ALTECH BATTERIES LTD — Capital/Financing Update 2021

Jul 27, 2021

ASX ANNOUNCEMENT AND MEDIA RELEASE

28 July 2021

ALTECH – LISTED GREEN BONDS IN FINAL STAGE

Highlights

• Listed green bond targeting an offer of ~US$144m for Malaysian HPA plant

• Final preparations near completion

• Marketing of bonds to commence during this quarter

• Malaysian HPA project 49% less carbon footprint than conventional HPA

Altech Chemicals Limited (Altech/the Company) (ASX: ATC) (FRA: A3Y) is pleased to advise that preparations for its proposed listed green bond offering of ~US$144 million, to provide additional financing for its Malaysian high purity alumina (HPA) project, are in the final stages.

Altech has been working with London based structuring agent, Bedford Row Capital PLC (Bedford Row) and Bluemount Capital (WA) Pty Ltd (Bluemount) to prepare for the green bond offering. Extensive due diligence has been completed, including financial, legal and environmental social governance. Legal counsels from various jurisdictions have now completed their respective reviews of documentation, and the bond issue process will shortly move from the preparation phase to marketing and finally initiation.

The initiation phase of the offering will include the distribution of comprehensive corporate presentation packs and will be followed by detailed briefings to potential subscribers. As is customary with these types of offerings, it is anticipated that subscriptions for the bonds will be received in several tranches over a period of months, rather than as a single tranche and closing for the entire US$144 million offering amount. Bedford Row has reported that its initial preliminary marketing (“soft sounding” ) during the preparation phase had been positive.

Altech is aiming to raise US$144m from this bond issue (Series 2021-F3 Notes), of which US$100m will be used as secondary debt for construction of its Johor HPA plant, with the balance of US$44m to service bond coupon (interest) during the HPA plant’s construction phase – see Figure 1. The bonds will be issued by Sustainable Capital PLC, incorporated in United Kingdom, a dedicated green bond issuance platform (www.sustainablecapitalplc.com). The bonds will be second lien to the senior project finance of US$190m that has already been committed by German government owned KfW IPEX-Bank.

Background

Increasingly green bonds are being used to finance new and existing projects which deliver environmental benefits and a more sustainable economy. As announced on 20 May 2020, Altech’s HPA project has been formally assessed as “ green ” by the independent Centre of International Climate and Environmental Research (CICERO) based in Oslo, Norway. Compared to conventional HPA processing, Altech’s disruptive HPA production technology is estimated to deliver a ~49% reduction in the comparable carbon footprint, and use ~41% less energy. Also, the primary end-use for Altech’s HPA is targeted for climate change products, such as LEDs lights and lithium-ion batteries.

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Altech Chemicals Limited ASX:ATC ABN 45 125 301 206

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

Telephone: +61 8 6168 1555 e-mail: info@altechchemicals.com Website: www.altechchemicals.com

As illustrated in Figure 1 below, Sustainable Capital PLC is the bond Issuer. From a US$144m issue, US$44m would be retained by the SPV to service bond coupon (interest) payments during the period of Altech’s HPA plant’s construction and commissioning. The US$100m balance of proceeds is lent by the SPV Co. to Altech’s Malaysian subsidiary (Altech Chemicals Sdn. Bhd.) to part-fund plant construction costs and/or for working capital. It is envisaged that the bond will be for an initial 5-year term, and typical of this type of funding would likely be re-financed at a lower coupon (interest rate) towards the end of the term. Sustainable Capital PLC would take second lien security behind senior lender KfW IPEX-Bank.

Figure 1: Green Bond Structuring Concept (US$144m issuance)

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----- Start of picture text ----- BondSubscribersAltech ChemicalsLimited(ASX:ATC) US$144mBond Proceeds Coupon (Interest)Australia 100% RepaymentsSustainableAltech ChemicalsCapital PLC.Australia Pty Ltd(Green Bond Issuer)US$100m100% 100% LoanAustralia MalaysiaLoan InterestAltech Altech RepaymentsMeckering Pty Ltd Chemicals Sdn BhdMeckering Meckering Johor Land HPA ChemicalTenement Land 30 yr Lease PlantMeckeringPlant– end –----- End of picture text -----

Authorised by: Iggy Tan (Managing Director)

The listed green bond terms and concept referred to in this ASX announcement are indicative in nature; are non-binding; and contain the general terms of a proposed transaction. There is no certainty that the listed green bonds will be concluded based on what is contemplated in this announcement. The Company makes no representations or warranties whatsoever as to the amount, success or outcome of the listed green bonds process.

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Altech Chemicals Limited ASX:ATC ABN 45 125 301 206

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

Telephone: +61 8 6168 1555 e-mail: info@altechchemicals.com Website: www.altechchemicals.com

For more information, please contact: Corporate Iggy Tan Shane Volk Managing Director Company Secretary Altech Chemicals Limited Altech Chemicals Limited Tel: +61 8 6168 1555 Tel: +61 8 6168 1555 Email: info@altechchemicals.com Email: info@altechchemicals.com

Investor Relations (Europe) Kai Hoffmann Soar Financial Partners Tel: +49 69 175 548320 Email: hoffmann@soarfinancial.com Wir sprechen Deutsch.

About Altech Chemicals (ASX:ATC) (FRA:A3Y)

Altech Chemicals Limited (Altech/the Company) is aiming to become one of the world's leading suppliers of 99.99% (4N) high purity alumina (Al2O3) through the construction and operation of a 4,500tpa high purity alumina (HPA) processing plant at Johor, Malaysia. Feedstock for the plant will be sourced from the Company’s 100%-owned kaolin deposit at Meckering, Western Australia and shipped to Malaysia.

HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of synthetic sapphire. Synthetic sapphire is used in the manufacture of substrates for LED lights, semiconductor wafers used in the electronics industry, and scratch-resistant sapphire glass used for wristwatch faces, optical windows and smartphone components. Increasingly HPA is used by lithium-ion battery manufacturers as the coating on the battery’s separator, which improves performance, longevity and safety of the battery. With global HPA demand approximately 19,000t (2018), it is estimated that this demand will grow at a compound annual growth rate (CAGR) of 30% (2018-2028); by 2028 HPA market demand is forecast to be approximately 272,000t, driven by the increasing adoption of LEDs worldwide as well as the demand for HPA by lithium-ion battery manufacturers to serve the surging electric vehicle market.

German engineering firm SMS group GmbH (SMS) is the appointed EPC contractor for construction of Altech’s Malaysian HPA plant. SMS has provided a USD280 million fixed price turnkey contract and has proposed clear and concise guarantees to Altech for plant throughput and completion. Altech has executed an off-take sales arrangement with Mitsubishi Corporation’s Australian subsidiary, Mitsubishi Australia Ltd (Mitsubishi) covering the first 10-years of HPA production from the plant.

Conservative (bank case) cash flow modelling of the project shows a pre-tax net present value of USD505.6million at a discount rate of 7.5%. The Project generates annual average net free cash of ~USD76million at full production (allowing for sustaining capital and before debt servicing and tax), with an attractive margin on HPA sales of ~63%. (Refer to ASX Announcement “Positive Final Investment Decision Study for 4,500TPA HPA project” dated 23 October 2017 for complete details. The Company confirms that as at the date of this announcement there are no material changes to the key assumptions adopted in the study).

The Company has been successful in securing senior project debt finance of USD190 million from German government owned KfW IPEX-Bank as senior lender. Altech has also mandated Macquarie Bank (Macquarie) as the preferred mezzanine lender for the project. The indicative and non-binding mezzanine debt term sheet (progressing through due diligence) is for a facility amount of up to USD90 million. To maintain project momentum during the period leading up to financial close, Altech has raised ~A$39 million in the last 24 months to fund the commencement of Stage 1 and 2 of the plant’s construction; Stage 1 construction commenced in February 2019 with Stage 2 early works completed at the end of June 2020.

Forward-looking Statements

This announcement contains forward-looking statements which are identified by words such as ‘anticipates’, ‘forecasts’, ‘may’, ‘will’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, ‘plan’ or ‘intends’ and other similar words that involve risks and uncertainties. Indications of, and guidelines or outlook on, future earnings, distributions or financial position or performance and targets, estimates and assumptions in respect of production, prices, operating costs, results, capital expenditures, reserves and resources are also forward-looking statements. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions and estimates regarding future events and actions that, while considered reasonable as at the date of this announcement and are expected to take place, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, the directors and management. We cannot and do not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this announcement will actually occur and readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are subject to various risk factors that could cause actual events or results to differ materially from the events or results estimated, expressed or anticipated in these statements.

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Altech Chemicals Limited ASX:ATC ABN 45 125 301 206

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

Telephone: +61 8 6168 1555 e-mail: info@altechchemicals.com Website: www.altechchemicals.com