AUSTRALIAN VANADIUM LIMITED — Capital/Financing Update 2017

Mar 12, 2017

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13 March 2017

Highlights:

• AVL acquires 100% of two new tenements at Gabanintha:

  • licences prospective for vanadium, iron, uranium, precious and base metals

  • strategic value for Gabanintha vanadium project infrastructure development

ASX ANNOUNCEMENT

Australian Vanadium Limited

ASX: AVL FRA: JT7.F

ABN: 90 116 221 740

T: +61 8 9321 5594

F: +61 8 6268 2699

E: info@australianvanadium.com.au

• sales consideration is AVL shares to the value of $100,000

• Environment field work to commence in midMarch as part of environmental approval processes

• Technical and financial valuation of Gabanintha and Vanadium Electrolyte Plant underway

W: australianvanadium.com.au

Street Address:

Level 1, 85 Havelock Street West Perth WA 6005

Postal Address:

Level 1, 85 Havelock Street West Perth WA 6005

Projects:

Australian Vanadium Limited (ASX:AVL, “the Company” or AVL”) is pleased to announce that it has agreed to acquire two exploration licences adjacent to the Gabanintha Vanadium Mineral Resource near Meekatharra. The tenements have been acquired 100% from an unrelated private third party with no encumbrances for a consideration of $100,000, payable in AVL shares.

The licences (E51/1694 and E51/1695) lie immediately to the west of the Company’s Gabanintha vanadium-titanium-iron Mineral Resource (Figure 1). The Gabanintha Vanadium Project is currently one of the highest-grade vanadium projects being advanced globally with existing Measured Resources of 7.0Mt, Indicated Resources of 17.8Mt and Inferred Resources of 66.7Mt, a total of 91.4Mt, grading 0.82% V2O5 and containing a discrete high-grade zone of 56.8Mt, grading 1.0% V2O5 reported in compliance with the JORC Code 2012 (see YRR ASX Announcement 10 November 2015).

The licences are considered prospective for vanadium, iron, titanium, uranium, precious and base metals.

AVL has acquired the ground as part of securing future infrastructure access for the planned Gabanintha vanadium project development. The

Gabanintha - Vanadium Blesberg,South Africa - Lithium/Tantalum Nowthanna Hill – Uranium/Vanadium

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Company is currently conducting a range of studies ahead of a more detailed feasibility study on the project.

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Figure 1 – Gabanintha Location Map showing new tenement acquisitions

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Environmental Field Programs Commencing

The Company has contracted Biologic environmental consultants to undertake the first of two field programmes to identify and report on flora and fauna at the proposed Gabanintha project site. The first field season survey in Autumn (March, April) will be followed by a Spring season survey later in the year (August). Results will form the basis of future environmental applications and management plans.

The surveys to be conducted include:

• two season Level 2 Flora Vegetation Survey;

• two season Level 2 Fauna and Short-Range Endemic (SRE) Invertebrate Fauna Survey, and

• subterranean fauna (stygofauna and troglofauna) desktop review and habitat assessment.

Technical Projects on Vanadium Continuing

Following the positive outcome reported in October 2016 from the pit optimisation work and the updated Concept Study and when all previous studies are also considered, the Company was satisfied that it can justify advancing the project towards development by the completion of a range of more in-depth studies.

These studies include:

• a resource update using the latest material density information and weathering surface interpretations;

• a detailed mining design and schedule;

• detailed assessment of an early startup (concentrate) option for Gabanintha, and

• further analysis and sampling of existing diamond core drilling for metallurgical testing designed to confirm metal recovery and concentrate grade and finalise process design inputs. This work will focus on roast and leach test work of magnetic ore concentrates.

The company anticipates a significant focus on marketing and offtake discussions during the current quarter as the market demand and enquires for vanadium products (for steel and energy storage devices) continues to grow rapidly.

Finalisation of the new work will allow the Company to determine a project feasibility study and construction timeline that will be dependent on prevailing vanadium market conditions. Much of the recent Concept Study work undertaken to date has been completed to a quality that it can be incorporated into the feasibility study. The Company will report the findings of the studies in accordance with the current reporting requirements for production targets and forward looking statements.

The Company, having commissioned a pilot electrolyte plant in November 2016, is currently undertaking the following ongoing work relating to the vanadium electrolyte opportunity:

• ongoing assessment of operational and quality parameters for a variety of V2O5 sources, and

• high level economic assessment of the viability of a commercial electrolyte plant, including a market assessment of future demand for vanadium electrolyte for Vanadium Redox Flow Batteries.

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AVL Strategic Objectives

AVL’s vertical integration strategy, which is focused on vanadium and other battery metals, includes four pillars of activity to drive cashflow generation and shareholder value. These are:

• Progressing the Company’s flagship Gabanintha vanadium project in Western Australia, through the identification of cornerstone investors and the completion of additional studies.

• Growing AVL’s subsidiary, VSUN Energy Pty Ltd to deliver additional vanadium battery sales into the many niches being identified in the commercial energy storage sector across Australia.

• The planned production and sale of high-purity vanadium electrolyte – a core component of flow batteries, to be achieved through the development of an Australian vanadium electrolyte plant.

• Investigation of other potential battery metal projects around the world, with the latest acquisition being the Blesberg lithium-tantalum project (see ASX Announcement dated 4 November 2016).

The Company is broadening its strategic focus to encompass the wider energy storage minerals market by this initial acquisition of a quality lithium asset at Blesberg in South Africa. It is apparent that there is exceptional growth underway in energy storage markets, including storage raw materials. AVL intends to utilise its knowledge and structure to generate additional shareholder wealth by the development of a project pipeline. This strategy offers both diversification and opportunity to shareholders.

The Gabanintha Vanadium Project is currently one of the highest-grade projects being advanced globally with Measured Resources of 7.0Mt, Indicated Resources of 17.8Mt and Inferred Resources of 66.7Mt, a total of 91.4Mt, grading 0.82% V2O5. It also contains a discrete high-grade zone of 56.8Mt grading 1.0% V2O5 reported in compliance with the JORC Code 2012 (refer to YRR ASX Announcement dated 10 November 2015).

For further information, please contact:

Vincent Algar, Managing Director

+61 8 9228 3333

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Competent Person Statement – Exploration Results

The information in this statement that relates to Exploration Results is based on information compiled by independent consulting geologist Brian Davis BSc DipEd who is a Member of The Australian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists and is employed by Geologica Pty Ltd.

Brian Davis has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which is undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

Mr. Davis consents to the inclusion in the report of the matters based on the information made available to him, in the form and context in which it appears.

Competent Person Statement – Mineral Resource Estimation

The information relating to the Gabanintha Project 2015 Mineral Resource estimate reported in this announcement is based on information compiled by Mr John Tyrrell. Mr Tyrrell is a Member of The Australian Institute of Mining and Metallurgy (AusIMM) and a full-time employee of AMC (AMC Consultants Pty Ltd). Mr Tyrrell has more than 25 years’ experience in the field of Mineral Resource Estimation. He has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and in resource model development to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

Mr. Tyrrell consents to the inclusion in the report of the matters based on the information made available to him, in the form and context in which it appears.

The information is extracted from the report entitled “Substantial high-grade vanadium resource highlights Gabanintha’s world-class potential” released to ASX on 10 November 2015 and is available on the company website at australianvanadium.com.au .

The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resource or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The company confirms that the form and context in which the competent person’s findings are presented has not been materially modified from the original market announcement

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