ECOGRAF LIMITED — Interim / Quarterly Report 2020

Jan 28, 2021

29 JANUARY 2021

==> picture [54 x 10] intentionally omitted <==

----- Start of picture text -----

ASX: EGR
----- End of picture text -----

DECEMBER 2020 QUARTERLY REPORT

WA Manufacturing Facility Advancing to Development Further positive results from recycling supports commencement of engineering for modular pilot plant to recover carbon anode material

EcoGraf Limited (“EcoGraf” or “the Company”) (ASX: EGR) is pleased to release its activities and cash flow report for the three months ended 31 December 2020.

HIGHLIGHTS

The Company made significant progress during quarter on all key business areas.

• Western Australia (WA) battery graphite manufacturing facility

• • Development report and updated financial model for the new HF free manufacturing facility released as part of financing and construction early works programs
• • EPC and early works program progressing with GR Engineering
• • EcoGraf appointed to Future Battery Industry Ministerial Taskforce

• Battery recycling programs continued with a range of battery industry participants in Australia, Asia and Europe

• • Positive results of up to 99.8% carbon achieved during testing with potential European customers on the recovery of high purity carbon anode material from battery black mass
• • Engineering design commenced for a containerised pilot plant. Pilot plant to provide recovered carbon anode material for product qualification process
• • Results support development of a blended anode material product with EcoGraf’s high purity battery spherical graphite from its planned WA manufacturing facility, to provide a unique recycled anode material for the lithium-ion battery market
• • Reuse of the recovered carbon anode material has significant potential to assist EV and battery manufacturers lower battery costs and carbon emissions with further positive results expected shortly
• • Agreement with a leading lithium-ion battery recycler SungEel Hitech operating in South Korea
• • Recycling strategy is supported by new European Union Commission legislative changes requiring higher levels of battery recycling to be achieved, with targets increased to 65% by 2025 and 70% by 2030

• Epanko debt financing

• • Further meetings held with Tanzanian Government to advance the US$60 million debt financing proposal submitted to the Government of Tanzania for the construction of the new Epanko Graphite Mine
• • Tanzanian Presidential election held on the 28th of October with President Magufuli winning a second term and announcing intention to remove investment hurdles to support increased foreign investment

• Battery market

• • Benchmark graphite prices increase 13.2%, leading the expected rise for battery raw materials
• • US President Biden announced plans to replace US Government vehicle fleet with electric vehicles, supporting the global shift to EV’s

EcoGraf Limited Level 1/18 Richardson Street West Perth WA 6005

ABN: 15 117 330 757 Managing Director E: info@ecograf.com.au Andrew Spinks www.ecograf.com.au T: +61 8 6424 9002

BUSINESS STRATEGY

EcoGraf is building a vertically integrated business to produce high purity graphite for the lithium-ion battery and advanced manufacturing markets. Over US$30 million has been invested to date to create two highly attractive, development ready graphite businesses.

The first new state-of-the-art EcoGraf processing facility in Western Australia will manufacture spherical graphite products for export to Asia, Europe and North America using a superior, environmentally responsible purification technology to provide customers with sustainably produced, high performance battery anode graphite. Subsequently, the battery graphite production base will be expanded to include additional processing facilities in Europe and North America to support the global transition to clean, renewable energy in the coming decade.

In addition, the Company’s breakthrough recovery of carbon anode material from recycled batteries using its EcoGraf[TM] process will enable the recycling industry to reduce battery waste and use recycled carbon anode material to improve battery lifecycle efficiency.

To complement these battery graphite operations, the Company is also developing the TanzGraphite natural flake graphite business, commencing with the Epanko Graphite Project, which will supply additional feedstock for the spherical graphite processing facilities and provide customers with a long term supply of high quality graphite products for industrial applications such as refractories, recarburisers and lubricants.

==> picture [497 x 144] intentionally omitted <==

QUARTERLY ACTIVITY UPDATE

KWINANA BATTERY GRAPHITE DEVELOPMENT

The Company has made significant progress during the quarter on the development of the new 20,000tpa battery graphite facility in Western Australia.

==> picture [499 x 173] intentionally omitted <==

----- Start of picture text -----

PLAY MOVIE
----- End of picture text -----

The Kwinana facility will be the first of its kind to be constructed outside of China and will provide a new supply of high quality and cost competitive purified spherical graphite for the lithium-ion battery market.

==> picture [34 x 34] intentionally omitted <==

2

The new state-of-the-art processing plant will incorporate the Company’s proprietary processing EcoGraf™ technology to manufacture purified spherical graphite for the lithium-ion battery market.

The Company is assisting Export Finance Australia with commercial and technical due diligence processes in relation to debt financing arrangements for the new development.

A summary of the key activities for the Kwinana development carried out during the quarter is provided below.

Development Report

A development report, prepared to support the Kwinana funding and project implementation programs, was released in November (refer ASX announcement Completion of EcoGraf[TM] Processing Facility Development Report 5 November 2020). The report confirmed an attractive market opportunity and supports due diligence processes for project funding arrangements, including debt financing with Export Finance Australia. The report was prepared in conjunction with Australian engineering and construction group GR Engineering Services Limited.

Highlights include:

• World’s first purified spherical graphite processing facility outside of China at a time when electric vehicle, battery and anode producers are actively seeking to diversify battery mineral supply chains

• High growth battery graphite market forecast by Benchmark Mineral Intelligence to expand by an annual growth rate of 31.5% over the next decade and reach 1.2 million tonnes per annum by 2030

• Proprietary EcoGraf™ purification processing technology provides competitive advantages through environmental sustainability, product quality and low cost with patent pending and trademarks registered

• Financial modelling shows strong economic returns, with an equity NPV8 of US$317m, equity IRR of 42.4% and payback period of 3.3 years

• Conservative development schedule provides opportunity for capital savings through scheduling and procurement strategies, with GR Engineering to undertake an optimisation process during the construction early works program

• Recycling application of the EcoGraf™ purification process to recover high purity carbon anode material from lithium-ion battery production waste and recycled batteries, provides the opportunity to assist anode and battery manufacturers reduce production costs, lower carbon emissions and progress towards closed loop manufacturing processes

EPC Construction Arrangements and Pre-Development Activities

The Company continued to work with its engineering partner GR Engineering on the EPC construction arrangements and pre-development activities.

WA Government Support

On 1 December, the Company announced (refer ASX announcement EcoGraf Appointed to FBI Ministerial Taskforce ) it has been appointed to the Western Australian (WA) Future Battery Industry Ministerial Taskforce chaired by the Hon Bill Johnston, WA Minister for Mines and Petroleum, Energy and Industrial Relations.

The invitation to the Ministerial Taskforce is in recognition of the Company’s contribution to increasing Western Australia’s participation in the global battery supply chain.

==> picture [34 x 34] intentionally omitted <==

3

The appointment coincides with the Federal Government’s $1.5 billion Modern Manufacturing Strategy and the Company is pleased to advise the Minister for Industry, Science and Technology, Hon Karen Andrews, has released a video case study that includes EcoGraf’s WA Manufacturing Facility. The video is part of the ‘make it happen’ modern manufacturing strategy.

==> picture [135 x 77] intentionally omitted <==

The video and case study highlights EcoGraf’s plans to establish a vertically integrated business to produce high purity graphite for the lithium-ion battery market in Western Australia.

The proposed 20,000 tonne per annum facility will manufacture battery anode products for export to Asia, Europe and North America using a superior, environmentally responsible purification technology to provide customers with sustainably produced, high performance battery anode graphite.

View the EcoGraf case study video on the following link: https://youtu.be/1fiWmYrd3WM

Product Sales

Interest and discussions continued during the quarter for the EcoGraf[™] HF free products. The Company has entered into sales arrangements with global industrial company ThyssenKrupp over 50% of its planned production and remains confident of finalising further sales arrangements as the Company continues to receive strong interest from prospective customers seeking to secure sustainable battery material supply chains.

Production Qualification

The Company continued its product qualification program to advance co-operation, offtake and strategic partnerships through the development and testing of product samples at its piloting facility in Germany.

Expressions of interest for product samples includes anode producers, battery manufacturers and electric vehicle manufacturers.

LITHIUM-ION BATTERY RECYLING

Significant interest has been received from third parties since the Company reported that it has successfully trialled its EcoGraf[TM] proprietary purification technology to recycle lithium-ion battery carbon anode material in Germany.

The recycling strategy is supported by new European Union Commission legislative changes which require higher levels of battery recycling to be achieved, with targets increased to 65% by 2025 and 70% by 2030.

Recycling programs continued with a range of battery industry participants operating in Australia,

Asia and Europe.

The testwork programs are focussed on the recovery and recycling of lithium-ion battery production scrap and end-of-life lithium-ion batteries after hydrometallurgical process have recovered cathode materials.

Recovered Carbon Anode Material Results

During the quarter, the Company announced additional results from its ongoing customer recycling program’s using EcoGraf™ proprietary purification process to recover high purity battery anode material from lithium-ion battery materials (refer ASX announcement Further Positive Results from Recycled Lithium-ion Battery Material 30 November 2020).

EcoGraf’s recycling activities are part of the Company’s vertically integrated graphite business to provide an alternative, responsibly produced and cost effect active anode material to anode

==> picture [34 x 34] intentionally omitted <==

4

manufacturers, through the initial EcoGraf™ Processing Facility planned for Western Australia and the development of its long-life and low cost Epanko Graphite Project in Tanzania.

In conjunction with the extensive growth in lithium-ion battery use for electric vehicles and clean energy storage, recycling of batteries and battery materials has become a major environmental and economic concern for both Government and industry.

Achieving 99.5% carbon is an important level, as it the meets the specification grade for high demanding industrial applications of graphite. A summary of both the production scrap and black mass outcomes are shown in the table below.

	PRODUCTION SCRAP (%C)	BLACK MASS (%C)
Product Sample	98.0%-99.85%	30%-50%
EcoGrafTM Purification	98.6%-100%	98.0%-99.8%

The results achieved to date and the positive customer feedback provides the confidence to commence the initial engineering design for a containerised pilot plant to recover carbon anode material.

The pilot plant will evaluate the recovery of carbon anode material from a range of hydrometallurgical processes and in-process production waste solutions and tailor these to customer needs.

The proposed plant will accommodate the existing EcoGraf[TM] purification flowsheet and be designed to deliver sufficient material to enable commercial qualification of the recovered carbon anode material for both the lithium-ion battery and industrial markets.

The engineering design works will provide a pilot plant capital cost estimate which the Company plans to fund with support from its R&D programs and collaboration with potential customers.

EcoGraf’s strategy to recover and re-use carbon anode materials is focussed on two material streams:

• Production scrap or waste from anode cell and battery manufacturing processes; and

• Residual carbon materials from recycled anode material that remains after the metals have been extracted through hydrometallurgical processing.

==> picture [594 x 261] intentionally omitted <==

==> picture [34 x 34] intentionally omitted <==

5

SungEel Hitech Agreement

The Company also announced (refer ASX announcement Agreement with Leading Lithium-ion Battery Recycler located in South Korea 12 October 2020) that it had signed a Memorandum of Understanding (MoU) with SungEel Hitech Co. Ltd (SungEel) to evaluate the EcoGraf[TM] proprietary purification process to recover and re-use high-purity battery carbon anode material from production scrap and ‘black mass’ from lithium-ion battery materials produced at their South Korean plant.

SungEel is one of the major lithium-ion battery recycling companies and is well connected to the South Korean lithium-ion battery supply chain, which includes both EV and battery manufacturers. SungEel currently process 24,000 tonnes of lithium-ion battery materials per year, with plans to increase to 56,000 tonnes per year, through their South Korean hydrometallurgical plant to recover cathode metals which includes Ni, Co, Cu, Mn and Li.

The processed material contains approximately 22% carbon anode material.

Collaboration with supply chain participants is critical to develop closed loop battery manufacturing for carbon anode materials

==> picture [139 x 126] intentionally omitted <==

Recycling Strategy

==> picture [282 x 243] intentionally omitted <==

EcoGraf[TM ] proprietary purification has the potential to provide a tailored and customised solution to increase recycling of recovered carbon anode material. During the quarter, the Company developed its recycling strategy to support greater recycling of lithium-ion batteries.

==> picture [494 x 231] intentionally omitted <==

==> picture [34 x 34] intentionally omitted <==

6

The recycling of anode material will provide the opportunity to blend the Company’s battery spherical graphite from its planned manufacturing facility in Western Australia with the recovered anode material to supply a unique recycled product to the lithium-ion battery market.

Based on achieving 99.9% carbon anode material, which appears realistic given the results achieved to date, the blend required to meet the critical 99.95% C grade specification by cell manufacturers would be two parts battery spherical graphite to one part carbon anode material.

==> picture [483 x 72] intentionally omitted <==

Product Marketing and Value Proposition

The production of lithium-ion batteries represents the largest market for the re-use of the carbon anode material and there is significant value as shown below.

The Company is also working with potential customers to pursue broader industrial natural and synthetic graphite markets for alkaline and zinc carbon batteries, phosphate-ion and aluminium-ion batteries, friction materials, conductive coatings, refractories and carbon additives.

In addition to the potential cost benefit, recycling of carbon anode material has an important role in reducing carbon emissions, with the lithium-ion battery representing over 40% of the total carbon (CO2) emission footprint of electric vehicle production.

==> picture [192 x 68] intentionally omitted <==

==> picture [192 x 50] intentionally omitted <==

==> picture [371 x 184] intentionally omitted <==

Source: (No Canary, Volkswagen)

Government and industry are actively working to establish effective recycling processes to improve waste recovery, with Bloomberg forecasting the battery recycling market to reach US$18 billion over the next decade.

The Company’s recycling strategy provides a unique opportunity to blend its high purity battery graphite with the recovered carbon anode materials to support these efforts.

==> picture [34 x 34] intentionally omitted <==

7

EPANKO GRAPHITE PROJECT

The Epanko Graphite Project (Epanko or the Project) is a development ready Tanzanian natural flake graphite project. Key milestones achieved to date include:

• Bankable Feasibility Study (BFS) completed by GR Engineering

• • Bank appointed Independent Engineer’s Review completed by SRK Consulting (UK), confirming that the BFS adequately addresses all technical aspects of the proposed development and the social and environmental planning aspects satisfy IFC Performance Standards and World Bank Group Environmental, Health and Safety Guidelines
• • Offtake commitments for the planned production secured in Asia (Sojitz Corporation) and Europe (thyssenkrupp and a large European graphite trading group)
• • Resettlement Action Plan approved by the Tanzanian Government
• • Mining Licence granted; and
• • Letter of Intent with GR Engineering for early works program and EPC construction contract.

During the quarter, further positive developments occurred in Tanzania that are supportive of Epanko’s development:

• President Magufuli won a 5-year second term with a strong margin and announced hi intention to remove investment hurdles to support increased foreign investment.

• Subsequent to the President’s announcement, London based Kabanga Nickel negotiated an agreement with the Tanzanian Government with respect to their planned nickel project which supports the Governments second term strategy.

Debt Financing

During the quarter, the Company continued to progress the senior debt financing of the new Epanko graphite mine and following positive feedback from a presentation of the KfW IPEX-Bank debt financing proposal to the Government in August, Government due diligence processes have commenced with a view to preparing an internal submission for formal Government approval of the proposed loan arrangements.

The debt financing proposal was developed in conjunction with KfW IPEX-Bank with the aim of simplifying and fast-tracking the debt financing process in Tanzania (refer ASX Announcement Government Breakthrough Paves Way for Epanko Financing and Development 28 January 2020).

The financing proposal accommodates the Government’s requirements under the new mineral sector legislation and provides an opportunity for Tanzania to develop a world class graphite mine in the Ulanga District, Morogoro Region that will operate under globally leading Equator Principles for social and environmental planning, including International Finance Corporation Performance Standards and World Bank Group Environmental, Health and Safety Guidelines.

Social and Environmental Sustainability

Epanko is unique in its Equator Principles development model. The Project has been designed to meet the strictest standards for social and environmental sustainability and to be fully compliant with IFC Performance Standards and the Equator Principles. These high standards of sustainability provide assurance to financiers and customers that Epanko products will be responsibly produced for the benefit of all stakeholders. The importance of sustainable development is reflected in the increasing emphasis globally on transparent supply chains and ethically sourced minerals.

Positive Economic Impact

The Project has strong economics and in addition to generating a pre-tax NPV10 of US$211m for shareholders, will make a long-term, inter-generational contribution to economic, industrial and social development within Tanzania. It is expected to operate for over 40 years, during which time it is forecast to directly contribute over US$3 billion to Tanzania through local employment, procurement, royalties, taxes and dividends. Over 95% of the 300 permanent staff will be Tanzanian, with an estimated 4,500 indirect jobs to be supported by the operation.

==> picture [34 x 34] intentionally omitted <==

8

BATTERY GRAPHITE MARKET

Benchmark graphite prices have recently increased 13.2%, leading to an expected rise for battery raw materials. Other significant news included.

• Eligible to foreign businesses, the European Union has approved funding of 2.9 billion euros to support the supply chain for the transition to electric battery industry in the 12-member states

• US President Biden announced plans to replace the US Government fleet with electric vehicles (EV) further supporting the increasing shift to EV’s

There are now announced plans for an estimated 600 GWh annual production capacity for lithiumion battery cells in Europe, , that is equivalent to 7-9 million electric vehicles.

==> picture [483 x 290] intentionally omitted <==

Other significant news supporting the transition to EV’s, covered in the Company’s market news reports included:

• • LG Chem to double China battery capacity to meet Tesla demand
• • Volkswagen is doubling down on EVs, stating that it will spend 73 billion euros to expand its EV production capacity

The above reports and links can be found ot the Company website or alternatively ‘click’ below to join the mailing list.

==> picture [481 x 145] intentionally omitted <==

==> picture [22 x 22] intentionally omitted <==

==> picture [22 x 22] intentionally omitted <==

==> picture [21 x 22] intentionally omitted <==

==> picture [34 x 34] intentionally omitted <==

9

CORPORATE

Marketing

Due to the COVID-19 travel restrictions, marketing was focussed on virtual presentations, meetings and media coverage. Activities included:

• • EcoGraf was invited to present its recent lithium-ion battery Benchmark Mineral Intelligence at its Battery Week conference. WA Minister for Mines and Energy, Hon Mr Bill Johnston, provided the keynote speech at the opening of the conference and highlighted EcoGraf's development
• • EcoGraf features in Germany’s GOLDINVEST “The decision is near”
• • EcoGraf featured on radio’s 6PR ‘Bulls & Bears’ program: Graphite is the new black – preparing for the lithium battery revolution
• • NY publishing house Battery Industry Tech reported on Kwinana Battery Manufacturing Facility

Cash

Cash at 31 December 2020 was $1.75 million and details of cash flows during the quarter are set out in the attached Appendix 5B. R&D cash credit of ~$0.5m is expected to be received this quarter.

Payments made to related parties during the quarter set-out in item 6 of Appendix 5B were for directors’ remuneration. Details of directors’ remuneration and fees are provided each year in the Remuneration Report of the Company’s Annual Report.

Share Capital

At 31 December 2020, the Company’s issued capital comprised 363,986,768 fully-paid ordinary shares.

==> picture [595 x 212] intentionally omitted <==

==> picture [429 x 182] intentionally omitted <==

==> picture [34 x 34] intentionally omitted <==

10

SCHEDULE OF TENEMENTS

	Ownership	Acquired/disposed
Licence			**Area (km2) **	Location
	interest	during the quarter
ML 548/2015 100% No change 9.62 Mahenge, Tanzania
PL 7907/2012 100% No change 26.42 Merelani-Arusha, Tanzania
PL 9306/2013 100% No change 17.53 Mahenge, Tanzania
PL 9331/2013 100% No change 2.76 Mahenge, Tanzania
PL 10092/2014 100% No change 23.23 Merelani-Arusha, Tanzania
PL 10388/2014 100% No change 2.57 Mahenge, Tanzania
PL 10390/2014 100% No change 2.81 Mahenge, Tanzania
PL 10869/2016 100% No change 29.95 Merelani-Arusha, Tanzania
PL 10872/2016 100% No change 2.60 Merelani-Arusha, Tanzania
PL 10972/2016 100% No change 3.83 Mahenge, Tanzania
PL 11081/2017 100% No change 2.08 Merelani-Arusha, Tanzania
PL 11082/2017 100% No change 20.77 Merelani-Arusha, Tanzania
PL 11143/2017 100% No change 2.62 Merelani-Arusha, Tanzania
PL 11196/2018 100% No change 46.72 Merelani-Arusha, Tanzania
PL 11386/2019 100% No change 6.73 Merelani-Arusha, Tanzania

This report is authorised for release by the Board.

For further information, please contact:

INVESTORS

Andrew Spinks Managing Director T: +61 8 6424 9002

==> picture [595 x 279] intentionally omitted <==

==> picture [34 x 34] intentionally omitted <==

11

Forward looking statements

Various statements in this announcement constitute statements relating to intentions, future acts and events. Such statements are generally classified as “forward looking statements” and involve known and unknown risks, uncertainties and other important factors that could cause those future acts, events and circumstances to differ materially from what is presented or implicitly portrayed herein. The Company gives no assurances that the anticipated results, performance or achievements expressed or implied in these forward-looking statements will be achieved.

Production targets and financial information

Information in this announcement relating to the Bankable Feasibility Study conducted on the Epanko Graphite Project, including production targets and forecast financial information derived from the production targets, included in this announcement is extracted from an ASX announcement dated 21 June 2017 “Updated Bankable Feasibility Study” available at www.ecograf.com.au and www.asx.com.au . The Company confirms that all material assumptions underpinning the production targets and forecast financial information derived from the production targets set out in the announcement released on 21 June 2017 continue to apply and have not materially changed.

Information in relation to the feasibility study conducted on the production of battery-grade graphite using the Company’s EcoGraf technology, including production targets and forecast financial information derived from the production targets, included in this announcement is extracted from an ASX announcement dated 5 December 2017 “Battery Graphite Pilot Plant”, as updated on 17 April 2019 “EcoGraf Delivers Downstream Development”, available at www.ecograf.com.au and www.asx.com.au . The Company confirms that all material assumptions underpinning the production targets and forecast financial information derived from the production targets set out in the announcement released on 5 December 2017, as updated on 17 April 2019, continue to apply and have not materially changed.

Competent persons

Any information in this document that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Andrew Spinks, who is a Member of the Australasian Institute of Mining and Metallurgy included in a list promulgated by the ASX from time to time. Andrew Spinks is a director of EcoGraf Limited and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking 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”. Andrew Spinks consents to the inclusion in this document of the matters based on his information in the form and context in which it appears.

Information in this document that relates to Mineral Resources is based on information compiled by Mr David Williams, a Competent Person, who is a Member of the Australasian Institute of Mining and Metallurgy. David Williams is employed by CSA Global Pty Ltd, an independent consulting company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking 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”. David Williams consents to the inclusion in this document of the matters based on his information in the form and context in which it appears.

Information in this document that relates to Ore Reserves has been compiled by Mr Steve O'Grady, who is a Member of the Australasian Institute of Mining and Metallurgy. Steve O’Grady is a full-time employee of Intermine Engineering and produced the Mining Reserve estimate based on data and geological information supplied by Mr Williams. Mr O'Grady has sufficient experience which is relevant to the estimation, assessment, evaluation and economic extraction of the Ore Reserve that he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves”. Steve O'Grady consents to the inclusion in this document of the matters based on his information in the form and context in which it appears.

==> picture [458 x 274] intentionally omitted <==

==> picture [34 x 34] intentionally omitted <==

12

Rule 5.5

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

quarterly cash	flow report	flow report
Name of entity
EcoGraf Limited
ABN 15 117 330 757	Quarter ended (“current quarter”)
	31 December 2020
Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) staff costs (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (financing, product marketing and business development) 1.9 Net cash from / (used in) operating activities	- (17) - - (100) (234) - 1 - - - (215)	- (17) - - (156) (381) - 1 - - - (422)
	(565)	(975)
2. Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities (b) tenements (c) property, plant and equipment (d) exploration & evaluation (e) investments (f) other non-current assets	- - - (52) - -	- - - (113) - -

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

Page 1

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
2.2 Proceeds from the disposal of: (a) entities (b) tenements (c) property, plant and equipment (d) investments (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - 36 - - - - -	- - 61 - - - - -
	(16)	(52)
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (release of cash bond) 3.10 Net cash from / (used in) financing activities	- - - - - - - - -	- - - - - - - - -
	-	-
4. Net increase / (decrease) in cash and cash equivalents for the period
4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above)	2,332 (565) (16) -	2,778 (975) (52) -

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

Page 2

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	-	-
	1,751	1,751
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	1,751 - - -	2,332 - - -
	1,751	2,332
6. Payments to related parties of the entity and their associates 6.1 Aggregate amount of payments to related parties and their associates included in item 1 6.2 Aggregate amount of payments to related parties and their associates included in item 2
		Current quarter $A'000
		89
		-

Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments.

Directors’ remuneration.

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

Page 3

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

7. Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 7.1 Loan facilities 300 - 7.2 Credit standby arrangements - - 7.3 Other (please specify) - - 7.4 Total financing facilities 300 - 7.5 Unused financing facilities available at quarter end 300 7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	300	-
	-	-
	-	-
	300	-
Unsecured, interest-free loan facility provided by related entities of Directors for an indefinite term, subject to cancellation and repayment on receipt of 30 days written notice.

8. Estimated cash available for future operating activities	8. Estimated cash available for future operating activities	$A’000
8.1 Net cash from / (used in) operating activities (item 1.9) 8.2 (Payments for exploration & evaluation classified as investing activities) (item 2.1(d)) 8.3 Total relevant outgoings (item 8.1 + item 8.2) 8.4 Cash and cash equivalents at quarter end (item 4.6) 8.5 Unused finance facilities available at quarter end (item 7.5) 8.6 Total available funding (item 8.4 + item 8.5) 8.7 Estimated quarters of funding available (item 8.6 divided by item 8.3)		(565) (52) (617) 1,751 300 2,051
		3.3
8.8 Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3 answer item 8.7 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7. If item 8.7 is less than 2 quarters, please provide answers to the following questions: 8.8.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?
	Answer:

Answer:

8.8.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Answer:

8.8.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer

Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

Page 4

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: 29 January 2021

Authorised by the board

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, 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. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

Page 5