Alkane Resources — Investor Presentation 2017

May 11, 2017

High k Sourcing & the Supply Chain for Hafnium and Zirconium

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© 2017 Alkane Resources Ltd

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Collection of Big Data by Sensors & Actuators

“Australian Strategic Materials & Alkane can supply up to 19 critical elements”

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Connecting people and processes ubiquitously for Smart Systems and IoT
Gold
Silver
© 2017 Alkane Resources Ltd Tantalum
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Hafnium: The ideal memory material

First use of HfO 2

• DRAM Memory (by Samsung 90 nm 2003/2004): • Transition from HfO 2 to ZrO2 took place at 65 nm • High-k & Metal Gate (Intel; 45 nm, 2007): • HfO 2 is still in use

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Source: Techchet CA LLC

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Hafnium: The ideal memory material

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Source: ferroelectric-memory.com

Source: ferroelectric-memory.com

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What is hafnium?

• A shiny, silvery metal that resists corrosion and can be drawn into wires.

• Discovered in 1923 by George Charles de Hevesy and Dirk Coster

• The name is derived from the Latin name for Copenhagen, 'Hafnia'

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• In its natural state it is always bound up with zirconium compounds, from which it needs to be extracted using advanced metallurgical processing.

http://www.rsc.org/periodic-table/element/72/hafnium

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Properties of hafnium

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Melting point: 2233°C, 4051°F, 2506 K Boiling Point: 4600°C Density (g cm[−3] ) : 13.3 Key isotopes:[177] Hf,[178] Hf,[180] Hf Electron configuration: [Xe] 4f[14] 5d[2] 6s[2]

• High thermal neutron absorption cross section (~600 times zirconia)

• High stability & strength at high temperatures in metallic & compound form

• High dielectric constant

• Thermoelectric material

• High-index/low optical absorption properties

• The main source of hafnium is as a by-product from producing nuclear grade hafnium free zirconium metal

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Hafnium traded as

Hafnium metal in ‘crystal form’

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Hafnium Hafnium oxide tetrachloride

(HfCl4)

(HfO2)

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Source:

http://www.periodictable.com/I tems/072.5/index.html

Source: Alkane Dubbo Project

Source:

http://onyxmet.com/?route=pr oduct/product&product_id=795

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Zirconium Industry: hafnium source

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Zircon Demand by End Use
1% of metal
(2016 ~ 1.1 million tonnes)
Other
3% Foundry
12%
Ceramics
47% Chemicals
21%
•
China dominates downstream
Refractory
17%
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• China dominates downstream zirconium industry (Supply 75+%)

• • Zirconium metal 5-6,000 tpa

• Global market US$2-3B

• 2017 producer zircon inventories low

• Nuclear zirconium metal 3,500 tpa 60 tpa Hafnium

• Demand increasing/supply constrained

• CAGR anticipated at 3-5% pa for zirconium chemicals

Source: TCMS and Industry Sources

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Zr-Hf separation process

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Zr feed
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Zr:Hf
50:1
1,000t : 20t HfO2
17t Hf metal
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Source: http://www.areva.com/EN/operations-913/jarrie-production-of-zirconium-sponge.html

• Main source of hafnium is the Nuclear industry, where it must be removed from zirconium to produce hafnium free zirconium

• Main application is neutron-transparent fuel assemblies

• Most Hafnium supply is Nuclear industry dependent

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Current world supply

2016 Hafnium supply

Estimated 70 tonnes

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<1t
<1t
2t 2t
10t
35t
20t
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• By-product from zirconium metal purification

• Depends on nuclear industry

  • Prices escalating through demand by aerospace industries 2014 into 2015

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Areva
ATI Wah Chang
Revert - Recycled
Westinghouse/SNZ
Chepetsky
China
Ukraine
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• 3 western companies produce – hafnium (metal) from HfO2

• ATI (US)

• Westinghouse (US)

• • Areva (France)

• Total world supply fits in a 40 foot shipping container

Source: Roskill ASM Internal report (draft)

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Historical hafnium pricing

Hafnium Pricing (2009 – 2017)

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US$/kg
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2,250
2,000
1,750
1,500
1,250
1,000
750
500
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Time

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Chinese zirconium metal capacities

Company	Industrial Grade tpa	Nuclear Grade tpa	Nuclear Grade Expansion Plans by 2020 tpa
State Nuclear WEC	-	1,500	2,500
Guangdong Orient	600	150	1,000
Jinan H-Technology	0	0	400
Others	1,400	100	300
Total	2,000	1,750	4,200
Hafnium supply	0	30	70

• Chinese zirconium metal production ~1,500 tpa - 2014 (mostly industrial grade)

• China’s strategy is to be self-sufficient in nuclear power plants

• Maximise value adding across supply chain (same as for rare earths)

• China will require all hafnium for its own industry

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China’s Zirconium Industry Challenges

1. Zirconium chemicals

• Dealing with U+Th waste residues for ZOC production

  • ZOC production of 210,000 tpa requires 130,000 tpa zircon • Contains 65 tpa of U+Th

    • Where does it go now and in the future?

• Occupational health and safety issues for workers

• Environmental compliance is becoming increasingly difficult

• 1/3[rd] of Chinese ZOC industry shut down in April 2017

2. Fused zirconia

• Regulations require <500 ppm U+Th for USA or Japan • China and exports elsewhere?

• Chinese Fused zirconia production of 45,000 tpa requires 70,000 t of zircon with U+Th <300 ppm to obtain U+Th <500 ppm

• • Where will premium zircon come from? Source: TCMS and Industry Sources

Source: TCMS and Industry Sources

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China: Critical Supply Issues to 2025

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Source: European Chamber of Commerce, China

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China Manufacturing 2025: A warning

Ambitious goals: 10 advanced industries & technologies

• US$100Bs of support: subsidies, funds, and "other”

• Move away from low value, and polluting industries to manufacturing for high value markets

• Avoid the middle income trap: being squeezed between developed and developing countries

• Race to get rich before growing old: 400 million ageing baby boomers

• Targeting 70-80% domestic supply: large scale import substitution

Factory of the world (2015)

• 90%+of world's mobile phones

• 80%+ of world's airconditioners

• 80%+ of world's computers

• 60% of world's colour TV sets

• Half of the world's steel

• 50%+ of world's refrigerators

• 41% of world's ships

• 28% of world's automobiles

• 24% of world's power, &

• • 20% of global manufacturing

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China: Critical Supply Issues to 2025

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Source: European Chamber of Commerce, China

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China: Critical Supply Issues to 2025

1. China Manufacturing 2025 is targeting 70-80% domestic supply by 2005 for key high value markets

• Critical supply risk for rare earths as China supplies 90+ % of world supply

• High growth rates for magnets will reduce supply for export- China will need to be a net importer

• 2. China’s rare earth industry is US$3-4 billion, with a US$3040 billion environmental clean up legacy

• Rare earth prices will need to double in order to pay environment clean up costs over 10 years

• 3. With 40-50% of all rare earths coming from illegal mining: Western companies need to become accountable

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Current global demand

2016 Hafnium demand Estimated 67 tonnes

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2t
2t
4.7t
7.4t
40.2t
10.1t
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Major markets (global output by weight): Superalloy (60%) Plasma cutting tips (15%) Nuclear control rod (11%) Catalyst precursor (7%) Semiconductors (3%) Oxide for Optical (3%)

Source: Roskill ASM Internal Report (draft)

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Other potential hafnium demand

1. Reusable spacecraft

• Hafnium offers extreme heat and creep resistance

• SpaceX uses C103 -10% hafnium & 90% niobium metals

• Blue Origin, NASA, European Space Agency

• U.K. Space agency, Russia/China/India/other

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2. Thermoelectric generators

3. High temperature refractories

4. Hafnium carbide cutting tools

5. HfO 2 nanoparticles in radiation oncology

6. Radiative cooling

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Hafnium Demand outlook 2016 - 2026

Depends on existing producers + expanded Russia/China supply

• Not sufficient for base-case demand growth

• Will impact price or substitution endeavours

-Constrained or abundant: If supply is more abundant demand may emerge from new sectors

Projected Hafnium Demand tpa

Forecast demand increasing to 152tpa by 2026 (CAGR +5.3%)

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Source: Roskill ASM Internal Report (draft) CAGR min 2.4%pa low supply constrained to max 8.5%pa high supply unconstrained *5.3% base supply expanded

Alkane’s Dubbo Project the only supply option not tied to Nuclear industry and Chinese zirconium industry

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Dubbo Project

• Large polymetallic resource - zirconium, hafnium, niobium (tantalum), yttrium and rare earths

• Defined resource supports 80+ years at 1 m tpa

• Pilot Plant at ANSTO has operated since 2008

• All State & Federal environment approved

• Outotec Finnish technology & engineering solutions company to present a fixed price EPC

• Sumitomo Mitsui Banking Corporation financial advisors

• Modular design option (halves CAPEX costs and output) for lower risk

• Dubbo infrastructure – roads, rail, power, gas, light engineering, people (pop~45,000)

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Dubbo Project
Toongi
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DUBBO PROJECT IS CONSTRUCTION READY

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A new Hf supply – Dubbo Project

• Hafnium concentrate has been successfully produced on the hafnium pilot plant at ANSTO from the zirconium refining circuit

• Orebody contains ~450 ppm hafnium oxide

• 1 million tpa production rate x 450 ppm = 450 tpa

• 50% recovery: ~200 tpa of hafnium oxide (95% HfO2)

• Initial start up output of 50 tpa

• Potential to increase hafnium supply as

• Independent of zircon and nuclear industry

• Sustainable and traceable supply

• Urban mining to recycle end of life materials

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Separation Process

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Modular Design

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Construction 2017 - 2019 Estimated cost US$480M ---------------------

Construction 2022 - 2023

Estimated cost US$360M ---------------------

Estimated total Cost US$840M

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Product Output

Dubbo Project Process Plant Rare earth chemical concentrate Zirconium as ZBC (carbonate) & zirconia Hafnium as HfO2 concentrate Niobium as ferro-niobium 95% REO 99% ZrO2 HfO2 conc 65% Nb	6,664 tpa (REO units) 16,374 tpa (ZrO2 units) 50 tpa (Hf units) 1,967 tpa (Nb units)*
Total output approximately 25,200 tpa of all products
Tonnage based upon recoveries developed from mass balances		of
the demonstration pilot plant.

*** Start up output: 200tpa potential depending upon market demand**

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Rare Earth Output

	bo Project REE SX La / Ce Pr / Nd Sm / Eu / Gd Tb / Dy / Ho / Er / Tm / Yb / Lu La2O3 1,441 CeO2 2,367	tpa tpa	Toll treatment – off site Tb4O7 Dy2O3 237tpa 921tpa 112tpa 3tpa 107tpa 14tpa 122tpa Sm2O3 Eu2O3 Gd2O3 Pr6O11 Nd2O3	Toll treatment – off site Tb4O7 Dy2O3 237tpa 921tpa 112tpa 3tpa 107tpa 14tpa 122tpa Sm2O3 Eu2O3 Gd2O3 Pr6O11 Nd2O3
	Y(2/3N)		Ho2O3 Er2O3	22tpa 75tpa
			Tm2O3	6tpa
	Y2O31,031tpa		Yb2O3 Lu2O3	61tpa 3tpa

Dubbo Project REE SX

Tonnage based upon recoveries developed from mass balances of demonstration pilot plant, & preliminary solvent extraction stages on site at the DP. Total saleable RE products from site ~1,030 tpa and off site ~ 1,675 tpa.

© 2017 Alkane Resources Ltd

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Conclusions

Ideal Hafnium Supply Scenario? ✔ Independent of nuclear fuel industry ✔ Independent of Zircon ✔ Independent of Chinese zirconium industry ✔ Sustainable and traceable supply ✔ Urban mining to recycle end of life materials ✔ Complementary other technology metals ✔ Low sovereign risk

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Heading goes here

Alister MacDonald General Manager - Marketing amacdonald@alkane.com.au +61 459 887 299 www.alkane.com.au

© 2017 Alkane Resources Ltd

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Disclaimer

This presentation contains certain forward looking statements and forecasts, including possible or assumed reserves and resources, production levels and rates, costs, prices, future performance or potential growth of Alkane Resources Ltd, industry growth or other trend projections. Such statements are not a guarantee of future performance and involve unknown risks and uncertainties, as well as other factors which are beyond the control of Alkane Resources Ltd. Actual results and developments may differ materially from those expressed of implied by these forward looking statements depending on a variety of factors. Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities.

This document has been prepared in accordance with the requirements of Australian securities laws, which may differ from the requirements of United States and other country securities laws. Unless otherwise indicated, all ore reserve and mineral resource estimates included or incorporated by reference in this document have been, and will be, prepared in accordance with the JORC classification system of the Australasian Institute of Mining, and Metallurgy and Australian Institute of Geosciences.

Competent Person

Unless otherwise stated, the information in this presentation that relates to mineral exploration, mineral resources and ore reserves is based on information compiled by Mr D I Chalmers, FAusIMM, FAIG, (director of the Company) who has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ian Chalmers consents to the inclusion in the presentation of the matters based on his information in the form and context in which it appears.

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Dubbo Project Resources & Reserves

Dubbo Project – Mineral Resources

Toongi	Tonnage	ZrO2	HfO2	**Nb2O5 **	**Ta2O5 **	Y2O3	REO
Deposit	(Mt)	(%)	(%)	(%)	(%)	(%)	(%)
Measured	35.70	1.96	0.04	0.46	0.03	0.14	0.75
Inferred	37.50	1.96	0.04	0.46	0.03	0.14	0.75
Total	73.20	1.96	0.04	0.46	0.03	0.14	0.75

These Mineral Resources are based upon information compiled by Mr Terry Ransted MAusIMM (Alkane Chief Geologist) who is a competent person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology were given in the 2004 Annual Report.

Dubbo Project – Ore Reserves

Toongi	Tonnage	ZrO2	HfO2	Nb2O5	Ta2O5	Y2O3	REO
Deposit	(Mt)	(%)	(%)	(%)	(%)	(%)	(%)
Proved	8.07	1.91	0.04	0.46	0.03	0.14	0.75
Probable	27.86	1.93	0.04	0.46	0.03	0.14	0.74
Total	35.93	1.93	0.04	0.46	0.03	0.14	0.74

These Ore Reserves are based upon information compiled by Mr Terry Ransted MAusIMM (Alkane Chief Geologist) who is a competent person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The reserves were calculated at a1.5% combined ZrO2+Nb2O5+Y2O3+REO cut off using costs and revenues defined in the notes in ASX Announcement of 16 November 2011. Terry Ransted consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Note: ASX announcements 16 November 2011, 11 April 2013, 30 October 2013 and 27 August 2015 - the Company confirms that all material assumptions and technical parameters underpinning the estimated Mineral Resources and Ore Reserves, and production targets and the forecast financial information as disclosed continue to apply and have not materially changed.

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