ELi Battery Grade Lithium Hydroxide Process and Mt Marion Spodumene

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1 ELi Battery Grade Lithium Hydroxide Process and Mt Marion Spodumene Integrated Lithium Supply Chain Chris Reed Managing Director, Neometals 1

2 Disclaimer Summary information: This document has been prepared by Reed Resources Ltd ( Reed or the Company ) to provide summary information about the Company and its associated entities and their activities current as at the date of this document. The information contained in this document is of general background and does not purport to be complete. It should be read in conjunction with Reed s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at Forward-looking information: This document includes certain statements, opinions, projections, forecasts and other forwardlooking information which, while considered reasonable by Reed, are inherently subject to significant uncertainties and contingencies. Many known and unknown factors could cause actual events or results to differ materially from estimated or anticipated events or results included in this document. Recipients of this document are cautioned that forward-looking statements are not guarantees of future performance they must make their own independent investigations, consideration and evaluation of the opportunity to invest in the Company. By accepting this document, recipients agree that if they proceed further with their investigations, consideration or evaluation of the opportunity to invest in the Company, they will make and rely solely upon their own investigations and enquiries and will not in any way rely upon this document. Any statements, opinions, projections, forecasts and other forward-looking information contained in this document do not constitute any commitments, representations or warranties by Reed and its associated entities, directors, agents and employees, including any undertaking to update any such information. Except as required by law, and only to the extent so required, directors, agents and employees of Reed shall in no way be liable to any person or body for any loss, claim, demand, damages, costs or expenses of whatsoever nature arising in any way out of, or in connection with, the information contained in this document. Financial data: All figures in this document are in Australian dollars (AUD) unless stated otherwise. Not financial product advice: This document is for information purposes only and is not financial product or investment advice, nor a recommendation to acquire securities in Reed. It has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making any investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction. Investment risk: An investment in securities in Reed is subject to investment and other known and unknown risks, some of which are beyond the control of Reed. The Company does not guarantee any particular rate of return or the performance of Reed. Investors should have regard to the risk factors outlined in this document. 2

3 The RIM and RAM Value Chain Low Cost Mine and ELi Process, Secure Supply Chain, Strong partner 3

4 Neometals Li Development Strategy NMT MIN NMT MIN + = RIM Mt Marion Produce Lithium Mineral Concentrates RAM Malaysia Value add into Lithium Hydroxide(LiOH) Integrated, low cost lithium supply chain 4

5 Neometals Strong Partner Mineral Resources Limited (ASX: MIN) ASX100 Listed Company, +A$2 Billion, Australia s largest contract processor of minerals Fund Mt Marion sunk costs to Final Investment Decision, then construct and operate project from mine-to-port, with no upfront capital cost through its subsidiary PMI 5

6 Value Chain Secure supply chain Stable, experienced Mt Marion operating partner High Capital Efficiency No up-front capital funding needed to develop Mt Marion Capex differential between the ELi and conventional hydroxide plants Low Opex Long-life, competitive cost of concentrates Cash operating cost advantage in hydroxide eliminates the conventional carbonate production step Decoupled from Reagent Supply Issues No bulk lime or soda ash consumption reduces reagent logistics Neutralises logistic complications associated with plant location Insulated from reagent cost and supply/demand issues De-risked process - proven chlor-alkali technology 6

7 Why ELi? Traditional production techniques are the indirect and higher cost route to battery grade Lithium Hydroxide Demand Electric Vehicles will provide large, sustained growth in lithium demand Supply growth needed in the high-spec end of hydroxide to supply third generation battery compounds Cost Battery and Motor Industry needs will influence the way the lithium industry develops in the future Car maker cost reduction objectives conflict with a rising Li price Lithium producers have to re-develop the production cost model Security Supply chain organisation and security is essential for the big vehicle and battery makers Quality, consistency and reliability are essential attributes in suppliers 7

8 Commercial Objective of ELi Fewer process steps, lower cost and increased profitability 8 Ref: Roskill and Rockwood Lithium

9 Why is LiOH Demand Increasing? The introduction of the 2 nd gen EV 1 st gen cathode, Use carbonate Better performance, lower cost 3 rd gen cathode, Use hydroxide 3 rd gen batteries (NMC, NCA, LMO, LFP) have different chemistry to 1 st and 2 nd gen Cathode is made with different production processes to 1 st gen Hydroxide is the compatible raw material Lower cost, Higher charging/discharging rate than 1 st gen 1 st gen cathode Can be made using either hydroxide or carbonate Limited availability of suitable hydroxide ensured the carbonatecalcining production route pre-dominated 9 Ref: BCG, management research

10 Low Cost Strategy Developing the Competitive Edge in Lithium Hydroxide for battery materials 10

11 Flowsheet process Operating cost advantage Competitors LiOH via carbonate Input Price US$5,000/t x 1 RAM ELi direct to LiOH, lower cost Input Price US$400/t x 7.5 Lithium Brine Lithium Carbonate Technical Grade Lithium Carbonate Battery Grade Final Product LiOH Battery Grade Spodumene Digestion Purification Electrolysis Final Product Battery Grade LiOH Cost US$5,700/t Cost US$4,057/t 11 Sources: SQM (Brine Flowsheet) and Reed internal analysis including 2014 Pre-feasibility Study and updated for current market prices. All prices are FOB Basis.

12 ELi Capital Efficiency 12 Sources: FMC Corporate Presentation 2011, Reed Pre-feasibility Study 2014, Reed management analysis

13 ELi Process Low Reagent Use Process RAM Brine Hard Rock Bulk Lime No Yes Yes Bulk Soda Ash Minimal Yes Yes Power Yes Yes Yes Gas/oil Yes Yes Yes Acid Recycled Low Yes Decouples production from bulk reagent availability, market disturbances and transport costs 13

14 Patented ELi LiOH Process High Capex Efficiency, Low Opex, High Grade Product Remove Fe, Al, Si Remove Ca, Mg Remove trace impurities to <5ppm for Na & K Cell Efficiency >80% Lithium Hydroxide Monohydrate 99.99% Produce Lithium Chloride Solution Primary Impurity Removal Secondary impurity Removal Ion Exchange Membrane Electrolysis Lithium Hydroxide Solution Lithium Carbonate 99.99% 14

15 De-risking through adaptation of a Mature Technology Chlor Alkali Chlor Alkali Conventional process produces NaOH Our new process produces LiOH Na OH LiOH H 2 O + POWER H 2 Li HCl POWER H 2 Na Cl Cl 2 LiCl Cl 2 Na Cl Step 1: Proof of concept Top quality % LiOH Very efficient - 90% recovery Semi-pilot scale testing in USA 15

16 Lithium Chlor-alkali Cell Our new process produces LiOH by adapting a mature process technology 16

17 Mt Marion Mine RIM Integrated Raw Material Supply 17

18 Mt Marion Mine Development Build, commission and operate Mt Marion Mine 1-2 years in advance of LiOH plant Stable on-spec production ramped-up to capacity avoids delays to LiOH plant supply Strong and experienced operating partner in place Stable RIM cash flow and profit will ensure secure supply RAM LiOH plant Life of mine Offtake Agreements support mine financing, reduces market disturbance Secure financial base to support further resource development activities at Mt Marion and extend mine life 18

19 Mt Marion New Tenure Added Tenements Tailings Storage Potential longer life 19

20 Strong Transport Infrastructure Mining Hub Road/Rail HV Power Port Access 20

21 Flythrough Mt Marion 21

22 Implementation RIM Mt Marion and RAM Malaysia 22

23 Completed milestones Proof Of Concept Semi Pilot Plant Testwork Complete Semi Pilot Plant Testwork Extended Testwork Feasibility Study Operating & Capital Costs Refined, Offtake Prove technical feasibility, product quality Discussions with LiOH JV Partner Nov 2013 March 2014 June Q2 14 Sept Q3 14 Q1,

24 Focus Risk Mitigation, Financial Stability and Secure Supply Chain, Competitive Supply to Battery Industry 24

25 Thank you 25