ABX GROUP LIMITED — Capital/Financing Update 2020

May 26, 2020

ASX ANNOUNCEMENT 27 May 2020

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AUSTRALIAN BAUXITE LIMITED

ASX: ABX

AlF3 for Aluminium smelters & Lithium ion batteries. Corethane: as clean as gas

5[th] Milestone Achieved: Alcore Produces Commercial-Grade AlF3

• Australian Bauxite Limited (ABx)’s 89%-owned subsidiary, ALCORE Limited (Alcore) is conducting advanced laboratory production of aluminium fluoride (AlF3) from aluminium smelters’ by-product waste materials and producing AlF3 from ABx’s clean bauxite.

• Alcore has received chemical analyses from CSIRO Laboratory, Melbourne which confirm that recent AlF3 produced by Alcore achieved commercial chemical grades. See Table 1 next page.

• This commercial-grade AlF3 was made from 30% dross waste and 70% gibbsite mineral. A new pretreatment method had been applied to both compounds that appears to work well.

• AlF3 is a strategically important mineral product because it is a key ingredient in the smelting of aluminium metal and reduces the electrical power consumption per tonne of aluminium. It is also used in the new-generation rechargeable lithium ion battery industry.

• Alcore is planning to be the first domestic producer of AlF3 so as to diversify supply for Australasian smelters and to export to other smelters world-wide.

• Alcore’s method is the world’s first production of ALF3 from the recycling of smelter waste and lowgrade bauxite and uses the aluminium-related parts of the CORE Technology (patent pending).

• Alcore has now proven it can:

• Make aluminium fluoride (AlF3) of acceptable saleable grade from aluminium oxide minerals in bauxite and other aluminium-rich material that is amenable to treatment by Alcore.

• Make AlF3 in a crystalline form that is needed for use in aluminium smelting

• Remove deleterious elements by adjusting the reagent mix and processing conditions

• Manufacture saleable Corethane gas-substitute by reducing ash content in coal from 28% to 0.3%, thus making an ideal, ultra-clean substitute for coke and ideal for industrial heating as a substitute for gas and diesel.

• Milestones: Alcore’s task list includes the following:

• Determine the optimum reaction conditions for the extraction of iron oxides. DONE. This has been achieved chemically and is now focussed on filtering the iron particles from solutions.

• Prove that Alcore can make commercial-grade AlF3 which involves both chemical and physical parameters. This is well advanced now that satisfactory chemical grades are being achieved. The task is to make the crystals at the right size. UNDERWAY

• Make commercial-grade AlF3 from economically attractive waste materials. DONE

• Create commercial-grade AlF3 for testing by prospective AlF3 customers. IN PROGRESS

• Make high purity AlF3 from gibbsite (Al2O3. 3H2O, the main ore mineral in ABx’s bauxite) that can be used in next generation batteries. This R&D work is UNDERWAY

• Making low-cost acid reagents from aluminium smelter by-products. IN PROGRESS

• Reduce ash content in Corethane to below 0.5%. DONE

• Finalise the process flow diagram and commence the engineering design work. UNDERWAY

AUSTRALIAN BAUXITE LIMITED www.australianbauxite.com.au e: corporate@australianbauxite.com.au

Level 2 131 Macquarie St Sydney NSW 2000 Australia P: +61 2 9251 7177 F: +61 2 9251 7500

ABN 14 139 494 885 ASX : ABX

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Table 1:

Chemical analyses of commercial-grade AlF3 and recent Alcore AlF3 product analysed by CSIRO Melbourne lab

Element	Al % F % Aluminium Fluorine	Fe2O3 % SiO2 % Na2O % CaO % P2O5 % MgO % Iron Silica Sodium Calcium Phosphate Magnesia
Commercial grade AlF3	AlF3> 90%	0.05% 0.28% 0.60% 0.09% 0.035% 0.003%
Alcore AlF3product 12May'20 analysed byCSIRO	91%	0.06% 0.29% 0.33% 0.05% 0.006% 0.035%

Production of high quality Alcore AlF3 is being repeated at the Alcore Research Centre this week.

Figure 1: Stages in the value-adding production of the above AlF3 sample sent to CSIRO Lab for analysis

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Raw dross ( -$0 )

Filtered solution AlF3 formed by dehydration Calcined AlF3 (US$1200/t)

COMMERCIAL ISSUES

• AlF3 is an essential electrolyte ingredient in aluminium smelters. Global demand for AlF3 increases as aluminium smelter production increases and the use of AlF3 in lithium-ion batteries increases.

• Market prices for AlF3 are mainly determined by the Chinese export price set on the basis of Free-onBoard in Chinese Ports which is a published daily and monthly by Chinese Customs, like bauxite, alumina and aluminium prices are published.

• Market prices are still around the long-term average price of US$1,200 per tonne. See Figure 2.

• Alcore plans to be the first producer of AlF3 in the southern hemisphere, starting at the production rate of approximately 10,000 tonnes of AlF3 per year which is a small percentage of the 1.5 million tonne global market for AlF3.

• Alcore’s business plan is to increase production steadily by commissioning 5 of these 10,000 tonne production modules at an industrial site in Bell Bay, northern Tasmania in an industrial precinct that currently has an aluminium smelter, a manganese smelter and an aluminium powder plant all powered by hydro-power. Alcore’s recycling strategy would improve the environmental credentials of Bell Bay Aluminium.

• A domestic producer of AlF3 should increase security of supply for Aluminium smelters in Australasia and elsewhere in the southern hemisphere.

• In the last 12 months, Australasian aluminium smelters imported more than 30,000 tonnes of AlF3 from China at an average price FOB China of US$1,370 per tonne.

• Co-products from Alcore’s production plant include Corethane gas-substitute, which is pure hydrocarbon powder, refined from low-value coals that can be used as a gas or diesel substitute (for fuel security in emergencies) and has emissions-reducing industrial applications. It is ideally suited for use as a sulphur-free bunker fuel for shipping under new strict emissions laws.

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ASX: ABX

Governments

Discussions continue with governments, agencies and with major companies in the aluminium industry. Alcore considers AlF3 to be a strategically important mineral product.

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Figure 2: Chinese AlF3 Export Prices and Tonnages.

Data from Chinese Customs

Comment: ABx CEO, Ian Levy commented: “The Alcore Research Centre is a leading-edge laboratory that has enhanced the technology significantly. We have developed a low-risk plan for the first production module at Bell Bay, northern Tasmania. It is the lowest capital cost strategy and simplest design we have. It is planned to present a feasibility study to investors as soon as possible.

We call this strategy “Refine and Recycle”. See Figure 3 below.

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Al-rich F-rich
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Figure 3 Summary of the Alcore “Refine & Recycle” Business Strategy

This process has the strong potential to be the simplest and lowest cost method to make AlF3.

It provides an economically attractive way to utilise the aluminium-rich and fluoride-rich by-products from many aluminium smelters worldwide.

Authorised for release by Ian Levy, CEO

For further information please contact:

Ian Levy, CEO Australian Bauxite Limited ALCORE Limited Mobile: +61 (0) 407 189 122

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Figure 4

The $2.5 million Alcore Laboratory built inside the Alcore Research Centre

The Alcore Lab is a climate-controlled laboratory constructed inside the Alcore Research Centre for the refining of alumina-rich waste materials and bauxite to produce test samples of AlF3 and co-products.

It will later become a research centre for testing CORE technologies on many ores and materials

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Figure 5: Preparation & Analytical Lab, XRF & furnaces Figure 6: Alcore test lab, fume cabinets with hi-tech scrubbers,

showers, microscopes & Draegar air monitor (wall)

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Figure 7: Exterior support systems a) Air purification and atmosphere control

• b) Liquids processing &

• neutralisation plant

• c) Duplicated secure LPG gas supply

• d) Gas-fired Standby-Backup Generator

Figure 8

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Fig. 8a Before Alcore processing Fig. 8b After Alcore processing
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Microscope images showing aluminium smelter by-product in raw form & processed form, refined into an AlF3 product

The reaction took less than 5 minutes to completion, demonstrating the power of the “brew” reagents used by Alcore

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