ALTECH BATTERIES LTD — Capital/Financing Update 2014

Jun 4, 2014

MEDIA/ASX RELEASE

5 JUNE 2014

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SIGNIFICANT COST SAVINGS IDENTIFIED BY HIGH PURITY ALUMINA (HPA) INTEGRATED PLANT STUDY

HIGHLIGHTS

• Integrated plant study (Study) indicates significant cost savings for AMMG’s high purity alumina (HPA) processing pilot plant (Plant);

• The Study’s capex/opex findings supports the commercial viability of AMMG’s proposed Plant by determining:

• Plant capex under $10m – based on a 2t/day HPA Plant;

• Competitive opex estimate through introduction of several efficiencies;

• Mass and energy balance for flowsheet optimisation.

• Based on the Study’s positive findings, AMMG will now move towards

finalising a competitive funding arrangement for its proposed Plant.

Australia Minerals and Mining Group Limited ( ASX: AKA ) (AMMG/the Company) is pleased to announce the successful completion of an integrated plant study ( Study ), which was based on the kaolin to high purity alumina ( HPA ) process flowsheet specifically researched and developed by AMMG. The Study was conducted by AMMG’s specialist engineering consultants ( Consultants ).

The Study’s findings indicate significant cost savings to capital ( Capex ) and operating ( Opex ) expenditure for AMMG’s proposed HPA processing pilot plant ( Plant ).

The objective of the Study was to further develop major operating parameters within AMMG’s process flowsheet by incorporating several efficiencies. The Study was conducted in conjunction with an optimisation test work program ( Test Work ), which was commenced by the Consultants in February 2014 and is nearing completion.

Using a base case of 2t/day (or 700t/year), the Plant’s Capex is estimated at under $10m , which is inclusive of a 30% contingency.

The Study’s Capex/Opex estimations for the Plant are significantly less than the figures determined by the previous pilot plant study in December 2013.

In the context of negotiating potential off-take agreements, the Study’s actual Opex figure will remain commercial-in-confidence at this stage, although it can be approximated at substantially less than $20/kg .

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Based on major industry producers’ reported HPA prices of $54/kg* up to $300/kg (depending on purity and other specifications) the Study’s estimated Opex would enable AMMG to deliver a potentially competitively priced product .

AMMG managing director Ric Dawson said, “The positive findings of the Study are highly encouraging as we move forward advancing funding arrangements for the development of the Plant. We are satisfied the Study’s findings are in line with our expectations and understanding of our process and today’s HPA market”, he concluded.

With the appointment of the Consultants, AMMG’s Study was undertaken:

1. To explicitly follow the specific process flowsheet researched and developed by AMMG and deviate only where efficiencies were identified within the current Test Work;

2. To provide Capex/Opex for AMMG’s Plant based on the process flowsheet optimisation,

3. including competitive vendor pricing for processing equipment; and

4. To provide a complete steady-state mass and energy balance for flowsheet optimisation, including outputs to size plant equipment, process flow diagrams and process design criteria.

The highly positive Capex/Opex figures established during the Study and the current Test Work were a result of incorporating several efficiencies into AMMG’s process flowsheet, with the following benefits identified:

• Lower energy costs by amending specific process stages and/or alternative equipment selection;

• Lower potential environmental factors by recycling, minimising waste and alternative equipment selection;

• Removal of and/or amendments to non-essential stages of the flowsheet;

• Introduction of innovative equipment solutions to increase efficiencies and lower costs;

• Amendments to process flowsheet to maximise the extraction of impurities and/or minimise reagent consumption ;

• Lower equipment costs by sourcing qualified overseas suppliers rather than locally or custom-designed;

• Lower operating costs by sourcing alternate reagent suppliers, amending types of reagents, or recycling to reduce reagent consumption; and

• Options to adapt various stages in the process flowsheet to further improve efficiencies (require consideration by AMMG).

*QYResearch 2014 average of 8 major producers

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Figure 1. Leaching stage conducted on a “continuous basis” as part of the current Test Work

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Update on Optimisation Test Work Program

AMMG engaged the Consultants in January 2014 (click here to view the announcement) to conduct the Test Work on the process flowsheet researched and developed by the Company and to subsequently produce a bulk trade sample of 99.99% (4N) HPA product.

Due to the significant efficiencies determined during the early stages of the Test Work, the Consultants were appointed to simultaneously conduct the Study to encapsulate the positive Capex/Opex estimates as detailed above.

The scope of work for the Test Work involved batch tests to further develop major operating parameters by analysing specific conditions of AMMG’s process flowsheet. This involved identifying potential areas of economic optimisation to then incorporate into the process flowsheet developed by AMMG.

During the Test Work the leaching phase of AMMG’s process was conducted on a “ continuous basis ”, which is highly encouraging as it represents an advance towards the full scale Plant. In other words, the data from the continuous leaching will be applicable to the Company’s proposed Plant.

Upon the completion of the final stages of the Test Work, which is anticipated by the end of the June quarter, AMMG and its Consultants will embark on a larger bulk program producing a trade sample of HPA with 99.99% (4N) purity for international dispatch.

Furthermore, a potential end user-specific program, involving final stage milling or grinding to specific client specifications, is currently being considered.

Off-take Negotiations & Funding

AMMG has received several requests for its HPA product from some major end-users and potential off-take customers from around the world, as well as some of the major HPA producers who have expressed an interest in potential Plant funding. The Company looks forward to providing its samples to those interested end-users and believes the sample may further support its off-take negotiations.

AMMG is highly encouraged by the favourable Capex/Opex figures indicated by the Study. Following the completion and verification of the current Test Work, the Company will move forward towards finalising a competitive funding arrangement for its proposed Plant.

In parallel to progressing fundraising activities in Australia, AMMG further developed a funding strategy for the Canadian capital and investment markets after conducting a successful Canadian investor road show earlier in 2014, where there is a heightened and increased market awareness of the HPA space.

Specialist Engineering Consultants

AMMG’s Consultants were engaged in early January this year to conduct the Test Work and subsequently to conduct the Study. The Consultants are highly qualified process engineers with substantial experience in acid mineral processing; process plant implementation and optimisation; project management and financial economic analysis.

The Consultants’ Perth-based processing facility is well-equipped and has proven highly capable of facilitating AMMG’s objectives.

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Project Background

The Company’s 100% owned South West HPA Project is made up of four separate project areas within the south-west of Western Australia. The project areas are strategically located within relatively close proximity to existing infrastructure such as major road, rail, electricity and water.

The Meckering project contains granted tenement E70/3923, which is located approximately 130kms from Perth, the capital city of Western Australia. AMMG’s tenement is bisected by the Great Eastern Highway and the Trans-Australia standard gauge railway; the Western Power’s SWIS transmission line and Goldfields water pipeline are within close proximity.

AMMG researched and developed its innovative acid-based processing technology in collaboration with consulting processing chemists TSW Analytical Pty Ltd. The processing technology is an energy efficient process that uses low temperatures at atmospheric pressures with the key reagents being recyclable .

The raw kaolin (or “aluminous clay”) material is used as the feedstock for AMMG’s HPA processing technology. The kaolin is a unique feedstock as it contains extremely low levels of impurities such as iron and titanium, which provides significant advantages in AMMG’s process. The Company’s Western Australian-based kaolin deposits are hosted by the Yilgarn Craton, which is one of the oldest weathered cratons on earth. The ancient weathering has left the kaolin as a primary or in-situ resource; it is whitish in colour and extends from the surface to a reported depth of 42 metres.

AMMG previously announced the successful production of 99.99% (4N) HPA (please click here to view the announcement dated 21 May 2013) during the early stage development of its processing technology. The Company lodged three patent applications in February 2013 to protect the intellectual property of its processing technology

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Figure 2. AMMG’s South West HPA Project location

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High Purity Alumina (HPA) Market

According to industry standards, HPA refers to alumina that has a purity level of more than 99.9% (3N). It is a highly specialised product that is used in a number of applications such as highperformance electronics; tablet, smartphone and computer screen backlighting; LED’s; and hybrid cars.

HPA is also used as a key component in the rapidly growing market of artificial sapphire crystal – a hard, transparent material made by crystallising 4N HPA. Artificial sapphires are mainly used to produce substrates (semiconductors) for consumer electronic devices, such as LEDs. The LED market utilises up to 60% of HPA , which is reportedly driving demand; an anticipated increase from 15,000tpa (2013) to 25,000tpa by 2015 has been reported.

Along with LEDs, artificial sapphire is a major component in today’s superior ‘smart’ electronics, boasting scratch-resistant screens and unbreakable hardware; applications include touch-screen displays for defence, aerospace and medical devices; smartphone components; and other emerging consumer technologies.

Extreme electrical insulation, high bending strength and corrosion resistance are some of the properties made possible from extraordinarily pure aluminium oxide.

These reported ‘miracle’ qualities are being increasingly depended upon by electronic manufacturers to enhance existing products while making new ones possible.

A leading producer of high-end electronic handheld devices has reportedly invested over half a billion dollars for artificial sapphire production.

Demand for the HPA-based sapphire crystal end product is reported (Direct Search) to at least double over the next several years, reportedly worth $35 billion by 2018.

ENDS

For more information on Australia Minerals and Mining Group please see below or contact:

	Ric Dawson		Tony Dawe
	Managing Director		PPR
	T: +61 8 9389 5557		T : +61 8 9388 0944
	ric@ammg.com.au		tony.dawe@ppr.com.au

About AMMG

AMMG was established for the purpose of securing exploration ground over areas that have typically been subject to historical exploration and where significant geological data was available and/or the land was considered sufficiently prospective. Areas with existing or potential access to infrastructure were also targeted.

To date, the Company has identified project areas located in Western Australia and Queensland, which the directors believe may have the potential for the realisation of economic resources of these commodities currently targeted, being - alumina, kaolin (aluminous clay), iron ore, coal, mineral sands, salt, gypsum and gold.

The Company itself or under joint venture now has 12 granted tenements and 20 applications for tenements covering approximately 6,450km[2] over the project areas. AMMG is pursuing a diversification strategy at this stage of the Company’s development in order to provide additional development options and potential production opportunities.

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