium-ion

produced. Lithium fulfils this storage role in its use in lithium-

of late. Whether it’s related to high-profile entrepreneur Elon

solar. One of the largest issues with wind and solar energy

Musk and his lithium-ion battery initiatives, his Tesla electric

sources is the need to store and release the electrical energy

batteries receive in the media related to new-age energy

ion batteries.

generation and storage, lithium is certainly a conversation-

Vanadium however is an energy option that I believe we should

starter. But many investors however know very little about

be watching more closely, as it is utilised in a promising storage

vanadium.

technology known as vanadium redox flow batteries, which

Returning to lithium, its price rise (refer to graphic on p.22) has

will boost overall demand for vanadium. We’ll discuss this

been spectacular and is directly correlated with the expansion

more in a moment.

31

THE ASSAY

In

supply

terms,

the

three

largest

vanadium-producing nations at present are

The Real Opportunity for Demand Growth is in Energy Storage

steel-smelter slag, but it is also mined in

Lithium-ion batteries have taken the lion’s

shales, as well as in magnetite (iron oxide)

batteries are both bringing down costs and

China, South Africa and Russia. Vanadium is currently produced as a by-product of

two different types of mineral deposits –

disseminated in carbon-rich deposits and deposits alongside titanium.

Vanadium’s main use at present is as a

steel additive in high-strength steel, which accounts for about

92% of the current global demand of ~100,000t of contained vanadium

(~180,000t V2O5 equivalent). Vanadium is used in the creation of metal alloys

that withstand extreme conditions, such

as those used in jet engines. Around 5% of vanadium’s usage is in catalysts and chemical applications.

share of the energy storage market so far, however technological advances in flow

improving their safety and environmental profile.

Compared

to

lithium-ion

batteries,

vanadium redox flow batteries (VRB) are non-flammable,

environmentally friendly, have estimated life-spans in excess of 10,000 cycles and

maintain 90% of their capacity over 20 years, thereby lowering the total cost of

ownership. By comparison, getting 1,000 cycles of use out of a lithium-ion battery

with full depth of discharge would be ambitious.

Deutsche Bank price forecasts for 99.5% and 98.5% lithium carbonate, lithium hydroxide and 6% spodumene concentrate

32

"Lithium-ion batteries have taken the lion’s share of the energy storage market so far, however technological advances in flow batteries are both bringing down costs and improving their safety and environmental profile."

www.theassay.com

VRBs are ideal for “grid-constrained” solar and wind-farms

what they were three years ago and are set to come down

uneconomical. Furthermore, VRBs boast a longer continuous

in by initial design. Unit cost for large-scale VRB goes down,

that currently struggle to sell their electricity at times of

further. VRB can be stacked up to increase storage capacities,

peak production, but find other forms of storage to be

whereas lithium-ion storage capacities are somewhat boxed-

discharge run time (6-10 hours versus 2-5 hours) than

whereas it goes up for lithium-ion batteries. This means on

lithium-ion batteries. The downside however for VRB is their

a large-scale deployment, VRB is already likely competitive

relatively lower round-trip efficiency (measured by power

with lithium-ion batteries today.

out over power in) of 70% compared to 85% with lithium

The cost of energy storage is, roughly, the up-front capital cost

batteries.

of the storage device, divided by the number of cycles it can

From a cost perspective, Tesla’s current battery costs are

be used for. If a battery costs $100 per kwh and can be used

estimated to be ~$150 to ~$200 per kilowatt-hour – well

1,000 times before it has degraded unacceptably, then the cost

below the industry average pack costs of ~$350 per kilowatt-

is one tenth of a dollar (10 cents) per cycle. This compares

hour – and could reach its <$100 per kilowatt-hour target in

with the cost of base-load power generation from wholesale

the intermediate term as Gigafactory production ramps up.

natural gas electricity from a new plant, which costs roughly 7 cents per kwh (not including the cost of carbon emitted).

By comparison, the VRB cost is slightly behind the curve at

$300/kWh to $500/kWh – however these costs are half of

33

V2O5 micro-tubes produced by laser evaporation

www.theassay.com

"...by combining VFBs with renewable energies such as wind and solar, inherently intermittent energy supplies can be regulated from moment to moment."

Enhancing the Reliability of Base-Load Power Batteries won’t compete with base-load power generation alone. Batteries deployed by utilities allow them to reduce the

use of (or entirely remove) expensive peaker plants, which

only run for a few hours a month. They allow utilities to reduce spending on new transmission and distribution lines that are (up until now) built for peak load and which sit idle at many

Strong Vanadium Price Outlook

In a world with batteries distributed close to the edge, utilities

Vanadium metal price charts are not readily available to

other hours.

the public, so I have provided ferro vanadium price trend

can keep their transmission lines full even during low-demand

information as it is a good proxy to the vanadium metal price.

hours, using them to charge batteries close to their customers – and thus cutting the need for transmission and distribution

Vanadium accounts for between 30% and 50% of the cost of

during peak demand.

VRB, making it essential for VRB manufacturers to secure vanadium supply. Billions of dollars have poured into VRB

So by combining VFBs with renewable energies such as

research and development over the course of the past decade,

wind and solar, inherently intermittent energy supplies can

with inevitable mass utility-scale VRB adoption.

be regulated from moment to moment, allowing the grid to balance the amount of energy being put into the wires with the

Thus, I believe the long-term vanadium price outlook is

demand arising from consumers. As a result, VFBs make for a

promising, which will inevitably generate increased interest in

new and growing demand for vanadium. Annual production is

companies that explore for and produce vanadium metal.

~180,000t V2O5 equivalent. Vanadium is used in the creation of metal alloys that withstand extreme conditions, such as those used in jet engines. Around 5% of vanadium’s usage is in catalysts and chemical applications.

35

COMPANY EXPOSURE

COMPANY LISTING

Vanadium-Titanium and Processing Technology

STOCK CODE

TNG Ltd

TNG LTD

ASX: TNG

COMPANY OVERVIEW

TEAM

TNG is an Australian resources company focused on the evaluation and development of its Mount Peake Vanadium-Titanium-Iron project. TNG’s main focus is the evaluation and development of its 100%-owned Mount Peake Vanadium-Titanium-Iron Project, located in the highly prospective Arunta Geological Province some 80km north-east of Alice Springs in the Northern Territory.

Paul Burton – Managing Director Rex Turkington – Non-Executive Director Stuart Cow – Non-Executive Director John Davidson – Non-Executive Director

TNG & MOUNT PEAKE OVERVIEW • • •

• • • • •

EIA approved

Simplified corporate structure enables focus on Mount Peake and TIVAN Focus has been on de-risking and locking down final designs:

»» Engineering Designs and layouts for mine nearing completion »» TIVAN process flow sheet completed

»» Mine area cleared by Traditional Owners for construction »» LOM water aquifer secured

Permitting anticipated: mine site EIS expected to be approved in Q1, 2018; plant site EIS expected to be approved in Q2 2018 Final Investment Decision targeted mid-2018

Darwin land site for TIVAN processing facility secured

WWB Investments P/L

9.94%

Ao-Zhang International Mineral Resources

3.88%

Management - 4% Retail - 73%

MOUNT PEAKE PROJECT Mount Peake is TNG’s flagship project. Discovered by TNG in early 2008, the Mount Peake Project comprises a current JORC Indicated Resource of 160Mt grading 0.28% V2O5, 5.3% TiO2 and 23% Fe, making it one of the largest of the known vanadium projects in Australia. The project is strategically located close to existing infrastructure, including the Alice Springs-Darwin Railway, Stuart Highway and the new LPG pipeline, 20km to its east.

Share Price

Shares Outstanding Cash/Equiv

MAJOR SHAREHOLDERS

Institutional Ownership - 23%

18/12/2017 24/11/2017 20/11/2017 15/11/2017 09/11/2017

Mount Peake Project EIA approval TNG signs agreement with EMC to evaluate alternative power sources for Mount Peake Mine Site EIS on track for completion TNG Receives Research and Development Rabat Updated Feasibility Study Results TIVAN Patent Update Final EIS Addendum Submitted

Market Capital

Successful demerger and listing of Todd River Resources (ASX:TRT)

SMS Investments SA

25/01/2018 21/12/2017

KEY FINANCIALS (JANUARY 2018)

Updated Feasibility Study confirms a robust, high-value project

Aosu Investment

COMPANY ANNOUNCEMENTS

6.99% 1.82%

Debt

Year High-Low

SHARE PRICE PERFORMANCE

A$0.16

804.5m

 A$128.7m  A$5.1m 0

A$0.18-0.11

TNG: SIMPLIFIED CORPORATE STRUCTURE

TNG NEW BUSINESS: VANADIUM ELECTROLYTE

TNG LTD

100%

Mount Peake Mine V/Ti/Fe

STRATEGIC PARTNERS Binding LOM Off-take

Agreements Project

Development

Cawse-Extended

Technologies

(20% Free Carried

TIVAN

Ni/Co Mine

WOJIN

Vanadium – Binding Term Sheet for

GUNVOR

Iron – Binding Term Sheet for LOM Off-

Agreements

LOM Off-take Agreement take Agreement

• • • •

Pre-production capital estimate (including all infrastructure) Total operating costs (including mining, processing, transport & royalties) Net cash flow (life-of-mine) Payback period

Net annual operating cash flow (pre-tax) IRR pre-tax

NPV (at 8% discounted)

At the end of that life the contents of the vanadium battery can be re-used

Vanadium Electrolyte successfully produced by TNG from Mount Peake V205. Opens significant new business potential for TNG

TNG’s 100% owned TIVAN® process has been under development by TNG and its metallurgical consultants in Australia since 2009.  • •

Process designed primarily for extracting vanadium, preferably as vanadium pentoxide,  from a titano-magnetite ore body (a geological igneous rock  formation that with iron, titanium and vanadium) Separates the titanium and iron preferably as ferric oxide and titanium dioxide.

•

provider

•

The fundamental difference and innovation introduced by the TIVAN® process route is that the vanadium is recovered entirely through a hydrometallurgical route incorporating leaching and solvent extraction.

Binding agreement for

engineering giant

•

engineering, design and

Global engineering and services Pre-Mine development,

operations and investment

Conventional methods of extracting vanadium from titano-magnetite ore deposits is through a salt roasting energy-intensive, pyro-metallurgical process, suitable for only a narrow range of selected ore compositions and water leach route to recover a water soluble vanadium compound.

Benefits: with the same flow-sheet hematite and titanium dioxide are separated and recovered as saleable by-products in addition to vanadium pentoxide.

TIVAN™ PROCESS: THE KEY INGREDIENTS

The updated Feasibility Study includes the result of optimisation work undertaken since the original July, 2015 Study. The overall strategy is similar to the Definitive Feasibility Study (DFS) from 2015. The DFS forecasts Mount Peake’s nameplate capacity at 17,569tpa of high-purity vanadium pentoxide (V2O5), 236,00tpa of titanium dioxide (TiO2) and 637,00tpa of pig iron. Mining rate

Life of a vanadium flow battery is 20+yrs

TIVAN ®

MOUNT PEAKE UPDATED FEASIBILITY (NOV 2017)

Project life

Life of a commercial lithium-ion battery = 5 to 8yrs

refinery in Darwin

•

•

Vanadium flow batteries store energy in the electrolyte fluid

•

Existing processes cannot extract all three of these elements at industrialcommodity-grade commercial products.

European-based global

•

•

Advances in Vanadium Battery Technology

•

•

construction of the TIVAN™ Downer

Vanadium able to store and retain electric charge

•

100%

SMS Group

•

17 years

3 years

A$738M 44%

A$4.7 billion

Use of abundant and low-cost raw material:

Uses well-proven technology

• •

Extraction of three target metals: Fe, V and Ti

Highly economic process

A$853 million (Stage 2 expected to be covered from revenue)

A$11.7 billion

•

Small environmental footprint

3Mtpa (Stage 1) expanding to 6Mtpa (Stage 2) after 4 years

A$185 per tonne

Processing polymetallic ores

FLOW SHEET

• • • • •

titanomagnetite

Based on an innovative reconfiguration of proven components

Individual process steps successfully demonstrated at industrial scale Hydrometallurgical process No smelters involved

Multiple revenue streams from products with one common processing train Low operating cost

Theoretical flowsheet: Primary and Secondary Crushing • • • • • • • • • •

37

High Pressure Grinding Rolls (HPGR) Magnetic Separation Atmospheric Leaching (leaving a titanium dioxide residue) Counter Current Washing of Residues Solvent Extraction Ammonium Metavanadate Precipitation, Calcination and Vanadium Petoxide Flaking Acid Regeneration Iron Precipitation Tailings Disposal Ammonia Recovery

WWW.TNGLTD.COM.AU

Financing Battery Material Projects Q&A with Chris Berry, Founder, House Mountain Partners

Based in New York, Chris has been an independent analyst since 2009 with a focus on Energy Metals including lithium, cobalt, graphite, vanadium, and rare earths. His research provides strategic insights to institutional clients and has a specific focus on how disruptive trends in energy, strategic metals, and technology create opportunities. Before shifting focus to analysis of these trends, Chris gained twelve years of capital markets experience on both the buy side and sell side.

W

hat are the obstacles facing battery materials

dollars per year.

companies when trying to raise finance?

Additionally, there is a broad lack of awareness surrounding

The markets for battery metals have traditionally

how the lithium-ion battery supply chain works. A lithium

suffered from several challenges. The size and murky pricing

molecule travels thousands of miles from when it’s mined to the

dynamics have forced many commodity investors to shun these

time when it’s placed in a phone or electric vehicle. The rapid

markets in favour of commodities with more liquidity, such as

evolution of the lithium-ion supply chain has forced even the

copper or iron ore. As an example, the lithium market is roughly

experts to rethink as the market has expanded. While around

200,000 tonnes in size when measured in lithium carbonate

$1.2bn has been raised for lithium project development and

equivalent units (LCEs) and generates perhaps $2bn per year in

expansion in 2017, we are going to need to maintain this pace

revenue. Compare that to copper which is roughly 23,000,000

until 2022 to ensure supply and demand can stay balanced.

tonnes and generates revenues in the hundreds of billions of

38

www.theassay.com

Before looking at the potential financial returns of a given

a disaster and thankfully it appears that many lithium projects

project, many of the conversations I have with investors focus

in existence today have learned the lesson that building a

first on understanding the battery metals market: supply

multi-faceted project all at once is unwise.

and demand, end uses, offtake agreements, and supply chain

participants. Companies trying to raise financing for various

projects have had to follow this same approach, as these metals are still new to many institutional investors.

How do companies win over investors who are hesitant to invest in battery metals projects?

What risks do companies face when developing their

With the rapid price increases in lithium and cobalt, there is a

projects?

definite degree of FOMO, or fear of missing out. The hesitancy of investors can only be overcome through time and experience.

Finding the deposit and building the mine are (almost) the

One of the biggest factors that can help investors get past

easy parts of this process. Getting them commissioned on time

their fears is looking for company management experience.

and on budget and establishing binding offtake agreements are

Does the senior team and board have experience in lithium,

the real challenges that make the battery metals sector unique.

cobalt, or graphite project development and production? Do

During the last lithium boom in 2010-12, roughly $1bn was

they have experience with unique processing techniques?

raised in the sector as demand was expected to triple between

Has the process been commercialised elsewhere? Does

2010 and 2016. Essentially, leading lithium projects tried to

management have relationships with downstream supply

do everything all at once, including establishing a resource,

chain participants?

confirming project economics, building the mine, building the

If not, you may want to continue your research and find those

concentrator, and building a conversion facility to produce

companies that do. Many companies are riding the wave of

battery grade lithium chemicals. This strategy turned out to be

high prices and news from countries that are de-carbonising

39

THE ASSAY

their economies or supply chains. This is positive long-term, but can muddle the true potential (or risks) of a given company.

Several companies are developing their own processing techniques. What are the risks associated with this approach and how does it impact their ability to raise project finance? Any “black box” technology is risky as

much of it is proprietary and will remain so in order to protect a company’s

competitive advantage. These companies must prove that their technology can be

scaled up to a production level consistent with traditional mines (25,000 tonnes

per year LCE), though the ultimate size of production depends on the size and

flexibility of the company’s balance sheet.

Unique processing technologies were made de rigeur in a previously sleepy lithium market where only the lowest cost

producers could even hope to compete with the established players such as SQM.

Despite the high prices buoying the market

the beholder with respect to these deposits.

End users are incredibly careful in terms of who they enter into agreements with and spend a great deal of time looking at

various deposits and management teams.

Offtake discussions typically take longer

than many people think as established end users of cobalt, lithium, or graphite

don’t want to rush into a deal with a junior developer with no history of successfully operating a mine.

There is also a distinction here – it’s

not just battery manufacturers that are

looking to lock down long term supply of these metals. Volkswagen recently made headlines by announcing its intentions to acquire large amounts of cobalt over a

ten year period reportedly worth $50bn. The fact that you’ve got multiple players along these supply chains looking at long-

term supply contracts is positive for metals prices and a sign that everyone is taking

the shift towards vehicle electrification

seriously – but due diligence is of paramount importance.

currently, I still believe a processing

What should the miners be looking for in

to compete. These technologies save time

The structure in the best interest of

technology can succeed and is necessary, certainly for new entrants into the market

and capital and are therefore of interest, but must be proven to be scalable.

Battery producing companies are keen to vertically integrate their business by securing raw materials offtake. Does the race to secure high-grade material result in a lack of due diligence being conducted on projects? There is a race to be sure but with respect to a lack of due diligence, this is a tougher

question to answer. Beauty is in the eye of

a potential offtake agreement?

shareholders involves a binding multi-year

offtake agreement for supply and perhaps an equity investment by the offtake partner in the producer. This ensures that the

offtake partner has ‘skin in the game’ and

also gives the lithium producer comfort that there is a reliable customer on the other end of the phone.

With governments around the world keen to push a green agenda, how can governments best support the development of energy metals projects?

40

"Volkswagen recently made headlines by announcing its intentions to acquire large amounts of cobalt over a ten year period reportedly worth $50bn."

www.theassay.com

Like all resources, battery material projects exist in less

Governments can do a great deal with rebates on exploration

developed countries. What jurisdictions would you be

or perhaps tax rebates on construction downstream (on

cautious of developing projects in?

conversion facilities, instance) but can also sometimes push

too hard with higher royalty schemes in response to robust

Obviously, the Democractic Republic of the Congo comes to the

markets. This is akin to killing the goose that laid the golden

top of mind with respect to cobalt. The DRC was responsible for

egg.

over 60 per cent of cobalt production in 2016, and paradoxically,

This is not an easy problem to solve as much of the supply

I see cobalt production from the country increasing rather

chain exists in Asia where labour costs are lower than in other

than decreasing in the coming years as the size and grade of

parts of the world.

those resources is almost unbeatable. Everyone in the cobalt

world is looking for a pure play opportunity, but this is easier said than done.

Which jurisdictions are offering incentivised funding

Bolivia has always been problematic in the lithium sector as

opportunities for companies?

producers and offtake partners are concerned about resource nationalism. I’ve also heard rumblings about “trillions” of

I suppose a blatant example of a government pushing the

dollars of mineral wealth (including lithium) in Afghanistan.

green agenda would be the State of Nevada offering Tesla an

incentive package worth $1.25bn over 20 years to build the

The robust demand backdrop is a real opportunity for lesser

Gigafactory. Similar types of arrangements are being discussed

developed countries though it remains to be seen how some of

in Chile and South Korea.

these countries handle new interest in their mineral deposits differently than in past booms. I do see a prime opportunity

Given the low-cost advantage that Asian-based manufacturing

for Europe and Canada, in particular, to build projects that can

has, I would expect to see the majority of this capacity be built

feed these growing battery metals supply chains.

in that part of the world; however there is a unique opportunity for western governments to establish ‘next-generation’ supply chains. Let’s hope they don’t squander it.

41

COMPANY EXPOSURE

COMPANY LISTING

Graphite

STOCK CODE

Battery Minerals

BATTERY MINERALS

ASX:BAT

COMPANY OVERVIEW

TEAM

Battery Minerals Limited, an ASX listed company (ASX: BAT), is a diversified mining development and minerals exploration company dedicated to exploring for and developing mineral deposits in Mozambique.

David Flanagan – Executive Chairman Ben Van Roon – Chief Operating Officer Andy Cardoso – Mozambique Country Director Tony Walsh – Company Secretary & GM Corporate Jeff Dawkins – Chief Financial Officer

 The Company’s core commodity targets are graphite, zinc/lead and copper. BAT is maintaining a focus on its two graphite development assets located in Mozambique, Montepuez and Balama, which are expected to come into production in late 2018 and 2021 respectively.

MAJOR SHAREHOLDERS Farjoy Pty Ltd.

Mitchell Group Holdings

BAS Investments Pty Ltd

Pacific Development Corporation Top 20 Shareholders

INVESTMENT HIGHLIGHTS

12.55% 3.45% 2.75% 2.00%

35.34%

COMPANY ANNOUNCEMENTS 22/01/17 19/01/17 18/01/17 19/12/17 07/12/17 01/12/17

KEY FINANCIALS (JANUARY 2018)

Battery Minerals completed a $20m placement via a $19.5 share placement in January, 2018. The placement was strongly supported by Battery Mineral’s largest shareholder, which has maintained its 12.55% interest in the Company, and institutional investors.

Shares on Issue (post Nov17/Jan18 capital raising) Board and Management

Share Price (as at 22 January 2018)

The Company is now fully-funded for its next phase of growth, including: •

Significant drilling programme underway at Montepuez, with results due shortly

•

Accelerate a DFS on Battery Mineral’s Balama graphite project with expected completion June 2018

•

Market Cap (post Nov17/Jan18 capital raising) Enterprise Value

Top 20 Shareholders

Planning, design and early development works at Montepuez including orders placed for the crusher and detailed engineering

Unlisted Options and Performance Rights

PROJECTS MONTEPUEZ GRAPHITE PROJECT Advanced Graphite Project (DFS and Value Engineering Study completed and published) • • •

Proven Logistics: bulk sample delivered to port in 2017 means 260km logistics chain now proven Port Allocation Approved: at Pemba Port for 100,000tpa of graphite concentrate Huge Resource/Reserve Inventory: »» Probable Ore Reserve 41.4Mt @ 8.8% TGC @ 4% TGC cut-off for a 30+year mine life »» Indicated & Inferred Resource 105.9Mt @ 7.74% TGC @ 2.5% cut-off »» Significant exploration potential

•

Fast Development Timetable »» Approvals expected in March Quarter 2018 - Construction started in early 2018 »» First shipment March Quarter 2019 »» Concentrate production of 50Ktpa @ 96.7% TGC

•

Initial production of 45,000 - 50,000tpa of graphite concentrate growing to 100,000tpa.

•

Low Capex of US$42.3M, lowest quartile Opex of US$337 per tonne.

•

Short payback of less than 2 years

•

Able to expand to 100ktpa: »» US$25-29M for additional 45-50ktpa capacity

Battery Minerals signs offtake agreement with Keshuo Battery Minerals signs 3rd binding offtake agreement with Qingdao Black Dragon Battery Minerals signs binding offtake agreement with GEM Battery Minerals signs binding offtake agreement Battery Minerals exploration update Montepuez and Balama Battery Minerals prepares to develop Montepuez Graphite Project

42

763.5m

>10% fully diluted

8.5cps

 A$55m  A$33m

44.7% 407m

BALAMA GRAPHITE PROJECT Concept study justifies move to feasibility study • • • •

Balama Total Resource of 16.3Mt at 10.4% TGC2 (6% TGC cut-off), for a 20+ year mine life, based on Montepuez type production parameters Additional resource potential down-dip, along strike

Preliminary test work concentrate recovery 93%, with 63% of product plus 150 micron high value flake Favourable flake distributions - September 2017 Benchmark Minerals published basket price US$1217/t

HOW MUCH GRAPHITE IS NEEDED FOR ELECTRIC CAR TAKE-UP? • •

Rechargeable battery demand by type of use

UBS Electric Vehicle sales (millions)

A typical EV or HEV has a 30-100kWh battery pack (Tesla Model 3 have >60kWh).

Each battery requires ~1.1kg of graphite per kWh

»» A Nissan Leaf with a 24kWh battery would need 27kg of graphite »» A Tesla Model S with a 85kWh battery would require ~94kg of graphite

• •

• •

»» A Chevrolet Bolt with a 60kWh battery has 63kg of graphite

UBS assumes on average each EV or HEV contains 50kg of graphite. That means each 1m vehicle sales per annum need ~50tktpa of graphite in the anode (45-50% material).

2016 Annual car sales ~94m vehicles (72m passenger) so 1m vehicle sales would represent around 1% of world car sales. If 30% of current car sales were Evs, then we need ~1.1Mtpa of graphite. The current graphite market is ~2.4Mtpa, of which natural flake is ~650ktpa. Thus if EV + HEVs take up a reasonably chunky position on the car market then the mine supply of natural flake graphite will likely need to grow multi-fold.

Battery anode feedstock demand (ktpa)

UBS model sales of 11.5m BEV, 7.2m HEV & 2.7m PHEV in 2025e.

This needs 555,000 tonnes of natural spherical coated graphite which with production losses requires 1.17m tonnes of natural flake graphite concentrates, ie. 95% TGC.

43

WWW.BATTERYMINERALS.COM

COMPANY EXPOSURE

COMPANY LISTING

Graphite

STOCK CODE

Talga Resources

ASX:TLG

TALGA RESOURCES

A PATH TO INDUSTRIAL-SCALE GRAPHENE SUPPLY AND COMMERCIALISATION - UNIQUELY PLACED WITH MULTIPLE CRITICAL MINERALS SOUGHT FOR BATTERY SUPPLY CHAIN

COMPANY OVERVIEW

TEAM

Talga Resources Ltd is a vertically integrated technology minerals company with its own carbon source in multiple high-grade graphite projects in northern Sweden. The flagship project “Vittangi” is at development stage and like the rest of the projects, it benefits from established high-quality infrastructure in Sweden including low-cost power, road, rail and ports.

Terry Stinson – Chairman Mark Thompson – Managing Director Grant Mooney – Non-Executive Director Stephen Lowe – Non-Executive Director Ola Mørkved Rinnan – Non-Executive Director

COMPANY ANNOUNCEMENTS

Apart from having the highest grade technical resource in the world, the Company’s Vittangi project hosts extremely conductive graphite that supports a unique exfoliation process that allows separation of graphite particle layers without the requirement for crushing and grinding. The graphitic materials produced are of a high quality and suitable for a range of large volume additive and technology applications.

16/01/17 05/12/17 24/11/17 09/10/17 05/10/17 11/07/17 07/07/17

Talga’s non-graphite assets include copper hosted cobalt as well as iron ore assets which are all to be commercialised to support core graphene developments.

KEY FINANCIALS (JANUARY 2018)

CAPITAL STRUCTURE AND SHAREHOLDERS Smedvig G P Ltd

Lateral Minerals Pty Ltd HSBC Custody Nominees (Australia) Limited Pelmer Securities S A

Citicorp Nominees Pty Ltd

Share Price

12.60%

Shares Outstanding

7.05%

Market Capital

4.11%

Cash/Equiv

3.76% 3.57%

J P Morgan Nominees (Australia) Ltd

Debt

3.34%

Kamberg Investments Ltd

Year High-Low

3.30%

Yandal Investments Pty Ltd

SHARE PRICE PERFORMANCE

2.98%

Two Tops Pty Ltd

Commercial Supply and Development Agreement with Haydale Funding success in UK Faraday Battery Programmes Talga graphene technology boosts epoxy resin markets Further Talga Li-ion Battery success High grade cobalt results from Ahmavuoma Project in Sweden Talga MOU with Heidelberg Cement  Talga Graphene Boosts Li-ion Battery Performance

1.48%

National Nominees Ltd

1.16%

TALGA STRATEGY Talga’s strategy will see the company leverage from vertical integration to commercialise industrial quantities of raw and value-added graphite and graphene materials/products. During the development phase while feasibility studies are completed and permits pending, Talga will continue to scale up its processing facilities, lock in commercial undertakings with customers and pursue early revenue before full scale mining commences

TALGA OPPORTUNITY On path to be the world’s largestvolume, best-margin supplier of graphene and micrographite materials •

Own 100% of a unique ore body in tier 1 mining and technology materials destination

•

•

Not constrained to one market big value proposition to remove a supply and pricing bottleneck across multiple large markets

Business model revolves around making real world products perform better and with new functionality today

• • •

End users currently validating the products and strategy to deliver business case

Talga’s markets totally different to flake graphite players with exception of batteries Talga is doing it now, not just talking about it

A$0.64

202.4m

 A$129.5m

 A$16.3 (31/10/2017) 0

A$0.90-0.33

Vertically integrated operations provide economic advantages PRODUCT DEVELOPMENT ROADMAP

TALGA’S GRAPHENE STATUS

“Technology Readiness Level” reflects where products are in the process towards validation

• • • • • • • • •

Test processing facility and feed from trial mining in storage Process scaled up several orders of magnitude from conception Process output from Germany feeding inventory, process R&D programmes, product prototyping and samples for industry partners Focus on both raw materials and chemically tuned ‘products ‘where the latter falls into four sectors (construction, energy, composites and coatings) Validation on raw materials and products evidenced by multiple collaboration and joint development programmes Ability to produce basket of goods including few layered graphene, graphene nanoplatelets and micrographite First sales of sample quantities into development programmes Feasibility study currently underway to supply option clarity to lodge exploitation permits Scale up of test facility continues with Phase 3 being commissioned and engineering design considerations underway for the process scale up

PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES IN STATE OF AFFAIRS TALGA OPERATIONS

1. • • • 2. • •

Upstream – Source-Unique Graphite Ores

100%-owned Vittangi graphite project near Kiruna in northern Sweden World’s highest-grade graphite resource (JORC/NI43-101) Wide, uniform mineralisation starts at surface – can support >20 year mine life and more for industrial scale production

Midstream – Technology

Processing;

Geology

Concept demonstration of Talga exfoliating graphene direct from its Swedish graphite ore Multi-academic partners and institutions confirm high quality FLG for bulk volume additives

3. Downstream – Product Development • • •

meets

Talga has in-house ‘value added’ product development capabilities – starts with internal prototype testing followed by external validation with end users Products developed by Talga are important to unlock value-add margins (as distinct from ‘raw’ graphite and graphene revenue) Talphene TM, is the brand of Talga graphene enhanced products

The principal activities of Talga for the last 12 months have comprised of graphite exploration and development, including trial mining in Sweden and graphite/graphene research, process and product development through the Group’s test facility in Germany and technology operation in the UK. Significant changes in the state of affairs of the Group during the financial year were as follows: • Strategic shift to manufacture value-added ‘fit for purpose’ graphitic carbon products in addition to raw materials; • Commercial undertakings including collaboration and joint development agreements with significant industrial end users that validate Talga’s products and strategy; • Commissioning of Phase 2 test facility in Germany; • Completion of second trial mining campaign in Sweden, followed by completion of rehabilitation exercise; • Appointment of European project manager and senior product development/technology staff; • Positive advancements across all graphene process and product research/partnering programmes; • Increased size, grade and status of Vittangi graphite mineral resource in Sweden; • Established a graphene product development facility in Cambridge with the incorporation of the UK subsidiary, Talga Technologies Limited; • Appointment of new Chairman, Terry Stinson; • Completed the sale of Talga’s Pilbara based gold projects in Western Australia; • Capital initiatives raising a combined ~$13.2m; and • Significant exploration drilling results and commencement of evaluation campaign across Talga’s cobalt and copper projects in northern Sweden.

INVESTMENT HIGHLIGHTS Talga is an emerging high-tech minerals company aiming to become a global leader in bulk graphene and graphite supply UNIQUE DEPOSITS

Two of the high-grade projects have truly unique characteristics (grade, conductivity, gangue mineralogy, strength) which allows for very simple and cheap separation of both graphite and graphene.

SWEDEN

Operating in a top mining jurisdiction with producing infrastructure on the doorstep of European markets. Extremely low-cost power, port agreement in place and direct road/rail options.

GRAPHENE

LOW COST

DEVELOPMENT STATUS  DEMAND SCALE 

DIVERSITY

Demonstrated ability to produce high-quality graphene direct from raw ore providing robust margin potential compared to peers.

Sub $30m capex and strong returns indicated from Vittangi project scoping study.

Advanced down the path to production with scoping level financial metrics published and trial mining complete and feasibility underway. Single applications for graphene alone forecast to dwarf the graphite market and strong demand for both products out of Europe and elsewhere. Massive resource growth profile – particularly at graphene producing projects.

Dual product stream with majority of forecast revenue coming from graphene which uncouples Talga from sole reliance on graphite market.

45

WWW.TALGARESOURCES.COM

COMPANY EXPOSURE

Graphite, Lithium, Cobalt, REE

COMPANY LISTING

STOCK CODE

TSX:LEM, OTCQX:LEM, FSE:7FL

Leading Edge Materials

LEADING EDGE MATERIALS COMPANY OVERVIEW

TEAM

Leading Edge Materials (“TSX:LEM”) is a Canadian mineral exploration and mining company, with a long-term focus on the Nordic region. LEM’s research and investment is directed towards the production and supply of high-value materials for the emerging lithium-ion battery market. Our extensive experience in minor metals and our European base, place us in a unique position to be a partner of choice as a European lithium-ion battery supply chain develops. The Company is well positioned for anode materials with engineered graphite from our Swedish Woxna mine, and are strategically investing in lithium and cobalt for battery cathode materials.

Blair Way – President, CEO & Director Mark Saxon – Director Michael Hudson – Chairman & Director Nick DeMare – CFO Filip Kozlowski – Director

LEM’s flagship asset is the Woxna Graphite production facility located in central Sweden targeting the supply of specialty materials for lithium-ion battery production. LEM currently operates in four divisions; Graphite, Lithium, Rare Earth and Cobalt. Our divisions all have assets in Northern Europe.

WHY LEADING EDGE MATERIALS?

LEM presents a unique investment opportunity in European lithium-ion battery raw materials. • • • •

High-Growth Sector – well positioned to supply critical raw materials to the high-growth low-carbon energy sector Right Location – well placed to play role in the raw material needs of Europe with assets and teams in the safe and stable Nordic region Unique Asset Mix – focused on graphite, lithium, cobalt, REEs and tungsten

Skilled & Experienced Team – highly experienced management and operating teams. The LEM team have a demonstrated potential to access the capital required for project development

PROJECTS

COMPANY ANNOUNCEMENTS 10/01/18

18/12/17 07/12/17

17/11/17

Leading Edge Materials intersects high tantalum and lithium grades at Bergby, Sweden Leading Edge Materials receives conditional approval for listing on Nasdaq First North in Stockholm Sweden increases focus on improving conditions for the supply of innovation-critical metals and minerals Leading Edge Materials intersects thickest interval of lithium mineralisation at Bergby, Sweden

KEY FINANCIALS (JANUARY 2018) Share Price

C$0.83

Shares Outstanding

88.2m

Market Capital

 C$73.2m

Cash/Equiv

 C$3.8m

Debt

0

Year High-Low

C$1.01-0.51

SHARE PRICE PERFORMANCE

ASSET Woxna Graphite Mine & Production Facility

Norra Kärr REE Project Bergby Lithium Project

Kontio Cobalt Project

COMMODITIES Graphite, High-Purity Graphite, Graphene

REE, Nepheline, Hafnium, Zirconium, Aluminium Lithium, Tantalum Cobalt, Copper

OWNERSHIP 100% 100%

100%

100%

GRAPHITE - Woxna Graphite Mine (Sweden) High Purity Project •

Modern, fully-permitted, operational graphite production facility, with measured and indicated resource of 7.7Mt @ 9.3% graphite Permitted for up to 100Kt per annum feed, producing up to 94% C concentrate Test work to produce high purity graphite for emerging markets has been successful. Optimisation work is on-going Excellent infrastructure: road, power, ports, water and services Unique ability to underpin a secure and sustainable European graphite supply chain. Recent HPC test results on 18,650 cells made using Woxna graphite concentrate has yielded excellent results for automotive-grade battery material LEM is working with graphite end users in the LIB market to align product specification targets with their requirements Engineering and optimisation of the value add process to produce high-value battery-grade materials is well advanced

• • • • • • •

NUMEROUS VALUE-ADD OPPORTUNITIES

RARE EARTH ELEMENTS - Norra Kärr REE Project (Sweden) • • • • • •

Norra Kärr is a nepheline syenite intrusion which is 300m wide, 800m long and begins at surface One of the world’s largest heavy REE resources, with the capacity to supply all of Europe’s heavy REE requirements for more than 20 years Norra Kärr is a large, well-drilled resource that begins from surface to at least 300m depth Extensive metallurgical testwork completed indicating ore can be processed via a simple flowsheet with high recovery Resource grade of 0.61% TREO. 52% HREO/TREO = high basket price Comprehensive Pre-Feasibility Study (PFS) completed in Q1 2015: »» 1.18Mt/year @ 0.59% grade REO »» 20 year mine life »» Low CAPEX »» Assuming a 10% discount rate, US$313 million after-tax NPV @ 10%; IRR of 20%; Payback: 4.9 years »» CAPEX: US$378.2 million; OPEX: US$20/kg REO Ave

LITHIUM - Bergby Lithium Project (Sweden) • • • • •

•

•

Newly discovered lithium project in central Sweden, less than 100km from the Woxna graphite mine and close to major infrastructure. Bergby lies in central Sweden, 25km north of the town of Gävle, secured by three exploration licenses that cover a total of 1,903 Ha. Assay results from 41 boulders, where Li2O (lithium oxide) averaged 1.06% and ranged from 0.03% to 4.56%; and Ta2O5 (tantalum pentoxide) averaged 168ppm and ranged from 1 ppm to 499 ppm. The site is close to infrastructure, with major roads, rail and power supply passing immediately adjacent to the claim boundaries. Bergby has now been tested by a total of 1525m of drilling in 33 drillholes to a maximum depth of 131.1m over an approximate 1500m strike length. Drilling intersected regular high lithium grades ranging from 1% Li2O over 20m to 2.5% Li2O over 10 m. Some of the lastest holes have also revealed high tantalum grades over 300ppm Ta2O5.

COBALT - Kontio Cobalt Project (Finland) • • • •

AN ADDITIONAL HIGH PRIORITY BATTERY MATERIALS PROJECT IN A MINING SUPPORTIVE COUNTRY

Leading Edge Materials cobalt-copper project Four main prospects – Pattasoja, Ristisuo, Maaninkajoki, and Maitokoski – secured within Leading Edge Materials’ 30,800 Ha Kontio-Sarvivaara reservation Numerous indications of high grade cobalt Modern geophysical methods provide an excellent opportunity to quickly develop high priority targets

CONTACT

Blair Way CEO and President [email protected]

47

WWW.LEADINGEDGEMATERIALS.COM

Understanding Battery Chemistries Q&A with Simon Moores, Managing Director, Benchmark Mineral Intelligence

Simon Moores is Managing Director of Benchmark Mineral Intelligence, an online publishing and consultancy business specialising in critical minerals and metals, disruptive technology and emerging markets. Moores has also worked as business journalist focusing on non-metallic minerals such as lithium, graphite, rare earths, potash, TiO2 pigment and feedstocks (rutile, ilmenite).

T

he lithium-ion battery market is clearly growing

NMC in particular is being favoured by the majority of electric

rapidly. But what kind of numbers are we talking

vehicle manufacturers and we expect NMC to be the dominant

about here?

battery chemistry by 2019.

At present, LCO (lithium cobalt oxide), the cobalt-rich battery

Without a doubt, huge growth is on the horizon. The lithium

in your iPhone or laptop, still accounts for half the market.

market is expected to grow from 180,000 tpa LCE (lithium

This will shift as EVs take off. Tesla is about the only major EV

carbonate equivalent) in 2018 to more then 700,000 tpa

producer focused on the NCA chemistry, a Panasonic creation.

LCE by 2027. This represents a huge disruption, that is being

However, Panasonic’s future lies in both NCA and NMC.

driven by the battery EV space.

What are the main types of lithium-ion batteries, what are

Cobalt is found in three of the five common chemistries

their compositions and what percentage of the battery

used in the lithium-ion battery market (LCO, NMC and

market does each chemistry represent?

NCA). Why is cobalt so important in lithium-ion batteries?

The two mainstream chemistries of the future will be NMC

Cobalt performs a very important stabilising effect for lithium

(nickel manganese colbalt) and NCA (nickel cobalt aluminium).

ion batteries. It is key for safety. However the cost and the

48

www.theassay.com

111

One part nickel, manganese and cobalt is the most common NMC chemistry today. However, cathode producers have been favouring higher nickel and lower cobalt chemistries in a bid to improve energy density and lower raw material risks

Five parts nickel, two parts manganese and three parts cobalt. On the cusp of commercial use

622

Similar to 523 though not yet commercialised

supply chain for cobalt has forced producers to develop

•

industry without DRC cobalt. Opportunities do exist for niche

producers to produce conflict-free cobalt outside of the DRC.

LCO – Cobalt rich - around 60% of this battery is cobalt.

But the bulk of material will still have to come from the DRC.

NMC – Nickel Manganese Cobalt - is likely to become the most common chemistry of the future as most EV

•

•

The most extreme version of the NCM battery which contains very high nickel content and the least cobalt of all. SK Innovation, the Korean battery maker, recently announced it was using this chemisty however as Benchmark discovered on a recent trip to Seoul, this is still very much a test phase product but it will be very interesting to see the real world results which could define the future of the battery sector

be integral to the EV industry and there will not be an EV

lower-cobalt contained chemistries. •

811

523

manufacturers are favouring this. Within this NMC

What occurs chemically for a battery to be no longer

there are a number of sub chemistries all of which have

usable and how does the battery composition affect the

NCA – Nickel Cobalt Aluminium – the classic Panasonic

The cathode and anode degrade to a level that intercalation is

varying amounts of cobalt.

longevity of specific batteries?

chemistry that is pretty much exclusively used by Tesla

no longer as effective. For the anode especially, degradation

in its EVs

and the formation of dendrites is an issue. This is why pure silicon anodes will just not work as an option, as they break

LFP – Lithium Iron Phosphate - the classic powerful

down too easily. However, graphite anodes enhanced with

chemistry that is, or best to say was, ideal for e-buses (the

3% silicon are looking to be the most effective option.

chemistry is famous for being in BYD buses). However, as China moves to higher energy density batteries and NMC ramps up, LFP’s days are numbered

How recyclable are these batteries? What percentage of the key materials contained with Lithium-ion batteries can be salvaged?

Can cobalt be substituted for alternative minerals and at what price would substitution be considered?

The biggest problem with battery recycling is the consistency of the chemistry and the format of the batteries. For example,

No cobalt can’t be substituted. If you want a cobalt-free

battery recyclers at present are receiving many forms of cells

cathode (which some companies are developing, such as

– from iPhone to laptops to power tools. The cells are small

Nano One in Canada), you need to change the chemistry

and the chemistry differs quite a bit.

fundamentally. It’s Benchmark’s belief that while cobalt

consumption will be reduced in lithium-ion batteries, overall

Once much larger EV batteries start entering the recycling

market growth will far outweigh this trend. Cobalt will

circuit, they will either be NCM or NCA and they will be

49

THE ASSAY

similar formats – cylindrical cell, pouch or prismatic. This

I have discussed lithium and cobalt above, but nickel is also

percentage in an LCO battery, is the most favoured material

represents 75,000 tonnes of this market. This market is

offers more consistency to recyclers and will help the

another key mineral to watch. While nickel is a 2 million

industry take off post 2022. Cobalt, due to its value and

tonne business, our data shows that the battery space only

to recycle. Lithium has been continually discussed as well,

set to see lithium-like growth going forward, especially as

with Umicore leading the way in recovering small amounts

higher nickel cathodes come into play.

of lithium from batteries.

Any other metals we should keep an eye on in this space? The four pillars of battery technology are lithium, graphite, cobalt and nickel. This is what we specialise in at Benchmark and these four materials will define the future of the battery industry.

50

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COMPANY EXPOSURE

Graphite Mine Development and Battery Materials Processing Technologies

COMPANY LISTING

Alabama Graphite Corp.

ALABAMA GRAPHITE

STOCK CODE

TSX:CSPG | OTCQB:CSPGF | FWB:1AG

COMPANY OVERVIEW

TEAM

Alabama Graphite Corp. (TSXV:CSPG | OTCQB:CSPGF) or ‘AGC’ is a Canadianlisted natural, flake graphite exploration and development company, as well as an aspiring US-sourced-and-manufactured battery-materials producer. As the only known graphite development company with its core business based on the production of secondary-processed, specialty battery-ready graphite products, namely, Coated Spherical Purified Graphite (CSPG), AGC does not intend to sell any primary-processed graphite concentrate. AGC intends to divert and process 100% of run-of-mine graphite into secondary processed, battery-ready graphite products — specifically CSPG — for use in Li-ion batteries, in addition to Purified Micronized Graphite (PMG). A highly experienced team leads the Company with more than 100 years of combined graphite mining, graphite processing, specialty graphite products and applications, and graphite sales expertise.

Donald K. D. Baxter – President & Chief Executive Officer Tyler W. P. Dinwoodie – Executive Vice President Douglas C. Bolton – Chief Financial Officer & Corporate Secretary Jesse R. Edmondson – Director of Business Development Ann-Marie M. Pamplin – Director of Investor Relations Randy A. Moore – Strategic Advisor Dr. Robert B. Cook – Strategic Advisor

As America’s leading graphite development company, AGC is focused on the development of its flagship Coosa Graphite Project in Coosa County, Alabama — the most advanced flake graphite project in the contiguous United States of America.

MAJOR SHAREHOLDERS US-based Investment Fund High-net-worth Investor High-net-worth Investor High-net-worth Investor Donald K. D. Baxter Tyler W. P. Dinwoodie High-net-worth Investor High-net-worth Investor High-net-worth Investor High-net-worth Investor

3.0% 2.6% 2.3% 2.1% 2.0% 1.4% 1.3% 1.3% 0.8% 0.7% Shareholder structure

LATEST ANNOUNCEMENTS

08/01/18 Alabama Graphite announces reporting of financial results for fiscal 2017 and provides update 13/12/17 Westwater Resources, Inc. to acquire Alabama Graphite Corp. 16/10/17 Alabama Graphite provides corporate update 10/10/17 Alabama Graphite announces Letter of Intent (LOI) to supply battery-ready graphite products to U.S. lead-acid battery manufacturer 21/09/17 AGC Receives Positive Evaluation Results for ULTRA-PMG™ product from RSR Technologies; Improved Dynamic Charge Acceptance (DCA) by +194% 24/07/17 AGC Receives Adem permit for final infill trenching programme for the Coosa Graphite Project Feasibility Study

KEY FINANCIALS (JANUARY 2018) Shares Price as at October 2017 Shares Outstanding Market Capital Cash

Debt

Year High-Low

SHARE PRICE PERFORMANCE

C$0.08

145.3m

C$10.9m C$1.3m C$0

C$0.22-0.075

Top Ten Shareholders 17.5%

Management and Employees 4.2% Others 78%

FLAGSHIP PROJECT (Alabama, USA) Coosa Graphite Project

• The most advanced stage flake graphite project in the contiguous United States of America • The only sourced-and-manufactured-inUSA solution for battery-ready graphite • Unrivaled technical expertise • 41,500 acres on private land

• No Federal permitting required; Stave-level permitting only; No First Nations claims

• Located in the historic, past-producing ‘Alabama Graphite Belt’

STRATEGIC RELATIONSHIPS •

• •

AGC has manufactured and shipped numerous tailor-made CSPG evaluation samples to several Department of Defence (DoD) battery contractors (DoD, DOE, and US government agencies strongly encourage their contractors and suppliers to source input materials from within the USA whenever possible) The ‘Buy American Act’ and other legislation may afford AGC a potential significant competitive advantage over its peers AGC has executed 30 NDAs with potential end users —14 with DoD Liion battery manufacturers — for CSPG and PMG samples

Alabama Graphite Corp’s mission is to build and advance the Company as a USsourced-and-manufactured Li-ion Battery supply-chain producer COOSA GRAPHITE PROJECT

AGC’S PROPRIETRY PROCESSING TECHNOLOGY FLOWSHEET

The Coosa Graphite Project hosts an NI 43-101 Indicated Mineral Resource Estimate of 78.5 million tons grading 2.39% graphitic carbon (Cg) — the largest Indicated Mineral Resource of natural flake graphite in the USA. Coosa Graphite Project Mineral Resource Estimate @ 1.0% Cg Cutoff (effective date: October 2, 2015)

Resource Category Indicated Inferred

Tonnage

Graphitic Carbon

78,488,000

2.39

(Tons)

79,433,000

(Cg %)

Graphite (Tons)

2.56

2,034,000

PRELIMINARY ECONOMIC ASSESSSMENT •

• • •

• • • • • •

Contained 1,876,000

CAPEX of $43.2 million — the lowest initial CAPEX requirements in the graphite development space — with a payback period of 1.9 years (pre-tax) & 2 years (post-tax) from commencement of commercial production Base-case pre-tax NPV of $444 million, post-tax NPV $320 million (8% discount); pre-tax NPV of $329 million, post-tax NPV of $236 million (10% discount)

Pre-tax IRR of 52.2%; post-tax IRR of 45.7% Base-case pre-tax annual cash flow of $67.5 million; post-tax annual cash flow of $49.7 million Life of Mine Gross Revenue (less royalty) of $2.4 billion Life of Mine OPEX of $533 million Life of Mine plan of 27 years based on mining ~10% of Mineral Resource Estimate Primary & secondary processing plants to produce 5,500 tons (5,000 tonnes) of specialty battery-ready graphite products annually, ramping up to 16,500 tons (15,000 tonnes) annually in year 7 PEA is based on selling two specialty, high-value high-purity graphite products — CSPG (75% of planned production) & PMG (25% of planned production)

AGC’S SILICON-ENHANCED CSPG (SI-CSPG) ANODE MATERIAL FOR LITHIUM-ION BATTERIES

Selling price for CSPG at $8,165 per ton ($9,000 per tonne) & PMG at $1,814 per ton ($2,000 per tonne) for a blended selling price of $6,577 per ton ($7,250 per tonne); Life of Mine average cash operating costs of $1,410 per ton ($1,555 per tonne) for final product of CSPG & PMG

Note: All dollar amounts are based in U.S. currency unless otherwise noted

AGC’S CSPG IN LITHIUM-ION BATTERY TESTING

• • • • •

AGC succeeded in producing high-performance Silicon-enhanced Coated Spherical Purified Graphite (Si-CSPG) for Li-ion batteries.AGC’s Si-CSPG was tested, performed well and exceeded theoretical electrochemical performance of premium-quality graphite; AGC’s Si-CSPG delivered Reversible Capacity above 405 mAh/g; exceeding the Maximum Theoretical Specific Capacity for Li-ion Anode Graphite (which is 372 mAh/g).

AGC conducted independent preliminary electrochemical test results for its CSPG in lithium-ion batteries. The test results demonstrated that AGC’s CSPG responded very well in CR2016 lithium-ion battery coin cell (half-cell with Lithium counter electrode; see above schematic) performance testing. The CSPG test results — representing a 94.91% efficient battery — are regarded as excellent in the lithium-ion battery industry and exceed the specifications of major battery manufacturers. The Company’s innovative, proprietary specialty CSPG manufacturing process which utilises environmentally sustainable processing methods.

Due to environmental and cost concerns, management of AGC believes that the growing American lithium-ion battery industry requires a US-sourced, costcompetitive alternative to current — primarily Chinese and environmentally unsustainable — sources of CSPG. According to UK-based Benchmark Mineral Intelligence, a leading independent source for data on the Li-ion battery global supply chain, the United States will require more than 150,000 tonnes of anode graphite by 2020 (total global demand is forecasted to be more than 780,000 tonnes of anode graphite by 2020).

Test results on the Company’s CSPG exceed the performance of the comparison benchmark of commercially available grade material. The test results confirm AGC’s potential midstream capability to manufacture and tailor lithium-ion battery anode grade graphite in order to create value-added products to meet highly demanding downstream customer specifications.

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WWW.ALABAMAGRAPHITE.COM

Baby Steps Into The World of New Battery Investings By Charles Whitfield, Founding Partner, Drumrock Capital

Mr. Whitfield has been on the board of Galaxy since 2013 with responsibilities for corporate finance, M&A and strategy, taking a lead in the negotiations with creditors, debt holders and new financing parties. He has been a Director of Drumrock Capital, a turnaround specialist, since 2008 assisting several early stage and distressed resource and technology companies. Previously he was MD with Citigroup heading Structured Equity for AsiaPac, and at Deutsche Bank, where he was head of the Strategic Equity Transaction Group for AsiaPac. Mr. Whitfield received his MBA (Finance and Strategy) from Columbia Business School and BA Economics from The University of Exeter.

O

ver the last decade in the battery and technical material

In the underlying materials market, opinions seem to swing

need for buffering capacity for renewable energy; the speed of

that alternative material technologies will have to replace it.

industry I have got used to the naysayers. People

doubted the rise of electrification of transport; the

converting existing battery applications to lithium-ion (Li-ion) ones; and the additional applications that would be created by

the greater energy density of this technology. Now many of the same investors are concerned that they have missed the train: that everything is fully valued and there are no opportunities to invest.

54

wildly. One moment there is concern that there is going to be

a glut of materials such as lithium; next, it is going to be so rare These divergences are sure indicators that we are still in an

immature market that trades on imperfect data rather than one

with broad knowledge and understanding. Even research from established houses has sometimes been so wide of the mark

that it has been met by those in the industry with a reaction of laughter or despair.

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There are many challenges faced by investors new to the space,

material makers, specialists who produce cathode, anode,

materials market.

know who to back.

and this article aims to provide some guidance and highlight

electrolyte or separator materials. These relatively small players

opportunities for those looking to get exposure to the technical

are highly segmented - without in-depth knowledge it is hard to

Many of the companies involved in the new battery industry

This leads most investors to the most upstream part of the chain:

are broad-based conglomerates with only a small part of their

battery minerals and battery mineral producers.

earnings coming from their Li-ion business lines. In addition, the

Unlike commodities such as oil, gold and coffee, battery minerals

industry has historically been made up of a protracted string of

lack a standardised specification which can be traded through

companies undertaking individual processes: extraction, primary

forwards or futures. I would argue that (with the possible

processing, battery chemical, battery material, battery assembly.

exception of cobalt) any standardisation is a long way off

This was compounded by the fact that much of the value chain

because as battery technology changes, so do the specifications

for the production of cathode (lithium based) batteries had little

of the required materials.

or no overlap with the anode (carbon based) supply chain. All

these factors made it hard to anticipate which materials would

Hence, a frequent complaint of investors is that the market for

reflect the growth in the sector, and a bewildering choice of

these materials is not transparent, so they cannot do proper

where to invest.

valuations. I would argue that this is all relative: granted, you cannot track daily prices of spherodised graphite or lithium

Starting at the end of the process, battery assemblers are large

carbonate on a Bloomberg terminal in the same way that you

conglomerates who have exposure to many unrelated businesses

can many raw materials, but with a little detective work, it is

and revenue streams. Most of the large battery producers such as

possible to track down pricing for certain specifications and

Panasonic, NEC, LG Chem and Samsung SDI are large electronics

at least see trends over time. There is actually an abundance

firms with diverse earnings so investment gives little actual

of research published by some of the Chinese brokers which

battery exposure.

has substantial detail on pricing, industry trends and the

The next step back up the manufacturing chain is the battery

performance of Asian participants (but you probably need to be

55

THE ASSAY

"Investors should take note that forward-looking companies have started to look at combining assets across different battery materials."

able to read Cantonese!).

To get exposure to the underlying minerals, the only real

choice is through the mineral producers. But which of these are worthwhile and which are duds?

It is crucial to note that the battery material industry is not

simply a mining business. Yes, all these products come out of

the ground - but this is closer to an industrial chemical industry

than a mining industry. Small discrepancies in the composition

include Galaxy Resources, Orecobre and Neometals, and

of the ore can make large differences to the applications for the

developers such as Kidman and Tawana.

product, and hence the price. A frequently noted example of this is the Bolivian lithium brines, which superficially look to be the

As noted, building and commissioning plants takes a long

most bountiful in the world. However, the high concentration

time to get right. Each body of ore is different in its geology

of magnesium in the brine (which is both detrimental to

and chemistry, so no single process fits every plant. There is

battery performance and very hard to isolate given current

also a long lead time in the planning and pilot testing. As a

technology) renders these uneconomic. Similarly in graphite,

result, supply responds slowly to increased demand, so prices

the crystalline structure and in situ impurities will have a

stay high for longer than many would predict. Don’t believe

significant impact on the yield and the viability of a project.

the development companies that tell you they will go from greenfield to production in 18 months.

These factors are a large part of the reason why many

technical materials projects have been substantially late and

Similarly, you should be sceptical about predictions for the

over- budget during the development and ramp-up stages.

future of the lithium market. The DSO model (which assumes

Management teams who have only mining experience may not

ore is able to be shipped to customers prior to beneficiation)

appreciate how demanding the specifications of production

seems unlikely to be viable in the long term as the processes

really are, and investors do not appreciate the risks.

required for removing extraneous material is specific to each

ore body. Equally, I am doubtful that customers would commit

The first step in choosing a battery material producer is, of

to building plants at a cost of $50m to $100m without long-term

course, to pick which of the battery materials will provide

ownership of raw material feedstocks. Lastly, most lithium ore

you the best “tail wind” going forward. Of the several key

is 1 to 3 per cent lithium, but customers require 6 per cent.

materials that go into a battery, each with their different

That means transport costs for un-beneficiated material are

supply dynamics. Below I’ll try to give a brief outline of the

higher. Still, the market at the moment means customers in

different materials for cathode (lithium and cobalt) and anode

China will take any material to get secure supplies.

(graphite).

Lithium

Graphite

The lithium production industry has been around a lot longer

The graphite industry is in many aspects a few years behind

often a byproduct and so the longer established producers

Again, the industry has been driven by producers in China

that of lithium, but with signs that history is repeating itself

than lithium batteries – it has a history of use in ceramics,

in terms of lack of foresight of trends in supply and demand.

pharmaceuticals and engineering applications. Lithium was

who created cheap, low-cost graphite for a range of industries.

are multi-product chemical companies such as SQM (a potash

Now, the increasing quality demanded by the battery sector

producer), FMC and Abermarle (multi chemical companies).

and the diminishing supplies in China means alternative

Solely Lithium-focused producers tend to be younger and

supplies are required. There are large projects underway in

smaller but give you better exposure to the market. These

56

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Africa - However graphite is not a commodity and both the ore

elsewhere in the world, most notably Canada. Cobalt is more of

Some of these projects have a large percentage of their

Manganese

industry. Similarly, the impurity profile is also crucial, with

Although this is an increasingly important battery chemical,

body and the end product must have the correct attributes to

a commoditised market and the processing technology is more

meet market needs.

established so risks should be lower.

material in amorphous form which, while it can be used for the

steel industry, is not applicable to the battery and electronics elements like vanadium and uranium being highly detrimental

the total battery related demand at present is around 300,000

to batteries. At the moment, most of the graphite being used in

tonnes vs a potential supply in South Africa alone of around

batteries (about 70 per cent) is synthetic. The driver to switch

15bn tonnes. Hard to see a substantial uplift in the pricing,

to natural graphite is cost, but quality and characteristics need

given these supply/demand dynamics.

to be maintained, so it is likely that a few high-quality projects will become key suppliers to the anode market. It’s all about quality, not quantity.

Other industry trends

Cobalt

The top concern in the battery industry at the moment is

Cobalt is currently the most in vogue of the battery materials.

security of supply. The large numbers of separate companies price signalling up and down the chain has been weak. Many

and the disjointed market in the supply chain has meant that

It is also the only one that has a more normal trading market.

battery producers had no inkling that there would be supply

Nevertheless it does have its eccentricities as cobalt is largely

constraints as demand increased. At the same time, none of

a byproduct, and therefore supply has been determined by

the demand pressure was obvious to investors in primary

the pricing and demand for the primary host material, copper.

producers to give them the capital to acquire assets and invest

Another problem is that the vast majority of cobalt has been

in development. Markets in many battery materials are thin

sourced from the Democratic Republic of the Congo (DRC),

and this has led to nasty surprises for battery producers

which prompts ethical questions and concerns over security of

in securing inputs and volatile prices. Now with battery

supply. Several new companies are now seeking out projects

producers investing billions in new production facilities,

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THE ASSAY

they need to know that they can run these at capacity with a stable supply of material.

One of the impacts of this search for input

stabilisation is consolidation both up the supply chain and across the various materials,

which in turn is creating a shift in the relative power of the different stages of the industry.

An example of this has been the shift in relative power of battery chemical companies and

extractors. A few years ago, the price setters of lithium were the companies (mainly in China) who converted spodumene to lithium

carbonate. The scarcity of supply of primary lithium feedstock meant that converters had little market power, with battery material

companies and assemblers agreeing direct deals with primary producers on future

production, and using the processors to convert the material on a set-cost basis (toll manufacturing).

There is now consolidation at all levels of the

supply chain. Their loss of pricing power has now prompted converters to try to invest upstream and make company acquisitions to secure raw materials. For example, Sichuan

Tianqi’s acquisition of half of Talison, and

Jiangxi Ganfeng’s 43 per cent investment in Neometal. At the other end of the process, as

research and development has become more expensive, battery producers are cutting out

whether it made sense to combine a lithium

and a graphite producer, I would have seen few synergies. As more consolidation happens

elsewhere, it is now possible that the buyer for lithium carbonate will also be the buyer for cobalt and graphite. Simultaneously, mining

companies, trading houses and electronics companies are looking to add battery material

divisions, so companies that can be moved to

a consolidated model may trade at a premium. Another market theme is jurisdiction. Security of supply means not only having a contract that

gives you access to material, but enforceability of that contract. That means that supplies

from stable countries will carry a premium.

Western producers also are seeking to avoid

dependence on China, and certain countries in Africa and South America are less desirable due to political risk, from export controls to tax

and royalty regimes. The dependence on DRC for cobalt is the most obvious example, but

there are others: Tanzania recently changed

the rules on graphite, affecting producers there.

The battery industry is a developing market

with changing technology and difficult pricing,

but that is the opportunity. With constant need

for development capital there will be plenty of activity and scope for attractive returns.

the intermediary step of battery material makers and bringing this business in-house.

Investors should take note that forwardlooking companies have started to look at

combining assets across different battery

materials. If you had asked me three years ago

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"There is now consolidation at all levels of the supply chain. Their loss of pricing power has now prompted converters to try to invest upstream and make company acquisitions to secure raw materials."

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