ALTECH BATTERIES LTD — Interim / Quarterly Report 2014

Jan 29, 2015

Altech Chemicals Limited

QUARTERLY REPORT December 2014

Quarterly Report December 2014

Name change to Altech Chemicals Ltd

Following approval of the Company's proposed name change to Altech Chemicals Limited at the 2014 annual general meeting (AGM) held on 5 November 2014, the Company's new name took effect from Monday, 10 November 2014.

The Company's Australian Securities Exchange (ASX) codes were amended from “AKA” and “AKAO” to “ATC” and “ATCO”.

The Company's new website address:

www.altechchemicals.com was also activated.

Other Company information, such as registered office address, contact details, share registry, directors and senior management, remain unchanged.

Design process updated for HPA plant

During the quarter the Company's high purity alumina (HPA) process design was further refined to incorporate its focus on becoming a dominant producer of HPA.

The philosophy adopted for the design of the HPA process flowsheet is to “minimise technological risk”; consequently the flowsheet is being designed to incorporate proven “off-the-shelf” equipment already successfully used in the chemical industry, such as conventional leaching technology and standard rotary kilns. The application of this philosophy will provide opportunities for the Company to further optimise the flowsheet and to incorporate efficiencies into the HPA process design, as well as potentially delivering savings on capital, and reducing operating costs.

Altech's proposed HPA process flowsheet has always considered operability as a key factor, however the Company's ultimate focus is on efficiently and consistently producing HPA at the specification required – 99.99% (4N) Al 0 . 2 3

The Company has already lodged patent applications for its HPA process design. The patents cover the Company's HPA process design to produce 4N HPA using the unique low-impurity Meckering aluminous clay as feedstock. As the Company's HPA process design is optimised and further refined, updates to the existing patent applications will be lodged.

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Altech Chemicals
Limited
New Company Logo
Proposed branding for future Altech
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Processing Technology

The Company's HPA process is founded on a hydrochloric acid leach (HCL), with effective acid recovery and recycling. The main advantage of this process is the simple recovery of acid, which will be re-used at the front-end of the process, thereby improving acid utilisation and constraining operating costs. The HCL process is a conventional, proven and robust chemical process that has been in use since the early 1980's. The process is being tailored to the Company's aluminous clay material for the production of very high purity alumina. The Company's raw aluminous clay material contains very low levels of impurities, which facilitates the production of a very pure alumina product, offering the Company a competitive advantage amongst global HPA suppliers.

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Quarterly Report December 2014

Altech selects Johor Bahru (Malaysia) for HPA plant site

During the quarter the Company selected the Tanjung Langsat Industrial Park in Johor Bahru (JB), the capital city of Johor state, Malaysia, as the preferred location for its proposed high purity alumina (HPA) processing plant.

After investigating potential site locations within the south-east Asia Pacific region, a number of candidates for the HPA processing plant site were identified and considered, including Kwinana, Western Australia.

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HPA
Site
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The final selection of JB as the preferred location for the proposed HPA plant was based on significant economic and developmental benefits of JB's Tanjung Langsat Industrial Park. Altech's proposed HPA operation will be supported by the ready availability of required consumables such as hydrochloric acid, power and natural gas – all at highly competitive prices. Other advantages included the availability of skilled labour, proximity to an international container port and international airport (Singapore), as well as various investment and tax incentives on offer.

Further, operating costs for the proposed HPA plant located in Malaysia were estimated to be in the region of 40% lower compared to an equivalent plant operated in Western Australia. In addition, the shipping of the Company's final HPA product from the Tanjung Langsat international sea container port to nearby Asian markets would provide both cost and delivery time advantages.

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Johor Bahru's Tanjung Langsat Industrial Park
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Preliminary engineering studies estimated that capital costs associated with the construction of a HPA plant at Tanjung Langsat would likely result in being 50-60% lower, compared to Australia. Overall, Altech anticipates its proposed HPA plant to be in the bottom quartile of the operating cost curve for the world's HPA producers.

Altech's proposed HPA processing operation has the potential to enhance the Malaysian region's HPA value-add chain, as sapphire glass producers such as Rubicon Technology, as well as other high-tech electronics producers, currently operate facilities in Malaysia and could potentially purchase Altech's HPA for their products. About 70% of HPA demand is in the Asia-Pacific region, with strong demand for HPA from sectors such as LEDs, semiconductors, phosphor-based products and more.

Letter of Intent (LOI)

In November 2014, the Company submitted a Letter of Intent (LOI) to TPM Technopark Sdn Bhd, a subsidiary of Johor Corporation, for the reservation of land in the Tanjung Langsat Industrial Park (refer to map above) in an area designated for chemical operations. The Company's preferred lot was selected due to its proximity to hydrochloric acid, sulphuric acid and quicklime plants – all required consumables for the Company's proposed HPA plant. Reticulated natural gas, high voltage power and access to processing water are also readily available; major roads, container ports and international airports are within close proximity.

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Quarterly Report December 2014

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Optimisation test work
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BFS optimisation of HPA plant output

Engineering investigations undertaken as part of the Company's Bankable Feasibility Study (BFS) established an optimised plant production rate of 4,000 tonne per annum (tpa) for Altech's proposed high purity alumina (HPA) processing operation.

The revised annual production rate means further positive economies of scale and improvements to efficiencies. It is also anticipated that operating costs per kilogram of final product (99.99% 4N HPA) will be significantly reduced.

The proposed HPA production rate of 4,000tpa could potentially position the Company as a significant global producer of HPA considering the current market size and forecast growth. The global HPA market was estimated at 19,040tpa in 2014, with the HPA market, driven by growing demand for sapphire glass in the LED lighting and electronics industries, expected to more than double in size to 48,230tpa by 2018, an annual growth rate of approximately 28%, according to Technavio Research.

Altech believes that based on the forecast growth in global HPA demand, there will be sufficient HPA required for the development of a 4,000tpa HPA production plant by 2018. It will represent approximately 8% of the global HPA requirement forecast by 2018.

Altech optimises beneficiation process for its Meckering deposit

Subsequent to quarter end, Altech announced the optimisation of the proposed beneficiation process for its Meckering aluminous clay (kaolin) deposit as part of its Bankable Feasibility Study (BFS). The results of the optimisation program confirmed the significant benefits of wet processing. Dry processing was previously contemplated, which involved the initial dry crushing, drying and screening of the material.

The selection of wet processing was based on recent test work conducted by Simulus Engineers and Simulus Laboratories in Perth, Australia. The test work successfully demonstrated that Altech's Meckering aluminous clay readily slurries in a water attritioner without the need for dry crushing and drying, prior to screening. In addition, superior recoveries of alumina were observed for the wet process, along with a higher finished concentrate grade, and consequently superior alumina yield.

Removing the dry crushing, drying and screening stages from the Meckering flowsheet resulted in lower capital and operating cost estimates; a more efficient and simplified process, with reduced dust levels associated with the beneficiation.

The aluminous clay concentrate (approximately 25,000tpa) will be used as feedstock for the Company's proposed HPA processing plant in Johor Bahru, Malaysia. Following beneficiation at Meckering the concentrate will be filterpressed and bagged into 2 tonne bulka bags (see process schematic below) for shipment from Fremantle port in Western Australia to Tanjung Langsat, Johor Bahru, Malaysia.

The aluminous clay concentrate (kaolin) is benign in nature and contains no deleterious elements. Although commonly used as a filler for coating product in the paper and ceramics industries, as well as a critical ingredient for plastic, rubber, paint and cosmetics applications, the unique properties of the Meckering deposit, rich in alumina with low levels of iron and sodium, make it the ideal feedstock for cost effective processing to 99.99% (4N) HPA.

Proposed Beneficiation Process at Meckering

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Quarterly Report December 2014

Singapore and Sydney Capital Showcase

During the quarter Altech managing director Mr Iggy Tan presented at the Singapore and Sydney Capital Expos held by international investment platform Wholesale Investor.

At both events, Mr Tan discussed Altech's outlook and objectives for 2015 and beyond.

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Altech at the Singapore Capital Expo
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Altech's company secretary/CFO
Mr Shane Volk
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Appointment of CFO/Company Secretary

During the quarter the Company appointed Mr Shane Volk as chief financial officer (CFO) and company secretary, effective 12 November, 2014.

Mr Shane Volk's extensive accounting and corporate governance experience in Australian and international mining operations is a critical requirement to support the Company's objectives.

Mr Volk is a qualified Chartered Secretary and has a Bachelor of Business (Accounting) from the Royal Melbourne Institute of Technology.

Mr Volk replaced the Company's previous CFO/company secretary Mr Piers Liews, who stepped down from his position due to work commitments. Altech chairman, Mr Luke Atkins thanked Mr Lewis for his significant contribution to the Company over the last three and a half years via his corporate financial services firm.

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Quarterly Report December 2014

In the media

Breakaway Research

During the quarter a research report covering Altech was published by Breakaway Research. The report provided an evaluation of the Company, which indicated a mid-point valuation of $0.25/share.

The valuation was based on only 7.5% of the full project value due to the early-stage nature of Altech's project.

Based on an average product price of US$20/kg for 99.99% (4N) high purity alumina (HPA), with Altech's reported estimated operating costs at approximately US$8/kg, the EV/EBITDA evaluation result was US$360m. Additionally, Breakaway used the Discounted Cash Flow (DCF) valuation method to arrive at US$260m evaluation. For 7.5% of the full project value Breakaway's evaluation ranged from US$260m-$360m.

The Next Tech Stock

Altech featured in the media promotion launched by the Next Tech Stock, which publishes and promotes its independent research and commentary of its investments in junior technology stocks via several online platforms.

The Next Tech Stock's research report/commentary on Altech “ASX company to supply to worlds smartphone markers?” was launched on 13 November 2014. Subsequently, “ATC Hurtling towards production of smartphone ingredients” was launched on 12 December 2014.

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Quarterly Report December 2014

Corporate Activities

Altech receives $0.46m R&D tax refund

During the quarter the Company received a research and development (R&D) tax refund of A$462,172 under the federal government's R&D Tax Incentive Scheme. The Company's claim related to the costs of its R&D activities for the 2013/2014 financial year, particularly in relation to the ongoing development and optimisation test work of the Company's high purity alumina (HPA) process flowsheet.

The R&D Tax Incentive program is jointly administered by AusIndustry (on behalf of Innovation Australia) and the Australian Taxation Office. It is a targeted program that helps businesses offset a portion of costs relating to eligible R&D activities and innovation.

Annual General Meeting

The Company's annual general meeting (AGM) was held on 5 November 2014 at the Celtic Club in West Perth. The meeting was well attended and all resolutions were carried on a show of hands, including the adopting of the Company's new name, Altech Chemicals Limited.

Non-renounceable Pro-rata Entitlement Offer

During the quarter the Company announced the launch of a non-renounceable pro-rata entitlement offer (Entitlement Offer), which was offered to eligible shareholders on the basis of one (1) new Altech share at $0.10 for every four (4) shares held, with a free-attaching listed option (exercise price $0.10, expiring of 15 Dec 2015), the offer closed on Friday, 19 December 2014.

Mineral sands joint venture finalised

Altech finalised a Farm-in and Joint Venture Agreement (JVA) with global engineering services group Midas Engineering Group Pty Ltd (Midas) (formerly METS) for the co-operation and advancement of the South West Titanium Project (formerly called Glenarty Mineral Sands Project) during the December quarter.

Midas is a dynamic and innovative global engineering group that specialises in mineral processing, design and project management for the mining industry.

Under the JVA terms, Midas will sole fund a series of engineering studies to confirm the mineral sands project's economic viability. The project, currently 100%-owned by Altech, contains a combined JORC (2004) indicated and inferred mineral resource of 807Mt at 3.7% heavy mineral (HM), estimated by the Company in June 2013. Under the JVA, Midas has the right to earn up to 20% interest in the project upon the completion of a scoping study, which it must sole fund; and a further 30% interest post completion and verification of a pre-feasibility study, which it must also sole fund.

With the Company focussing on the development of its HPA project, the JVA is an excellent opportunity for the advancement of this non-core project, and as the Company is free-carried during the farm-in period, it will not incur any costs.

Cash position

The Company had approximately $1.2m as at 31 December, 2014.

In total, the Entitlement Offer raised $402,774. The funds will be applied to the Company's Bankable Feasibility Study (BFS) for the development of the HPA operation, corporate purposes and general working capital.

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Altech Chemicals

Limited

Company Snapshot

Altech Chemicals Limited (ATC) ABN 45 125 301 206

FINANCIAL INFORMATION (as at 31 December 2014) Share Price: Shares: Listed Options: Unlisted Options: Performance Rights*: Market Cap: Cash:

$0.088 111.5m 25.3 m 12.6m 15.4m $9.8m $1.2m

DIRECTORS:

LUKE ATKINS LLB Non-executive 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: 3 Bay Road, Claremont Western Australia 6010

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 December, 2014
Consolidated statement of cash flows
Current quarter Year to date
Cash flows related to operating activities $A'000 (6 months)
$A'000
1.1 Receipts from product sales and related debtors - -
1.2 Payments for (a) exploration and evaluation (23) (148)
(b) development (552) (837)
(c) production - -
(d) administration (162) (279)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 14 18
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Research and Development tax refund 462 462
Net Operating Cash Flows (261) (784)
Cash flows related to investing activities
1.8 Payment for purchases of:
(a) prospects - -
(b) equity investments - -
(c) other fixed assets (12) (12)
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 (12) (7)
1.13 Total operating and investing cash flows (273) (791)
(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

__________

1.13	1.13	Total operating and investing cash flows	Total operating and investing cash flows		(273)	(273)			(791)	(791)
		(brought forward)
		Cash flows related to financing activities
1.14		Proceeds from issues of shares, options, etc.			211				211
1.15		Proceeds from sale of forfeited shares			-				-
1.16		Proceeds from borrowings			-				-
1.17		Repayment of borrowings			-				-
1.18		Dividends paid			-				-
1.19		Other - payment of finance lease			-				-
1.19		Other - share issue costs			(30)				(30)
		Net financing cash flows			181				181
1.20		Net increase (decrease) in cash held			(92)				(610)
1.21
1.22		Cash at beginning of quarter/year to date			1,265				1,784
		Exchange rate adjustments to item 1.20							-
		Cash at end ofquarter			1,174				1,174
	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
1.24			Aggregate amount of payments to the parties included in item 1.10						181
1.25			Explanation necessaryfor an understandingof the transactions
			Directors remuneration, consulting fee's and the rental of office premises

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.

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report __________ Financing facilities available Add t f dtdi f th iti	Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report __________ Financing facilities available Add t f dtdi f th iti	Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report __________ Financing facilities available Add t f dtdi f th iti
noes as necessary or an unersanng o e poson. Amount Used $A'000 Amount Available $A'000 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	Estimated cash outflows for next quarter
4.1 Exploration and Evaluation 4.2 Development 4.3 Production 4.4 Administration	$A'000
	40
	360
	-
	200
Total	600

Reconciliation of cash

Reconciliation of cash	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
	674	265
	500	1,000
Total: cash at end of quarter(item 1.22)	1,174	1,265

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 ofquarter	Interest at end of quarter
	E70/4581 E63/1700 E70/4577 E70/4585 E70/4582 E77/1746 E771747 E771748	Relinquished Relinquished Relinquished Relinquished Relinquished Surrendered Surrendered Surrendered	100% 100% 100% 100% 100% 100% 100% 100%	0% 0% 0% 0% 0% 0% 0% 0%
	E70/4668 E70/4669 M70/1334	Application Application Application	0% 0% 0%	100% 100% 100%

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• 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	111,536,237	111,536,237		Fully paid
	3,777,735	3,777,735	$0.10	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 EmployeeRights ManagingDirector PerformanceRights 7.8 Issued during quarter Managing Director Performance Rights
	8,000,000 21,465,000 1,000,000 1,000,000 1,000,000 500,000 333,333 200,000 600,000 3,777,735 384,580 15,000,000	- 21,465,000 - - - - - - - 3,777,735 - -	Ex. Price $0.20 Ex. Price $0.20 Ex. Price $0.20 Ex. Price $0.25 Ex. Price $0.30 Ex. Price $0.20 Ex. Price $0.30 Ex. Price $0.25 Ex. Price $0.20 Ex. Price $0.10 Nil Ex. Price Nil Ex. Price	Expiry 31-05-2015 Expiry 31-05-2015 Expiry 18-12-2017 Expiry 18-12-2017 Expiry 18-12-2017 Expiry 08-02-2015 Expiry 04-02-2015 Expiry 15-09-2015 Expiry 31-01-2017 Expiry 15-12-2015 Subject to vesting conditions
	3,777,735 15,000,000	3,777,735 -	Ex. Price $0.10 Nil Ex. Price	Expiry 15-12-2015 Subject to vesting conditions

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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

___ 7.9 Exercised during quarter 7.10 Expired during quarter	___ -	___ -	_____ -	____ -
	-	-	-	-
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 January, 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