ALTECH BATTERIES LTD — Interim / Quarterly Report 2015

Apr 29, 2015

Altech Chemicals Limited

QUARTERLY REPORT March 2015

Quarterly Report March 2015

Malaysian subsidiary incorporated for HPA project

During the quarter Altech incorporated a wholly-owned Malaysian subsidiary company. 'Altech Chemicals Sdn Bhd' was formally incorporated on 6 January, 2015. The move followed the Company's strategic decision to select Johor Bahru, Malaysia, as the preferred location for its proposed HPA processing plant.

The incorporation of Altech's Malaysian subsidiary represented a significant first step in the Company establishing its presence in Malaysia. It will enable the Company to advance the required documentation associated with the construction and operation of its proposed HPA processing plant, and will allow the Company to make submissions to the Malaysian Investment Development Authority (MIDA) for various investment and tax incentives that may be available to the HPA project.

Shipping distance from Perth WA to Johor Bahru, Malaysia (approximate)

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Altech appoints Seatram as its transport and logistics services provider

During the quarter Altech executed a Memorandum of Understanding (MOU) to appoint Sea Transport Management (W.A.) (Seatram) as the exclusive transport and logistic services provider for the Company's HPA operation.

Seatram is a leading international freight forwarder and logistics provider based in Perth, Western Australia, and under the terms of the MOU Seatram will provide the end-to-end transport and logistics for Altech's proposed HPA processing plant to be located in Johor Bahru, Malaysia. Seatram will initially design and then provide both the transportation and logistics associated with moving approximately 18,565tpa of beneficiated aluminous clay feedstock from the Company's Meckering deposit in Western Australia to the HPA plant in Malaysia. In addition, Seatram will provide the international transportation and logistics for the distribution of the finished HPA product from Johor Bahru to a global customer-base.

Altech's aluminous clay will be shipped in "bulka bags" as per the proposed design

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Quarterly Report March 2015

Altech produces competitive high purity alumina (HPA) results

As part of its Bankable Feasibility Study (BFS) for its HPA project, Altech successfully completed a further series of laboratory pilot plant test work programs (test work), which simulated the proposed HPA processing plant.

The test work involved bulk wet processing of the Meckering aluminous clay, calcination, acid leaching, crystallisation of aluminium chloride, two stages of purification, roasting for acid recovery, and final calcination to produce HPA.

HPA samples produced from the test work and competitor samples were tested by TSW Analytical. The results confirmed the quality of Altech's HPA product as better when compared to other HPA samples obtained from leading competitors (refer to the graph to the right).

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The Company has incorporated the successful test work results into the optimisation of its process design. The optimisation areas include the removal of ion exchange units at the purification stages, replacement of evaporative crystallisation and counter current washing of aluminium chloride crystals across the three stages of crystallisation. Removing these units from the process flowsheet has indicated a significant reduction of capital costs as well as further simplification of the HPA plant.

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Altech's HPA flowsheet

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Quarterly Report March 2015

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Altech secures partner to fund bulk kaolin study

During the quarter the Company signed a Memorandum of Understanding (MOU) with Dana Shipping and Trading S.A. (Dana) to fund a scoping study to assess the commercial viability of mining and processing bulk kaolin from the Company's Meckering kaolin (or aluminous clay) deposit. Bulk kaolin is predominantly used in the ceramics, paper, rubber and paint industries. The cost of the study is estimated at around $100,000.

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In return for conducting the study, Altech granted Dana until 30 September 2015 to which it can exercise the exclusive right to mine up to 10Mt of kaolin from the Company's Meckering deposit (First Option). On exercise of the option, Dana will be required to subscribe to $1,000,000 of Altech fully paid ordinary shares, to be priced at a 10% premium to the volume weighted average price of the shares as traded on the ASX in the 120 calendar days prior to the option exercise date, and pay the Company a 2% gross sales royalty on all future bulk kaolin sales.

In the event Dana exercises its First Option, Altech will grant Dana a second option (Second Option) to mine an additional 10Mt of kaolin from the Meckering deposit. The Second Option is exercisable within 3 months from the date of the first sale of commercial bulk kaolin from the Meckering deposit, and if the Second Option is exercised Dana must subscribe to an additional $1,000,000 of Altech fully paid ordinary shares, to be priced at a 10% premium to the volume weighted average price of the shares as traded on the ASX in the 120 calendar days prior to the option exercise date, and continue to pay a 2% gross sales royalty on all bulk kaolin sales.

Dana is an Athens-based global shipping company with a focus on dry cargo operations, working with a diversified suite of dry bulk commodities such as coal, iron ore, grains and minor bulks across all dry bulk vessel sizes.

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Quarterly Report March 2015

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Altech appoints M+W as EPCM partner

During the quarter Altech appointed M+W Group as its Engineering, Procurement, Construction and Management (EPCM) partner, following its decision to select Johor Bahru (Malaysia) as the preferred location for its HPA processing plant. M+W Group brings a vast knowledge of the Malaysian construction environment, conditions, regulations, and design requirements; Altech's BFS team will merge with M+W Group to facilitate more informed design decisions during Altech's BFS. The Company anticipates that this strategy will ease the transition into the final detailed design, long lead item procurement and the commencement of construction following the completion of the BFS.

Altech appoints Tialoc as its composite supply partner

Altech appointed Tialoc Group (formerly known as Atea Environmental Group) as its partner for the supply of dual-laminate anti-corrosive composite plant and equipment for the its proposed HPA processing plant. Dual-laminate composite materials are highly specialised fluoro-plastics that can withstand hydrochloric acid duty at elevated temperature. The plant and equipment to be supplied by Tialoc will include specially fabricated vessels, tanks, process equipment and piping/fittings for heavy-duty applications in the acid leaching, crystallisation and purification areas of Altech's HPA plant.

Tialoc is a leader in thermoplastics and fibre re-enforced plastic (FRP) materials in Asia. The group's Malaysian production facility, established in 2004, is located near Kulim High-Tech Park, close to George Town, Penang, Malaysia.

Recent Tialoc project - mineral processing plant in Malaysia

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Altech’s HPA Plant Preliminary Layout (Malaysia location)

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Quarterly Report March 2015

Altech appoints Castle Group as its mining and processing partner

Altech commences permitting process for HPA plant in Malaysia

Subsequent to quarter end Altech signed a MOU with mining services company, Castle Equipment Pty Ltd (Castle), appointing it as mining contractor and processing plant operator for its Meckering aluminous clay (kaolin) deposit. Castle is an experienced mining industry services provider offering a range of mining, crushing and equipment hire services to the WA mining industry.

Subsequent to quarter end Altech reported it had commenced the permitting process for its HPA processing plant proposed to be located in the Tanjung Langsat Industrial Park, Johor Bahru, Malaysia. The Company submitted a Preliminary Site Assessment (colloquially referred to as a ‘PAT’), to the Department of Environment, Malaysia, which is the first stage of Malaysia’s approvals process for the project.

Altech is planning to campaign mine approximately 145,000t of Meckering aluminous clay (kaolin) at 3 to 4 year intervals to provide feedstock for its proposed 4,000tpa HPA processing plant, which is the subject of its pending BFS (scheduled for completion in Q3 2015).

Beneficiation will consist of simple wet processing to remove oversize silica, followed by drying to reduce moisture content for shipment. The upgraded kaolin will be packed into “bulka bags” for shipment to Malaysia via the port of Fremantle, Western Australia. The Meckering plant has been designed to produce approximately 18,565tpa of beneficiated kaolin per annum at full capacity.

Altech’s proposed HPA plant has been designed to meet international environmental standards as well as the standards of the Malysian Environmental Quality Act (EQA) 1974. Specifically, Altech has designed its plant to ensure that all off gasses that vent to exhaust stacks meet Malaysian environmental emission limits and that any discharges vented to the atmosphere pass through appropriate dust removal systems such as bag-houses or electrostatic separators.

Solid residue from the plant will predominantly be in the form of neutralised benign silica, which will be made available to local brickworks or cement plants. A local environmental consultant Daya Eco Techno Sdn Bhd (Daya) is retained by Altech to assist the Company in complying with Malaysian approvals processes.

Altech’s HPA Plant Preliminary Layout (Meckering location)

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Quarterly Report March 2015

Shareholder update

Shareholders were invited to attend an Altech presentation by managing director Mr Iggy Tan on Wednesday 1 April, 2015. Iggy Tan discussed how the Company could benefit from new electronic products incorporating artificial sapphire such as the Apple Watch.

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Corporate activities

Altech receives $815,000 from R&D advance loan facility

During the quarter Altech entered into a short-term debt-based instrument that provides immediate funds equivalent to the Company's forecast R&D tax incentive offset for the 2014/2015 year. The advance of $815,000 from Platinum Road was based on the R&D rebate being received in October 2015. The upfront funds will allow Altech to accelerate its BFS and ongoing R&D activities for its HPA project.

General meeting 18 March 2015

A general meeting was held on 18 March, 2015 – all resolutions were passed by the required majority as detailed in the announcement (click to review).

Mineral sands joint venture terminated

In the media

According to Focus Taiwan News, Foxconn Technology Group (a major supplier of Apple inc.) is making sapphire displays for iphones.

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A Farm-in and Joint Venture Agreement (JVA) with Midas Engineering Group Pty Ltd (Midas) for Altech's South West Titanium Project (formerly the Glenarty Mineral Sands Project) was terminated during the March quarter. Based on the impact of the economic climate, Midas withdrew from the JVA effective 25 March 2015.

Apple Watch with artificial sapphire glass

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Altech Chemicals

Limited

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Company Snapshot

Altech Chemicals Limited (ASX:ATC) ABN 45 125 301 206

FINANCIAL INFORMATION (as at 31 March 2015) Share Price: $0.069 Shares: 112m Listed Options: 25.5m Unlisted Options: 14.1m Performance Rights*: 20.4m Market Cap: $7.7m Cash: $1.3m

Constance Range Constance Range

DIRECTORS:

LUKE ATKINS LLB Chairman

IGGY TAN B.Sc MBA GAICD Managing Director

PETER BAILEY B.Sc(Hons) Elect.Eng MIEE C.Eng Non-executive Director

DAN TENARDI Non-executive Director

SHANE VOLK BBus (ACC) GradDip (ACG) CSA Company Secretary & CFO

ADDRESS: Suite 8, 295 Rokeby Road, Subiaco, Western Australia, 6008

T: +61 8 9389 5557 F: +61 8 9389 5510

*Subject to vesting conditions

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Rule 5.5

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly

report

Introduced 1/7/96. Origin: Appendix 8 Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10, 01/05/2013

Name of entity ALTECH
CHEMICALS
LIMITED

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ABN Quarter ended (“current quarter”)
45 125 301 206 31 March, 2015
Consolidated statement of cash flows
Current quarter Year to date
Cash flows related to operating activities $A'000 (9 months)
$A'000
1.1 Receipts from product sales and related debtors - -
1.2 Payments for (a) exploration and evaluation (40) (188)
(b) development (564) (1,401)
(c) production - -
(d) administration (209) (488)
1.3 Dividends received -
1.4 Interest and other items of a similar nature received 13 31
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Research and Development Tax Rebate - 462
Net Operating Cash Flows (800) (1,584)
Cash flows related to investing activities
1.8 Payment for purchases of:
(a) prospects - -
(b) equity investments - -
(c) other fixed assets (16) (28)
1.9 Proceeds from sale of: - -
(a) prospects - -
(b) equity investments - -
(c) other fixed assets - 5
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Disposal of fixed assets - -
Net investing cash flows (16) (23)
1.13 Total operating and investing cash flows (816) (1,607)
(carried forward)
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______________

• See chapter 19 for defined terms.

01/05/2010 Appendix 5B Page 1

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

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1.13	1.13	Total operating and investing cash flows	Total operating and investing cash flows		(816)	(816)			(1,607)	(1,607)
		(brought forward)
		Cash flows related to financing activities
1.14		Proceeds from issues of shares, options, etc.			192				403
1.15		Proceeds from sale of forfeited shares			-				-
1.16		Proceeds from borrowings			765				765
1.17		Repayment of borrowings			-				-
1.18		Dividends paid			-				-
1.19		Other - payment of finance lease			-				-
1.19		Other - share issue costs			-				(30)
		Net financing cash flows			957				1,138
1.20		Net increase (decrease) in cash held			141				(469)
1.21
1.22		Cash at beginning of quarter/year to date			1,174				1,784
		Exchange rate adjustments to item 1.20							-
		Cash at end ofquarter			1,315				1,315
	Payments to directors of the entity and associates of the directors
	Payments to related entities of the entity and associates of related						entities
								Current quarter
									$A'000
1.23			Aggregate amount of payments to the parties included in item 1.2						173
1.24			Aggregate amount of payments to the parties included in item 1.10						-
1.25			Explanation necessaryfor an understandingof the transactions
			Directors remuneration

Non-cash financing and investing activities

2.1		Details of financing and investing transactions which have had a material effect on consolidated
		assets and liabilities but did not involve cash flows
2.2	Details of outlays made by other entities to establish or increase their share in projects in which the
	reportingentityhas an interest

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• See chapter 19 for defined terms.

01/05/2010 Appendix 5B Page 2

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

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Financing facilities available

Add notes as necessary for an understanding of the position.

Financing facilities available Add notes as necessary for an understanding of the position.
3.1 Loan facilities 3.2 Credit standby arrangements	Amount Available $A'000	Amount Used $A'000
	-	-
	-	-

Estimated cash outflows for next quarter

Estimated cash outflows for next quarter
4.1 Exploration and Evaluation 4.4 Administration 4.2 Development 4.3 Production	$A'000
	40
	400
	-
	160
Total	600

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts as follows. 5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	Current quarter $A'000	Previous quarter $A'000
	806	674
	508	500
Total: cash at end of quarter(item 1.22)	1,315	1,174

Changes in interest in mining tenements and petroleum tenements

6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements and petroleum tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter
	EPM16620 EPM19772 (application) EPM19773 E70/4630 (application) E45/4067 (application) E70/4657 (application) E70/4654 (application) EPM18030 (application) E70/4655 (application) E77/1770	direct direct direct direct direct direct direct direct direct direct	100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
	E70/4706 (application) E70/4707 (application) E70/4708 (application)	direct direct direct	0% 0% 0%	100% 100% 100%

______________ + See chapter 19 for defined terms.

01/05/2010 Appendix 5B Page 3

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

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Issues and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security	Amount paid up per security
7.1 Partly paid~~+~~securities 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
7.3 ~~+~~Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital,buy-backs	112,013,117	112,013,117		Fully paid
	476,880	476,880		Fully paid
7.5 ~~+~~Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured,converted
7.7 Options EmployeePerformanceRights MDPerformanceRights NEDPerformanceRights 7.8 Issued during quarter NED Performance Rights
	21,465,000 4,027,735 8,000,000 2,500,000 1,000,000 1,000,000 1,000,000 600,000 157,700 15,000,000 5,250,000	21,465,000 4,027,735 - - - - - - - -	Ex. price $0.20 Ex. price $0.10 Ex. price $0.20 Ex. price $0.10 Ex. price $0.20 Ex. price $0.25 Ex. price $0.30 Ex. price $0.20 Nil Ex. price Nil Ex. price Nil Ex. price	Expiry date 31-05-15 Expiry date 15-12-15 Expiry date 31-05-15 Expiry date 30-06-16 Expiry date 18-12-17 Expiry date 18-12-17 Expiry date 18-12-17 Expiry date 31-01-17 Expiry date 31-12-17 Expiry date 19-11-22 Expiry date 18-03-20
	250,000 2,500,000 5,250,000	250,000 - -	Ex. price $0.10 Ex. price $0.10 Nil Exprice	Expiry date 15-12-15 Expiry date 30-06-16 Expirydate 18-03-20

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• See chapter 19 for defined terms.

01/05/2010 Appendix 5B Page 4

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

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_______	_____	____	_______	__
7.9 Exercised during quarter Employee Performance Rights 7.10 Expired during quarter	226,880	-	Nil Exercise price	Vesting conditions attained
	500,000 333,333 200,000	- - -	Ex. price $0.20 Ex. price $0.30 Ex.price $0.25
7.11 Debentures (totals only)
7.12 Unsecured notes (totals only)

Compliance Statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to the ASX (see note 5).

• 2 This statement does /does not give a true and fair view of the matters disclosed.

Sign here: Dated: 30 April, 2015

Print Name: Shane Volk (Director ~~/~~ Company Secretary)

Notes

1

The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2

The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements and petroleum tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement or petroleum tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4

The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.

5

Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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• See chapter 19 for defined terms.

01/05/2010 Appendix 5B Page 5