Initiate with a BUY: Advancing Brines in Grande Fashion

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1 LSC Lithium Corp. (LSC-V: C$0.37) September 20, 2018 BUY Target: C$1.40 Joseph Fars, MBA, P.Geo / (416) jfars@viiicapital.com David A. Talbot / (416) dtalbot@viiicapital.com Initiate with a BUY: Advancing Brines in Grande Fashion LSC-TSX New Last Rating BUY - Target $ Projected Return 278% - Target Multiple 0.6x - Total Resources based on In-Situ Value $ Other Exploration Projects $ Cash (less exploration spend) $ Warrants/Options (potential) $ NAV $ P/NAV 0.16x - Company Data Last Price week Range Market Cap ($MM) $29.8 Enterprise Value ($MM) $23.1 Shares Outstanding - Basic (MM) Shares Outstanding - FD (MM) Avg Volume - 100d (000 sh/day) 68.6 Cash ($MM) $6.7 Debt ($MM) $0.0 Lithium Forecast 2017A 2018E 2019E LT Spot LCE (US$/t) Spot Li-OH (US$/t) All Figures in C$ Unless Otherwise Noted Target based on fully diluted share count Source: Company Reports, FactSet, Eight Capital LSC-TSXV: Price/Volume Chart Source: Factset Company Description LSC Lithium Corp. is a Lithium Developer focused on its core assets of Pozuelos/Pastos Grandes (PPG), Rio Grande and Salinas Grandes in the provinces of Salta and Jujuy, Argentina. The PPG project has quickly rose to be LSC's flagship project, with good grades, low impurities and access to ample infrastructure. Since inception in 2016, LSC was able to aggressively amass a 300,000 Ha land package of prospective brines throughout Argentina, compiling multiple highquality assets with the potential to act as standalone projects. A strong incountry technical team is also a differentiator for LSC. We initiate on LSC Lithium Corp. with a BUY and a target price of C$1.40 per fully diluted share, after applying a 0.6x multiple to our NAV estimate. We believe that LSC has one of the most attractive resource portfolios amongst advanced stage global Lithium brine developments, complemented by ample infrastructure in Argentina and strong in-country technical expertise. LSC is developing the Pozuelos-Pastos Grandes (PPG) project, the Rio Grande project, and the Salinas Grandes project, and expect that these assets will be the focus of investor attention. LSC stacks up well against its brine peers due to a large resource base, significant infrastructure advantages, good grades, high flow rates, a low impurity profile and a low risk conventional pond approach. Recent stake by Argentine O&G producer Plus Petrol in LSC's non-core Arizaro project may also signal interest in LSC's large resource profile. Stock is currently underpinned by global Li equities. Average in-situ valuations are down 73% YTD while average LCE pricing is only down 11.8%. We consider this polarizing behaviour unsustainable and expect Li equity valuations to re-rate upward into a notoriously active fourth quarter. Recent overreaction to Argentine export duties impacted current producers and developers out to 2020 (using Orocobre's [BUY, C$8.40 TP] agreement as a barometer). We note that LSC's plan does not account for production pre Dec- 2020, and we don't believe the new tariff will slow down development plans. We await the completion of a rights offering (expected Sep 21) for C$9.2MM priced at a 25% discount. Share price depreciation from that announcement had lost over ~$14MM in market value, which may have been an overreaction in a deflated lithium market. Standby commitments of $5.2MM from Regent Mercantile Holdings Ltd. and BMC Global Ltd. were already guaranteed. We note the optics of an unsuccessful rights offering could read negatively, despite LSC's best efforts to advance its core assets with use of proceeds. Strategic Acquisitions of over 300,000 Ha. An extensive land package in the lithium triangle of over 300,000 Ha has been consolidated in Salta and Jujuy Provinces of Argentina since A variety of advanced projects were acquired, including Pozuelos, Pastos Grandes, Rio Grande, Salinas Grandes and Jama. Strategic prioritization continues. Management is thinking large-scale production, and fast-tracking development of the most favourable projects, with Pozuelos-Pastos Grandes emerging as its flagship. Large Resource Potential. Five major development projects continue to be the focus. Resource-laden projects, including PPG and Rio Grande, are valued at C$ MM based on an EV/t basis. These resources include 1.3 MM t LCE M&I and 2.5 MM t inferred. Other Argentine exploration projects are valued at C$137 MM based on an EV/Ha metric applied to 100%-owned projects that encompass 147,079 Ha. Latest Pozuelos drill results hosted average grades more than 2x resource grades, confirming a second high-grade depocentre. We expect this to have positive implications for a resource update within the pending PEA. Infrastructure Advantages. Pastos/Pozuelos asset is situated ideally for a commercial lithium mine operation in Argentina. Access to roads, rail, natural gas and hydro surround the project and provides a development leg-up on brine peers. Risks. Key risk to the story is currently underpinned by a pending rights offering priced at a 25% discount. In the event the R/O is unsuccessful in raising its desired amount, a more dilutive price may be necessary to incentivize current shareholders, which we see as a significant risk. Other key risks are subject to exploration success, plan execution, commodity price and project financing risks, typical of early-stage explorers and developers. Please see Disclosures and Disclaimers at the end of this report.

2 VALUATION We value LSC Lithium at C$256.8MM or C$1.40 per fully diluted share after applying a 0.6x NAVPS multiple (see Table 1). Our valuation is comprised of various factors, including implied value of its core Argentine projects (C$267 MM), exploration projects based on an EV/Ha value (C$121MM), potential value of warrants/options ($28 MM), cash, investments and successful rights offering (C$19.2 MM), less planned spending (C$7.0 MM). Projects are valued using multiple conservative methods that reflect the stage of project, management focus and short-term upside potential. To value on a fully diluted basis, we assume all warrants and options are exercised. We would look to re-evaluate our NAVPS multiple on an ongoing basis to account for catalysts that are completed along the path to production. Resource-laden projects, including Pozuelos/Pastos Grandes and Rio Grande, are valued on an enterprise value per tonne basis. These resources include 1.3 MM t LCE M&I and 2.5 MM t inferred, applied to an average EV/t from a select group of lithium brine developers averaging C$70/t LCE. It is too early to determine whether LSC Lithium would deliver raw brine to Rincon Ltd. (formerly Enirgi) as per its strategic alliance, produce a lithium brine concentrate, or take on a standalone commercial scale lithium carbonate and/or lithium hydroxide plant at specific project sites. Each successive option may add value, but comes at increased cost and difficulty. Based on the various revenue-generating options, a DCF was not utilized to produce our valuation. Non-resource bearing Argentine exploration projects are valued at C$121 MM based on an enterprise value per hectare metric applied to the 100%-owned projects that encompass 147,079 Ha. No value was given to non-core assets, including its Jama project, until further development catalysts crystallize value. Precedent transactions suggest an average acquisition price of US$1,083/Ha (C$1,546/Ha). We would argue that an average value is likely conservative given that it's an industry average valuation, but these salars have not only lofty brine potential but good infrastructure as well. Table 1: Implied LSC Lithium Valuation Summary Valuation Summary Valuation Fully DilutedValuation $ MM $/share Total Resources based on EV/t in-situ Value Exploration projects based on EV/Ha value Book Value for Non-Core Assets - Cash and successful R/O less obligations over 1-5 years Investments Warrants Options Total Implied Valuation Target Multiple 0.6x Target per Share 1.40 Source: Company reports Table 2: Valuation Breakdown of Resource and Exploration Assets Contained LCE Valuation Per Share Value Resources MM t Interest Attrib. $/t $ o/s f/d Rio Grande Inf 2,190, % 2,190, ,913, Pozuelos M&I 1,296, % 1,296, ,107, Pozuelos Inf 312, % 312, ,993, Total Res 3,799, % 3,799, ,014, Valuation Per Share Value Exploration Hectares Salar Cover Interest Attrib. Resource $/Ha $ o/s f/d Salinas Grandes Salta 53,472 95% 85% 45, ,327, Salinas Grandes Jujuy 35,000 44% 85% 29, ,032, Rio Grande 26,865 90% 100% 26,865 Y Pozuelos 21,425 99% 100% 21,425 Y Pastos Grande 2, % 100% 2, ,151, Jama 7,634 95% 68% 5,191 Nil Others (1) 159,268 83% 65% 103,154 Nil Total Ha 306,347 83% 77% 234, ,512, Capital Structure Per Share Value Price $ o/s f/d Cash 11,000, Investments (DJI-TSXV: Dajin Resources) 27,777, ,333, Cash obligations (<1 year) - 3,714, Cash obligations (1-5 years) - 3,245, Warrants 10,860, ,964, Options 9,380, ,194, ,532, (1) Other projects include Guayatayoc, Western Claim Block, Arizaro, Laguna Palar, Pocitos, others Source: Company Reports, FactSet, Bloomberg, Eight Capital Estimates EIGHT CAPITAL Page 2

3 EV/t valuation designed for resources only. Pozuelos/Pastos Grandes and Rio Grande are the most advanced and/or largest potential projects, and are being fast-tracked to PEA first by LSC Lithium. Thus, we base our valuation on 1) the current trading enterprise value per tonne of lithium carbonate at these projects, and 2) the amount of existing resources. See Table 2. Thus, our 3.99 MM t LCE of existing resources base case can be considered conservative. We estimate a trading EV/t average of C$70/t, down from C$106/t over the last 15 months given both the drop off in lithium explorer valuations and the growing resource size for those same companies. We view EV/t as a reasonable measurement for the relative value of certain mineral deposits that don't yet have an economic study. Once information is available to complete early stage economic studies, a DCF valuation would make more sense. LSC Lithium is a lithium brine development story and we treat it as such. Its peer comparison group (Table 3) is based on brine developers and a junior producer that host defined resources and are at similar stage of development. While EV/t could also be used to value hardrock lithium players, thereby broadening our peer comparison, isolating junior brine developers is more specific to LSC Lithium's situation. Brines do behave quite differently from their hardrock counterparts. That said, this is a relative metric that measures in-situ value of lithium and doesn't account for any processing or metallurgical challenges from brine or hardrock projects alike. We recognize that this relative metric also does not directly incorporate factors such as location, metallurgy, Capex/Opex, cost of exploration/development, timeline or risk. This metric is relatively sensitive to deposit size and market cap of the company. Small companies may host large deposits that are still subject to the law of diminishing returns - while resources might support a long mine life; cash flow that is too distant simply isn t well valued and brings down its overall EV/t. Therefore, we feel comfortable in applying the peer group average of C$70/t to our valuation. Keep in mind, the EV/t metric is variable and also depends on market sentiment of lithium stocks. As a means to mitigate this bias, we have incorporated recent lithium brine acquisitions into the determination of our peer group average. This includes POSCO's ( KRX, Not Rated) purchase of Galaxy's (Not Rated) non-core Sal de Vida assets (valued at C$150/t LCE), and Lithium X's (LIX-T) takeover by Nextview (valued at C$125/t LCE) to produce a more representative global metric of current in-situ value (Table 3). Senior producers were also excluded, as they tend to be multi-billion dollar international chemical companies and lithium makes up only a portion of those businesses. Table 3: EV/t comparables table showing brine-developer peers Attributable Resource EV/T Contained t Grade 17-Sep-18 Shares O/S Mrkt Cap Cash Debt EV LCE Company Ticker Project Stage (MMt LCE) (Mg/L) Intraday Price MM (C$MM) (C$MM) (C$MM) (C$MM) (C$/t) Junior Brine Developers Lithium Americas LAC-TSX Cauchari-Olaroz (50%), Kings Valley Construction C$ Pure Energy Minerals PE-TSX Clayton Valley South, Terra Cotta Resource Development, PFS C$ Advantage Lithium AAL-TSX Cauchari Resource Development, PEA C$ Neo Lithium NLC-TSX 3Q PFS C$ Millenial Lithium ML-TSX Cauchari, Pastos Grades PFS C$ Junior Brine Producers / Recent Transactions Orocobre ORL-TSX Olaroz Production C$ Galaxy/POSCO GXY-ASX Non-core- Sal del Hombre Muerto Property Acquisition LIX / NextView LIX-TSX Sal de Los Angeles Corporate Acquisition GLOBAL AVERAGE 70 GLOBAL MEDIAN ` 45 Source: Eight Capital, Company Reports, FactSet Table 4: Summary of resources from LSC Lithium brine projects in Argentina Source: Company Reports EIGHT CAPITAL Page 3

4 We estimate an EV/Ha of US$1,188 for brine exploration projects, based on actual transactions. We only apply it to core pre-resource stage projects, such as Pastos Grande and Salinas Grandes projects totaling 91,155 Ha (77,884 Ha attributable) that are owned by LSC Lithium. We have used 17 brine project transactions over the past two years as comparatives for identifying an appropriate EV/Ha metric (Table 5). While this metric provides an indication of acquisition value and somewhat of the going rate, it doesn t directly reflect several attributes that can differentiate good projects from speculative ideas, such as location, geology, evaporation rates, brine chemistry, Capex/Opex, exploration/development budgets or timeline. LSC's average acquisition price is C$535/t (US$411 Ha), based on a book value of $96.4 MM for 234,519 Ha attributable (306,347 Ha total), representing just 35% of our average precedent value estimate of US$1,188. It is difficult to ascertain value of the local infrastructure; the potential for utilizing the Rincon site and the fact that many of these deals were arranged during a period when the lithium market was quite frothy between 2015 and We expect each of these projects to become better valued via EV/t for ultimately DCF as they are advanced, much as Pozuelos and Rio Grande have become. Table 5: EV/Acreage (Ha) of select brine property acquisitions within the last two years Announcement Price EV Acreage EV/Acreage Date Acquirer Target Property Interest Consideration US$MM US$MM Status Type (Ha) (US$/Ha) 30-Jul-18 Litica LSC Lithium Arizaro 60% Cash/Work Complete JV 22, Nov-17 Pure Energy Advantage/Sunrise Clayton NE 100% Shares Complete Purchase 587 4, Mar-17 LSC Lithium Private/Advantage Stella Marys Project 100% Cash/Shares Complete Option 1,472 1, Feb-17 Lithium X Orocobre Arizaro 100% Cash/Shares Complete Purchase 33, Apr-17 LSC Lithium Private Salar de Jama 51% Cash Complete Purchase 5,000 1, Mar-17 Advantage Lithium Orocobre Cauchari-Olaroz 91% Shares Complete Purchase 85, Jul-16 Millennial Lithium Private Pastos Grandes 100% Cash/Shares Complete Purchase 1,221 2, Oct-16 Argentina Lithium Private Arizaro 100% Cash/Shares Complete Option 20, Mar-16 Lithium X Aberdeen Sal de Los Angeles 50% Shares Complete Option 8,187 1, Mar-17 Pure Energy Private Terra Cotta 100% Cash/Shares Complete Purchase 13, Aug-16 Wealth Minerals Private Chilean Proyecto Atacama 100% Cash/Shares Complete Option 46, Jul-16 Wealth Minerals Private Chilean Quisco Project 100% Cash Complete Option 2,400 1, Jun-16 Wealth Minerals Private Chilean Pujsa Project 100% Cash Complete Option 1,600 1, Apr-16 Wealth Minerals Private Chilean Puritama Project 100% Cash Proposed Option 2,000 1, Sep-16 Advatage Lithium Private Argentina Stella Marys Project 100% Cash/shares Complete Purchase , Jun-16 Advantage Lithium Nevada Sunrise 5 Nevada Projects 60% Cash/shares Proposed Option 3,973 1, Sep-16 Advantage Lithium Radius Gold 3 Mexican projects 70% Cash/shares Proposed Option 25, Average (US$/Ha) 1,188 Median (US$/Ha) 1,083 Source: Eight Capital, Stockwatch, Company Reports UPCOMING CATALYSTS/COMPLETED MILESTONES LSC achieved several milestones since its acquisition of core assets in Last year, LSC listed on the TSX Venture and forged a strategic alliance with Rincon, giving LSC optionality to Rincon's DXP process. Pozuelos' acquisition and portions of Salinas Grandes came shortly after with initial drilling at Pozuelos generating excellent grades, pump rates and low impurities in LSC's first pass. An initial resource at Pozuelos came next, generating 1.8MMt LCE and garnering attention as a large, high grade, low impurity lithium brine. Rio Grande's maiden resource followed shortly after, adding 2.19MMt LCE to its resource profile of 3.99MMt LCE and cementing LSC as a large-scale lithium developer of consequence that moved with an aggressive cadence at delivering resource estimates across its suite of salars. Recently, Argentine O&G PrivateCo Plus Petrol committed US$6.8MM for a 3-stage exploration program on one of LSC's non-core assets, giving us the indication of a "trial relationship" which could develop further as the O&G company looks to gain more lithium exposure. Inroads into O&G relationships should bode well for infrastructural advantages towards LSC s development plans of other salars. The following are completed milestones and pending catalysts for LSC: Property Acquisitions, Strategic Alliance with Rincon - Completed 2016/17 Pozuelos Phase 1 Drilling - Completed Q4/17 Pozuelos Resource Estimate - Completed Q1/18 Rio Grande Resource Estimate - Completed Q1/18 Salinas Grandes Resource Estimate - Q3/18 Pastos Grande Resource Estimate - Q4/18 Pozuelos Resource Estimate Upgrade - Q4/18 EIGHT CAPITAL Page 4

5 Pozuelos-Pastos Grandes PEA - Q4/18 Rio Grande Resource Upgrade - Q4/18 Targeted Production Figure 1: LSC Lithium Critical Development Timeline Source: Company Reports BUSINESS STRATEGY LSC is more than just a land grab. It was able to splice together multiple high quality projects in the Salta and Jujuy Provinces of Argentina, most of which could act as a standalone project for any other company. Its projects have notable infrastructure advantages over projects of many of its peers. A strong in-country technical team is also a differentiator for LSC. It currently has five major project areas. The plan is to accelerate several of these key projects through initial mineral resource estimates. Top priority is being given to a combined Pozuelos-Pastos Grandes, as the projects are located only 17 km apart. Pastos Grandes is adjacent to Millennium Lithium's (ML-T, Not Rated) project of the same name. They essentially share the same deposit and various development or production synergies may come available over the life of the assets. While each project may be able to operate individually, we speculate that consolidation may help improve project economics for all parties. Advantages to a combined Pozuelos and Pastos Grandes (PPG) project. It will likely be fast-tracked to production with a PEA being produced by YE2018, and a goal of production by Significant existing work at Pozuelos allows a fast-tracked approach to complete the PEA and PFS. The combination of two salars would allow blending of brines to optimize plant feed, and leverage to evaporation rates at Pozuelos. Furthermore, Pozuelos has plenty of land available for ponds, excellent infrastructure, lack of nearby communities that should lead to a comparatively simple environmental and social situation which should lead to faster permitting. Key focus for LSC is to advance a PEA on the Pozuelos-Pastos Grandes project. We expect to see multiple initial resources and updated mineral resource estimates over the next 6 to 12 months, most notably including a resource on Salina Grandes, thereby rounding out its initial resource campaign on its core assets of Pozuelos/Pastos Grandes, Rio Grande and Salinas Grandes. Rights Offering Success could Influence Optics. A rights offering is never an ideal scenario for a company to raise money, as it is typically priced at a significant discount to motivate existing shareholders to participate. LSC's rights offering of proceeds up to C$9.2MM was designed to move the story forward sooner rather than later in a deflated battery metals market. Priced at a 25% discount, each shareholder will be issued of one right, allowing each shareholder the opportunity to purchase one unit at C$0.40 EIGHT CAPITAL Page 5

6 per unit. A full raise of $9.2MM would potentially issue 22,988,000 shares. Each unit is made up of one share and one-half of one share purchase warrant, which entitles the holder to purchase one share at C$0.55 for up to 18 months. As LSC hosts a stable of development projects, we note that a successful rights offering yielding $9.2MM would allow the company to advance and de-risk each core project, in our view, creating significant valuation upside. We note that $5.2MM of the $9.2MM is backstopped, with standby commitments from Regent Mercantile Holdings Ltd. and BMC Global Ltd. guaranteeing $2.6MM each. However, in the event LSC is not successful at raising the remaining $3.9MM, the company could be forced to complete the rights offering at a further dilutive price, which we see as a significant risk to shareholders. Litica Joint Venture may be a First Date. LSC Lithium has entered into a JV with Litica Resources, a wholly owned subsidiary of Pluspetrol, a private Argentine oil and gas company. The 40/60 JV is to explore and develop l22,376 Ha worth of tenements on the Salar de Arizaro lithium project in Salta province, Argentina. Arizaro is next door to Rio Grande, one of LSC s flagship assets. While Arizaro screens as a promising salar, this is not a core focus of LSC and offers pure upside to LSC's already impressive resource roster. We think this may be the beginning of a longer-term relationship and Arizaro is potentially a "first date" to what could be a promising strategic alliance. Litica Resources will be the operator with exploration and brine sampling to begin as soon as possible, followed by a resource estimate. LSC management indicates that Litica stumbled onto the area through its own prospecting for oil and liked the logistics of this lithium brine salar as part of its broader business plan. Litica will commit US$6.8MM in a 3-stage exploration program to earn 60%. LSC would be required to spend about US$1 MM to bring to resource level by the 3rd stage. Inroads into O&G relationships should bode well for infrastructural advantages towards LSC s development plans of other salars. Rincon's Strategic Arrangement offers proprietary optionality. Currently, we do not value this arrangement and treat this only as a potential upside opportunity for LSC. Our conversations with management indicate that current economic studies are pursuing a conventional evaporation brine processing technique for its salars. A deal struck in 2016 with Rincon has the potential to benefit LSC Lithium in several ways. Rincon's proprietary DXP Technology is a lithium processing method for its 100%-owned Rincon project and designed to produce battery-grade lithium carbonate directly from raw, un-concentrated brine (Figure 2). LSC could utilize this strategic alliance and extract lithium-bearing brine from its salars and deliver either unprocessed or intermediate processed brine to Rincon. Assuming the plant is constructed, this may allow a quicker pathway to production with very little upfront capital due to LSC. Figure 2: (Left) Enirgi Group's DXP Technology stacked up against conventional pond systems. (Right) Flowsheet of Energi's Direct Xtraction Process Source: Enirgi Reports DXP Flowsheet overview includes: Brine extraction via wells. Three-stage brine beneficiation. This should provide ~89% Li recovery. Expect to become more efficient as the company has made improvements in membranes, temperatures, etc. DFS had 85% recovery using one stage. Impurity removal. This includes two stages caustic soda, soda ash to ppt Ca and Mg and solid separation. Use SX to remove B. Then use highly selective membrane in EIGHT CAPITAL Page 6

7 high pressure RO system to separate out single cations from 2+, 3+ and negatively charged ions - calcium carbonate, Mg, Na, sulphate. After filtration, solid/liquid separation, you are left with brine containing Li, Na, Cl. Lithium extraction and reagent recycling. Li and NaPO4 at one ph, LiP at another. Lithium conversion. LiP breaks bonds in water, Li stays in solution, NaPO4 separates out. Lithium precipitation. Heat Li solution to 105 C and 3 atm. Use 1.2t Na2CO3 to create 1t LiCO3 and filter LCE using centrifuge. Drying and packaging. LCE is jet milled/cycloned to specific size. Total Li recovery is about 65%. CAPITAL STRUCTURE AND SHAREHOLDER BASE Cash in hand totaled $6.7 MM at 31-May-18. LSC has MM shares o/s and MM shares fully diluted. We assume on the heels of a successful rights offering financing that the company will have 178.4MM fully diluted shares outstanding. At 31-May-18, there are 3.71 MM warrants exercisable and at a weighted average strike of C$0.80 (average duration of 1.49 years left) for $7.44 MM assuming all are exercised, and 9.38 MM options at a weighted average strike of C$1.31 for a potential cash influx of $12.3 MM assuming all are exercised. It appears that 5.6 MM warrants expired in June Growing Shareholder Base. Insiders currently hold 55.7 MM shares for a 39% interest in the company, while institutions host 1.8 MM shares or 1.68% of LSC, according to FactSet. Project book value is $97 MM. Enirgi's initial 20.6 Mm shares or 25% interest in LSC earned by selling several projects to the company has been diluted to a 14.5% interest. FIVE MAJOR DEVELOPMENT PROJECTS LSC's total project portfolio hosts 306,347 Ha of salars with lithium-bearing brine resource potential. Of this, 234,519 Ha are attributable to LSC. Five projects are considered priority and potentially world-class. Other projects include Guayatoyoc, Western Claim Block, Arizaro, Laguna Palar, and Pocitos. While we believe it s a bit too early to start to model production at any given project, let alone across all five development projects, management has suggested that it can see potential for up to 70,000 tpa LCE production. This might include Salinas Grandes (25ktpa LCE), Rio Grande (15ktpa), Pozuelos (20ktpa), Pastos Grande (5ktpa) and Jama (5ktpa). When prioritizing its portfolio of assets, size, grade, infrastructure and social/permitting challenges come into play. Pozuelos/Pastos Grandes are adjacent to each other, ranked 1st, and will get PEA treatment as a combined entity before other projects. They have critical mass, good grades and permeability and best infrastructure due to location. The large Rio Grande project over Salinas Grandes is due to lack of issues on permitting and surface rights. There are a number of land owners across two different provinces. Salinas does have the highest grade and excellent purity levels, so ultimately it has the potential to become the lowest cost operation. Pozuelos: 100% interest in 21,425 Ha that covers 99% of the salar. A recent resource estimate suggests a grade of 387 ppm Li and 1.3 MM t LCE (M&I) and 323 ppm Li and 313,000 t LCE (inferred). AT/AMT surveys suggest that brine is present throughout the entire salar. The deposit is comprised of two main zones: an upper 50-90m thick compact halite zone, and a lower sandy zone. An additional seismic survey was completed recently and additional resource drilling will begin in July Pastos Grandes: 100% interest in 2,683 Ha of this salar could act as a satellite deposit to Pozuelos. Initial sampling returned lithium in the mid-400 ppm Li range, while a nearby pump test returned up to 550 ppm Li at depth. The brine exhibits very good chemistry. Rio Grande: 100% interest in 26,865 Ha covering 90% of the salar surface. This project is becoming more important. Recent exploration demonstrates that grades are improving at depth, seismic suggests the salar is deep at 500m, and porosity might be much higher than previously expected. A recent resource estimate suggests a grade of 374 ppm Li and 2.19 MM t LCE (inferred) in just the upper 100m. Plans are to complete exploration and pumping wells, geophysics. EIGHT CAPITAL Page 7

8 Salinas Grandes: 85% interest in 88,472 Ha. About 60% is located in Salta province and covers 95% of the salar surface, while 40% is located in Jujuy province and covers 44% of the salar surface. This is a potentially world-class salar, with high grades ranging from 800 to 1000 ppm Li, great chemistry (low Mg, SO4 and K) and porosity and ample historical resources in just the upper 15m of the salar. There are high specific yields up to m deep. There is a thick impermeable clay layer that might have additional brine potential below. Jama: This project ranks a distant 5th. LSC has a 68% interest in 7,634 Ha that cover 95% of this salar that runs along the Chilean border. It is a flat clastic salar with fine sand and gravel and unsaturated brine. Figure 1: Location map for LSC's main lithium projects: 1) Pozuelos; 2) Pastos Grandes; 3) Rio Grande; 4) Salinas Grandes; and 5) Jama Source: Company Reports EIGHT CAPITAL Page 8

9 Figure 2: (Left) Highlights LSC's salars development stage and brine chemistry; (Right) LSC's brines compositional phase diagram of magnesium, sulfate and potassium affecting LSC's salars Source: Company Reports POZUELOS-PASTOS GRANDES PROJECT (PPG) LSC Lithium has decided to combine Pozuelos (Poz) and Pastos Grandes (PG) projects as they are only 17km apart. Both projects should benefit from common development, infrastructure and processing plant. This should also help reduce Capex and Opex. A combined PPG offers substantial synergies via brine chemistry combination and potential resource size. Blending brines should help optimization production and help sustain higher production levels over a longer period. Pond and process infrastructure is planned to be located only at Pozuelos, where geotechnical, environmental and social conditions are better suited to construction, and sufficient space is available for development. We await critical data on the blending potential of both brines in the pending PEA. Management has advised us that the high calcium from the depocentre of Pozuelos will be complemented with the high sulphates from clastics at Pastos Grandes. A 12 km connection (8 km to the side of Pastos + 4 km connection to Pozuelos) leverages the proximity of these salars and its elevation differential, as Pozuelos is almost 20m lower than Pastos Grandes (see Figure 5). Figure 5: (Left) Brine Pipeline from Pastos Grandes (PG) to Pozuelos highlighted in Blue; (Right) Elevation differential from PG to Pozuelos Source: Company reports, Company Management The initial Poz resource estimate includes MM t LCE with an average grade of 387 ppm Li measured and indicated, and MMt LCE with an average grade of 340 ppm Li inferred. PG resource is expected in H1/18, with a Poz resource update due in Q4/18. EIGHT CAPITAL Page 9

10 These will help support a pending PEA and permit applications due in Q4/18. The goal is to selectively extract high grade targets of over 700 ppm Li. PEA work kicked off in June. GHD Ltd. has been appointed lead engineer to complete a PEA (Q4/18) and fast-tracked PFS (mid-2019). It has lithium experience including work at Olaroz Mine expansion and 3Q projects in the Puna plateau of Argentina. GHD is focused on optimizing process recovery, operating costs, capital costs and timeline. A second stage of met work is being designed to include lab and bench-scale work, and construction of pilot ponds at Pozuelos, with launch expected in August We note significant infrastructural advantages surrounding the PPG project, with a gas pipeline 20 km to the west of Pozuelos, at an intersection with a main road, rail and powerline (see Figure 6). Figure 6: (Left) PPG and Salar de Pocitos infrastructure advantages with nearby access to Gas, Rail, and Power, along with a major road. (Right) Hydro power substation proximal to LSC's Pocitos easement (35 km away) which may be location of Lithium Carbonate plant Source: Company Reports, Eight Capital Site Visit Environmental Baseline Studies are complete, including biodiversity, soil, air, noise, water, archeological and social baseline studies at both Pozuelos and Pastos Grandes. The environmental impact statement is nearing completion. They are to be filed with Salta regulators in Q4/18. The 2018 exploration program includes: Pozuelos drilling at depth to help expand and upgrade current resources. The northern third of the salar has not yet been drilled, although surface sampling suggests grades may improve. Pump tests have returned consistently high grades of between 480 ppm and 627 ppm Li in the centre of the salar. Porosity testing, seismic studies, pump tests and hydrogeological studies have been undertaken (see Figure 7). Pastos Grandes drilling has returned both high grades and multiple mineralized brine horizons, and this should lead to an initial resource estimate. SPG B returned an average of 569 ppm Li over 430m (ranged between 543 ppm and 637 ppm Li). SPG B returned up to 511 ppm Li in three main mineralized zones: 377 ppm Li over 91m from 57m depth; 459 ppm over 57m from 354m; and 466 ppm over 14m from 466m. Mineralization also resumed at 512m and remains open at depth. SPG A returned up to 528 ppm Li with three main zones, including an average grade of 500 ppm Li over 62m; 388 ppm over 110m; and 326 ppm over 83m. Seismic surveys and a three hole pump test is also planned. EIGHT CAPITAL Page 10

11 Figure 7: LSC's "pilot pond" approach, testing the salar's hydrogeological characteristics and evaporation potential Source: Eight Capital Site Visit BRINE PROCESSING Low operating cost potential. Besides its good grades and impressive infrastructure, the PPG's salars have favourable purity salars. This allows for natural evaporation and fewer reagents necessary, and thus lower costs, to arrive at high Li concentration. This should not only help contribute to a low operating cost, but also increase the likelihood of producing a battery grade LCE product. Pozuelos' depocentre Mg:Li impurity ratios are 2.44 for the first 35m, rising to 4.12 at an average depth of 150m, while SO4:Li ratios are 3.4 for the first 35m of the salar, with this ratio rising to 13.8 within the south clastics portion of the salar. We note that brines with Mg:L ratios beyond 10:1 effectively become uneconomic due to reagent costs. Those with SO4:Li ratios beyond 50:1 would likely see Opex balloon to over US$5,500/t. Potential for low risk conventional flowsheet. Based on our conversation with management, the process for brine at the PPG will likely follow a typical pre-concentration of brine via evaporation ponds directly on the salar. This not only elevates the concentration of lithium within the pre-concentrated brine, but also reduces volume 20x to 100x. Next would be to add reagents in order to separate contaminants from a clean brine. In this step, Mg, Ca, SO4 and B are used via a slaked lime in order to make a clean, lithium concentrated solution, which could potentially yield approximately 5000 Li ppm of clean brine. On the polishing sequence, cloth filters are used to capture colloidal gypsum and typically boron is removed using solvent extraction or ionic exchange. Soda Ash is then used to remove all Ca and Mg, producing lithium chloride. Lastly, heating a lithium chloride solution to ~70 C to ~100 C and adding more sodium carbonate is needed to precipitate lithium carbonate. See Figure 8 for basic steps that LSC will likely deploy for its brine processing at the PPG project. EIGHT CAPITAL Page 11

12 Figure 8: LSC's Brine Processing Basics of what we expect to be deployed in the upcoming PPG preliminary economic study Source: Company Management POZUELOS PROJECT Company Reports, Company Management, Eight Capital LSC owns a 100% interest in 21,425 Ha and controls 99% of the salar. The project has excellent infrastructure with a gas pipeline located ~15 km west of the salar and railway located ~55 km to the north-west. A limestone quarry is also located on the property. Lime is in very short supply in the Puna, but is required for LCE production from brines rich in SO4. This project does not have high SO4. Pozuelos is well advanced with about $40 MM sunk to date. Current resources total 1.3 MMt LCE and a grade of 387 ppm Li M&I and MM t LCE and a grade of 340 ppm inferred. This is due to be upgraded in Q4/18 following the completion of another three deep drill holes.. Latest Pozuelos drill results hosted average grades more than 2x resource grades, confirming second high-grade depocentre. Consistent grade with average 750mg/L Li and a minimum 736mg/L Li (see Figure 9) was observed in well SP W, which was drilled in the South-West portion of the Pozuelos salar. Pump testing also showed promise here, as the observed drawdown EIGHT CAPITAL Page 12

13 reduced rapidly with distance, supporting the view that pumping wells can be installed in a production grid to support a high-grade brine supply system for operations. We expect this to have positive implications for a resource update within a pending PEA. Mineralized brine occurs within highly fractured halite down to 35m, and within deeper sand and gravel. Brine chemistry is favourable with low Mg:Li ratio (typically <6:1 Mg:Li) and low sulphates. Figure 9: Latest Pozuelos Drill Results showcase potential for second high-grade depocentre with average grades of 750mg/L Li and positive pump test results Source: Company Reports The initial resource estimate is based on 13 delineation drill holes (1,789m) and two pump test wells. The first 30-day pump test averaged 591 ppm Li with a Mg:Li ratio of 4:1. The second test ran for 15-days and averaged 548 ppm Li with a Mg:Li ratio of 5:1. Both the upper highly fractured halite zone and lower, more compact halite zone both demonstrate sustainable extraction potential. Advanced exploration and pre-engineering work underway, including diamond drilling, brine sampling, porosity testing, seismic work, further pumping well tests and hydrogeological studies. The six-hole pump test is half complete and has already achieved 40 cubic metres per hour at grades of up to 731 ppm Li over 48 hours. This confirms high porosity and brine yields in clastic sediments, suggesting sustainable pumping rates with higher than resource grades. Longer-term, 7-day tests are planned to confirm aquifer yield and brine chemistry consistency. Results will help support the EIA and develop a hydrogeological model, with the next step in estimating mineral reserves for the PFS due in Q3/19. A deep drill hole testing the centre of the salar was drilled to m by early August, and three other deeper holes should help extend resources at depth, with A one-line km seismic survey completed to help define the base of the salar and confirm the limit of the resource area. New 40-person camp to be completed in August. Camp will be converted to administration offices during operations. The Pocitos project also lies only 15 km away, separated by a 300m high ridge. A halite and clastic salar, it has sharp faults on the graben edges. Grades are ppm consistently, and a 30-day pump test returned a respectable 35 cubic metres per hour. More work is required there to determine if it might also make a good satellite for Pozuelos. EIGHT CAPITAL Page 13

14 PASTOS GRANDES PROJECT Source: Company Reports, Company Management, Eight Capital LSC has a 100% interest in 2,683 Ha at Pastos Grandes, with 75% of its tenements located on the surface of the salar. The salar is shared with a competitor who hosts over 2 MM t LCE resources with a grade of 445 ppm Li over a similar sized portion of the salar as owned by LSC. This project is to be jointly developed with Pozuelos. Pastos Grandes is adjacent to Millennium's project of the same name. They essentially share the same deposit and various development or production synergies may come available over the life of the assets. While each project may be able to operate individually, we speculate that consolidation may help improve project economics for all parties. Delineation drilling, seismic surveys and three-hole pump tests are underway, which should culminate in a resource estimate in Q4/18. A five-hole drill hole program to test open mineralization below 480m depth is underway. The first three holes returned lithium intercepts of up to 569 ppm Li average over 430m, with peak grades achieving 637 ppm. Now, the first of two 500-metre holes is near completion - drill hole PG was at 541.4m in early August and had an average grade of 491 ppm Li from surface to m depth. Grades and brine chemistry are both very good, although not quite as good as Pozuelos. A km seismic survey was completed along six survey lines with results pending. EIGHT CAPITAL Page 14

15 RIO GRANDE PROJECT Source: Company Reports, Company Management, Eight Capital LSC holds a 100% interest in 26,865 Ha that covers 90% of salar surface. Management envisions 25,000 tpa LCE production at Rio Grande with potential for sodium sulphate and gypsum by-product credits. Past sodium sulphate producer with a camp and three former production wells (150m3/hour) are currently closed and under rehabilitation. A resource estimate totals 2.19 MM t LCE with a grade of 374 ppm Li down to only 100m. About 63% of the resource lies in the upper 50m, but grades have increased to 410 ppm Li in the lower portions, suggesting higher grades at depth. Prior work included surface sampling, 47 auger holes (4 and 20m depth), 12 diamond drill holes (averaging 71.4m depth) and pumping tests. While existing grades are modest, porosity and specific yield are very high and lithium grades appear to consistently improve at depth. Exceptional depth potential. A recently completed CS-AMT subsurface conductivity survey suggests that there is significant depth potential for lithium-bearing rocks in the salar. Five seismic lines (41.73 line km) were also completed (three lines oriented N-S, and two E-W), and these supported previous CS-AMT results. Two deep depressions of over 500m are interpreted, one of which is open at depth and to the north. Recent drilling has started to target these deep areas with great potential to expand resources. Results include: lithium grades ranging from 375 to 657 ppm Li over a 90m intercept; 384 to 535 ppm Li over 89m; 385 to 411 ppm over 86m; 356 to 385 ppm Li over 92m; and 327 to 433 ppm Li over 74. A resource estimate update is due by YE and PEA in Q1/19. EIGHT CAPITAL Page 15

16 SALINAS GRANDES PROJECT Source: Company Reports, Company Management, Eight Capital Salinas Grandes project consists of land holdings in both Salta and Jujuy provinces. In Salta, over 95% of the salar surface is controlled by LSC, while about 44% is owned within Jujuy. In total, LSC has a 100% interest in 60,947 Ha, and a 51% interest in 27,535 Ha under JV with Dajin Resources (DJI-TSXV, Not Rated). The project has excellent infrastructure, bisected by a main highway, with a gas line located to the north. LSC continues to consolidate what once was a fragmented surface ownership situation and has expanded its land holdings beyond the salar and onto surrounding alluvial fans. Salta portions and Jujuy portions are being run as separate projects due to different permitting regimes and community involvement requirements. Expectations are for a large, high-grade lithium deposit. Orocobre did complete and update a mineral resource estimate on the Salta portion of the property, but LSC is considering that study to be historical (non-compliant). A new compliant resource will be estimated by LSC Lithium in H2/18. Plans are to rehabilitate drill and trench sites remaining from historical Orocobre work by mid-year. Lithium mineralization occurs within a shallow brine in this mixed salar with halite above and clastics below. The basin floods every year. Grades are very good, particularly in the upper reaches of the salar. There is an impermeable clay layer at 13-14m deep, but potential for further high-grade brine below. A 2017 verification program of Orocobre surface pit sampling and auger hole assay results was successful. Brine chemistry shows low Mg:Li ratio and favourable K:Li ratios. High grades of up to 2,736 ppm Li with 80% of assays >500 ppm and 44% >1000 ppm Li. mg/l Li were reported from 53 shallow pits in Salta Province. Average grades were 795 ppm Li and 9,547 ppm K with concentrations elevated in the upper 10m to 15m of the salar. Surface sampling on the San Jose/Navidad JV (Jujuy section returned up to 1,353 ppm Li with 60% of the assays >500 ppm and 8% >1000 ppm. On the Jujuy side, 25 shallow pit assays had 60% return grades in excess of 500 ppm Li 8% above 1,000 ppm Li. Peak grades were 1,353 ppm Li, and grades averaged 591 ppm Li work program includes shallow drilling on the Salta side in Q3/18, and in Jujuy, gravity, VES and CS-ATM/TEM work to confirm historical gravity and AMT surveys and help define basin dimensions, structures and aquifers down to 400m depth. This will be followed by drilling in three locations and a resource estimate due in H2/18. Considerable attention is being paid to a social license. Local community consultation is running parallel to provincially sanctioned exploration. LSC is the dominant tenure holder on the salar. However, a large portion of the salar is controlled by local cooperatives that mine other minerals, including borates. Government in Jujuy promoting concept of a single lithium brine operator on the salar and LSC acquisitions have now covered about 44% of its surface area. EIGHT CAPITAL Page 16

17 JAMA PROJECT Source: Company Reports, Company Management, Eight Capital LSC has a 68% interest in 7,634 Ha to control 95% of the salar. This includes a 51% interest in JV over 5,000 Ha (LSC is the operator) and a 100% interest in 2,634 Ha. The project is located at the top of the Andes Mountains adjacent to the Chilean border, but it does have excellent infrastructure. It is on a major highway near a border crossing and lies on the national power grid. Early results suggest good lithium grades and favourable Mg:Li ratios (typically ~3:1) with good porosity. Results of VES and AMT geophysical exploration program show a deep conductive basin extending over a much greater area and to greater depths than originally expected, perhaps 300 to 400m deep. An 80 km seismic survey was recently completed to help better define the basin. Additional diamond drilling is planned with a resource estimate due in Q2/19. Jama ranks as a lower priority project for LSC at this time. PERMITTING AND COMMUNITY SUPPORT Five employees work on social/community engagement at an office in San Antonio de los Cobres. Assistance by LSC to the local hospital helps develop local suppliers, support infrastructure and training. Rules are clear in both Salta and Jujuy provinces. There is a 3% royalty in Jujuy province, and while JEMSE involvement isn t a requirement, an 8% stake in the Olaroz Mine owned by a competitor was negotiated. Addressing social license due in part to actions of previous owners has been a challenge at Salinas Grandes where LSC is actively working with ten communities in Salta province and four communities in Jujuy province. Ongoing consultation with the locals is starting to fix the issues. Salt coops have surface rights over parts of the salar and land use negotiations will be required. At Pozuelos-Pastos Grandes, LSC is supporting improvements in local education and waste disposal, and the training and hiring of local workers. At Rio Grande, LSC is supporting and developing local suppliers and working to enhance tourism in the area. LSC is assisting with the operation and maintenance of a weather station in addition to other community programs at Jama. EIGHT CAPITAL Page 17

18 RISKS Commodity price volatility. Rapidly changing lithium prices are a key risk. Prices hinge on a growing battery market and multiple new producers may potentially oversupply the market. We do anticipate Battery LCE demand to continue to trend upwards, even with anticipated supply from near-term producers. Prices will likely follow suit. Our lithium price assumptions may or may not be reflective of current or future prices. Financing Risks. We note that a rights offering is never an ideal scenario for a company to raise money, as it is typically priced at a significant discount to motivate existing shareholders to participate, thereby having a significant dilutive effect. We note that $5.2MM of the $9.2MM is backstopped, with standby commitments from Regent Mercantile Holdings Ltd. and BMC Global Ltd. guaranteeing $2.6MM each. However, in the event LSC is not successful at raising the remaining $3.9MM, the company could be forced to complete the rights offering at a further dilutive price, which we see as a significant risk to shareholders. Technical risks. This represents a broad spectrum of potential risks. Items include physical attributes such as brine quality, grades, impurities, metallurgical characteristics, resource quality and may impact on the flowsheet. Technical studies, estimation methods and assumptions may or may not be accurate. There may be a perceived risk by investors surrounding production of lithium carbonate from lithium brines rather than spodumene. Resource risk. Current lithium carbonate resources were sourced from drilling and seismic data of a lithium-bearing brine deposit. Several factors, such as porosity, permeability, specific yield and other hydrogeological factors that are often difficult to determine, have been used to estimate resources. There is no guarantee that they represent future resource estimates or exploration results. Economic risk. Economic studies such as Preliminary Economic Assessment, Prefeasibility Study or Feasibility Study have not yet been completed. Mine scheduling, production rates, mine life and development timing, initial and working capital, sustaining capital, and other operating expenditures must be considered in context with the current market and project resources. Valuation risk. Further dilutive or non-dilutive equity funding might be required to advance the various projects. Project valuation is fairly rudimentary at this stage. The EV/t LCE and EV/Ha of property evaluation methodologies are rather weak when compared to discounted cash flow methods available after completion of technical studies. Project and company valuation should improve as the various projects are advanced. Permitting risk. Environmental Baseline Studies must be completed and a final environmental permit issued for each project prior to construction. Geopolitical risk. President Marci had announced that a ARG$3 Peso for every US$1 export duty would be applied to "internationally exported goods" in September 2018, with agriculture products hit harder by ARG$4 for every US$1. Lithium junior developers in Argentina also were affected, the majority of which aren't planning to come online until after this export duty comes offline (using ORL's agreement as a barometer). Argentina s Federal Government is focused on improving the mining industry, and specifically lithium. Yet the Argentina Peso continued to plummet, with recent changes to Argentinean letters of credit on taxes immediately resulting in lower foreign investment and devaluation of the Argentina Peso. The government decided to keep pushing on reducing subsidies on energy tariffs, and this resulted in higher inflation (that was also impacted by the devaluation). Pressure is being placed on the current government to move away from heavy energy subsidies and a deficit budget. Opposition parties, including the previous Government, however, are fractured and don't present a decent alternative. Access and transport risk. Various projects are located at high elevation in the Andes Mountains of Argentina. Road access and other infrastructure is fairly good, although weather might play havoc with travel plans. The high altitude and low oxygen content can have an impact on people, chemistry, and operating internal combustion machinery. EIGHT CAPITAL Page 18