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Lithium & Natural Graphite

Trends, Drivers and Geology impacting Markets

15 November 2016 www.csaglobal.com

Andrew Scogings PhD Geology, MAusIMM, MAIG, RP Geo (Industrial Minerals)

Principal Consultant, CSA Global Pty Ltd

CSA Global office locations

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• EXPLORATION

• RESOURCES

• MINING

• DATA

• CORPORATE

We have broad technical expertise and experience which covers most mineral commodities, geological terranes, deposit types and mining methods. Our team of specialists are leaders in their respective fields and experienced in all stages of the mining cycle from project generation to production and mine closure.

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Lithium production trends-historical

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• Global lithium mineral production has risen from about 0.1 Mt in the 1950s to an estimated 0.6 Mt in 2013

• Includes carbonate, hydroxide, spodumene and other minerals

Global lithium production

www.csaglobal.comSource: USGS

• Lithium carbonate: 91,458 t

• Lithium chloride: 8,291 t

• Lithium hydroxide: 4,197 t

• Aussie spodumene: 421,000 t (~12kt Li / ~ 25kt Li2O / ~62kt Li2CO3)

• Other Li Minerals and mineral concentrates: 96,000

• TOTAL: 620,946 t

Global lithium production

www.csaglobal.comSource: USGS

Country 2009 2010 2011 2012 2013e

Argentina, subsurface brine:

Lithium carbonate 8,574 11,178 10,000 9,700 9,500

Lithium chloride 4,279 6,644 4,480 4,350 4,200

Australia, spodumene 197,482 295,000 421,391 456,921 421,000

Brazil, concentrates 15,929 15,733 7,820 7,084 8,000

Canada, spodumene 10,000 -- -- -- --

Chile, subsurface brine:

Lithium carbonate 25,154 44,025 59,933 62,002 52,358

Lithium chloride 2,397 3,725 3,864 4,145 4,091

Lithium hydroxide 2,987 5,101 5,800 5,447 4,197

China, carbonate 20,000 21,000 22,000 24,000 25,000

Portugal, lepidolite 37,359 40,109 37,534 20,698 38,000

United States, carbonate W W W W 4,600

Zimbabwe, amblygonite, eucryptite, lepidolite, petalite, spodumene 50,000 47,000 48,000 53,000 50,000

Ceramics, glass and batteries account for at least two thirds of consumption

Global lithium markets

www.csaglobal.comSource: Roskill 2014

• Battery consumption as % of total LCE has risen from 17% in 2008 to 35% in 2014

• Battery consumption has grown from 20kt in 2008 to 64kt LCE in 2014 (CAGR 21.5%)

• Total LCE production has grown 50% from 2008 to 2014 (CAGR 7.1%)

Global lithium market trends

www.csaglobal.comSource: Roskill 2014; Stormcrow 2015

• Total LCE predicted to grow from 166 kt in 2014 to 410 kt in 2025 (CAGR 7.8%)

• Rechargeable batteries predicted to grow at CAGR ~13%

• Glass & Ceramics predicted to grow at CAGR 6%

Global lithium market trends

www.csaglobal.comSource: Stormcrow 2015

Market 2013 market share 2025 market share CAGR

Rechargeable Batteries 48,169 29% 200,341 49% 12.6%

Glass & Ceramics 58,135 35% 117,512 29% 6.0%Greases 13,288 8% 18,964 5% 3.0%

Metallurgical Powders 9,966 6% 22,195 5% 6.9%

Polymer 8,305 5% 12,561 3% 3.5%

Air Treatment 8,305 5% 12,561 3% 3.5%

Non-rechargeable Batteries 3,322 2% 4,472 1% 2.5%

Aluminium 1,661 1% 114 0% -20.0%

Other 14,949 9% 21,334 5% 3.0%

Total LCE 166,100 410,054 7.8%

Where is lithium produced?

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Where do we find Lithium ?

www.csaglobal.comSource: Kesler, et al. 2014, modified by Scogings

Three main deposit types

Continental Brines. Pegmatites. *Li rich clay & Sediments

BrinePegmatite

Volcanic ash*

Sediments*

* Not in production

Mt Marion

Pilgangoora

Whabouchi

Highbury

Arcadia

San Jose

SeymoreRoot Lake

Bougouni

• Global lithium production estimated at 36kt Li in 2014

• 13kt each from Australia and Chile (72% combined)

Global lithium production

www.csaglobal.comSource: USGS; Albemarle

Li (kt): annual production by country

What do lithium minerals look like?

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Reporting of lithium pegmatites

To download the article visit http://aigjournal.aig.org.au/wp-content/uploads/2016/11/N2016-001-Scoggings-et-al.-Reporting-Exploration-Results-and-Mineral-Resources-for-lithium-mineralised-pegmatites_v2.pdf

Lithium occurs in numerous minerals

What minerals contain Lithium?

Source: AusIMM Field Geologists’ Manual, Industrial Minerals Handybook , www.webmineral.com

Principal Li-minerals in pegmatites Formula Density g/cm3 Li2O%

Spodumene LiAl(Si2O6) 3.2 8.0

Petalite Li(AlSi4O10) 2.4 4.5

Eucryptite LiAl(SiO4) 2.7 11.8

Amblygonite LiAl(PO4)(OH) 3.0 10.2

Lepidolite K(Li,Al)3(SiAl)4O10(OH,F)2 2.8 7.6

Lithiophilite Li(Mn2)PO4 3.5 7.1

Zinnwaldite K(Al,Fe,Li)3(Si,Al)4O10(OH)F 3 6.2

Minerals in altered ash and sediments

Hectorite (Li smectite)* Na0.3(Mg,Li)3SiO4O10(OH)2 ~1.8 ~1.0

Jadarite* LiNaB3SiO7(OH) 2.45 ~6.0

*from resource reports and Handybook

Lithium pegmatites

www.csaglobal.comSource: Pioneer Resources Ltd

Spodumene – a range of colours & compositions

Lithium pegmatites

www.csaglobal.comSource: Prospect Resources Ltd

Petalite – pink due to minor alteration

Lithium minerals under the microscope

www.csaglobal.comPhoto: A Scogings

Not all created equal – discrete spodumene

Lithium minerals under the microscope

www.csaglobal.comPhoto: A Scogings

Not all created equal – fine-grained SQI

Lithium minerals under the microscope

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Not all created equal – Petalite & SQI

• Numerous lithium-bearing minerals, e.g. spodumene, petalite and lepidolite

• Range of compositions, varying between and within deposits

• Some markets, e.g. glass may require very low iron content

• Petalite concentrates contain ~4% Li2O

• Spodumene concentrate contain ~5% to 6.5% Li2O

• Petalite concentrate will yield less lithium carbonate / lithium chemicals than spodumene – logistics disadvantage for the battery market

• Petalite is often altered to spodumene + quartz (SQI) during pegmatite deposition. This may require fine grinding to liberate spodumene.

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Mineralogy and markets

Graphite production trends -historical

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This 500-page report reviews every major graphite producing and exploring company around the world, as well as detailing global exploration activity. It also contains an in-depth focus on graphene, including its production, supply and demand.

Key topics include:

• Unique country supply reviews including: China, Brazil, India, North Korea, and Canada

• Major demand drivers – Li-ion batteries, refractories, & emerging markets• How will prices react? Historical analysis, supply and demand• Critique of the graphene revolution

The data for the report was collected from multiple locations using primary research including methods such as thin-section petrography, mine and plant visits.

Natural Graphite Report: Strategic Outlook to 2020

To download a sample of the report visit www.indmin.com/graphite-report

• Global graphite production has risen from about 100,000 tpa in the early 1900s to an estimated 1.2 Mt in 2014

• Compound annual growth from about 1950 >3%.

Global graphite production

www.csaglobal.comSource: USGS

Markets -where is graphite used?

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Graphite production & markets

www.csaglobal.comSource: USGS, industry sources, Scogings et al (2015)

Each market has individual product specifications

Graphite production & markets

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China74%

Brazil9%

North Korea6%

India2%

Canada2%

Turkey1%

Russia1%

Sri Lanka0%

Others5%

Estimated global natural graphite production 2014 ~1.2 Mt• Amorphous 0.3 Mt

• Flake 0.8 Mt

• Vein 0.004 Mt

Source: USGS, industry sources, Scogings et al (2015)

Markets – what is driving growth?

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Global graphite market trends

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Approximately 430 kt flake graphite by 2025 (at 40% yield) to make approximately 180,000 tonnes spehrical

Battery – estimated consumption of spherical natural graphite for Li-ion batteries

Source: ProGraphite; Kibaran Resources Ltd

What does natural graphite look like?

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Amorphous graphite

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Metamorphosed coal

Source: ProGraphite

Flake graphite

Germany

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Photos: A. Scogings

Flake graphite under the microscope

Triton (Ancuabe, Mozambique) Huanyu (China, Heilongjiang)

www.csaglobal.comPhotos: A. Scogings

Source: Triton Minerals; Huanyu.

Flake graphite under the microscope

Graphex Mining Ltd, Tanzania

‘Low Grade Zone’ >2% cut-off ‘High Grade Zone’ >5% cut-off

www.csaglobal.comPhotos: A. Scogings

Source: Graphex Mining Ltd

Vein graphite

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Sri Lanka

Photo: A. Scogings

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Vein graphite

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Sri Lanka

Photo: A. Scogings

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• Low price

• Fuel: during desulfurization of steel, the iron cools and may need re-heating. Amorphous graphite briquettes are placed on the surface of iron to warm up the iron

• Amorphous graphite less reflective and darker colour than other natural graphite (silver-grey). Useful in coatings when lower reflectance is desirable, or in pencils to get darker colour.

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Why use amorphous graphite?

• High purity flake graphite (>97% Carbon) can be produced by flotation, without chemical purification (e.g. acids)

• Flakes are flexible and can be spheronised (rolled) into very small ‘potato’ shapes for use in battery anodes

• Flakes can have other molecules inserted between the layers of carbon atoms. When heated, the graphite layers are forced apart at between 200 and 300oC.

Source: spherical graphite photo: Kibaran Resources Ltd

Spherical graphite Expandable graphiteSpherical graphite plant

Why use flake graphite?

• Shape advantage (not flakes) easier to mix into formulations

• Natural high purity, no chemical residues from flotation or chemical processing

• More isotropic electrical and thermal behaviour than anisotropic flake graphite

• Softer and smoother (noise reduction)

• Small amounts of fine quartz (abrasive) cleans electric motor commutators.

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Why use vein graphite?

Conclusions

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Conclusions- lithium

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• Markets and drivers

➢ Two dominant markets - batteries and glass / ceramics (>65%)

➢ Battery and glass markets growing

➢ ~160 kt LCE (2014) growing to >400 kt LCE (2025)?

• Not all lithium deposits are created equal

➢ Dominated by two sources - Brines and Pegmatites

➢ Each pegmatite is individual - can be complex mineralogy

➢ Li-minerals vary in size and purity

➢ Markets may demand different Li-minerals, purity and / or sizing

Conclusions – natural graphite

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• Markets and drivers

➢ One dominant market - refractories & steel, (>60%)

➢ Refractories and steel declining

➢ Battery and expandable graphite market growth

• Not all graphite deposits are created equal

➢ Grade / shape / flake size / purity vary between deposits

➢ Markets may demand different graphite shape, purity and / or sizing

Thank you

• CSA Global Pty Ltd

• Graphex Mining Ltd

• Industrial Minerals Magazine

• Kibaran Resources Ltd

• Pioneer Resources Ltd

• ProGraphite

• Prospect Resources Ltd

• Triton Minerals Ltd

15 August 2016 www.csaglobal.com