NEOMETALS LTD — Capital/Financing Update 2018

Nov 15, 2018

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16 November 2018
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NEOMETALS COMMENCES UPDATE OF BARRAMBIE DEFINITIVE FEASIBILITY STUDY

Highlights

• Record high vanadium prices (US$130/kg V) and robust market outlook support the commencement of a formal update to the historic Barrambie Vanadium Definitive Feasibility Study.

• The updated Study will examine staged development options including offshore processing of crushed ore, onsite production of a high-grade concentrate for sale, and refining to produce vanadium chemical products.

• Adaman Resources appointed to complete mining, crushing and transport cost studies. Snowdens appointed to estimate Ore Reserves. Ausenco appointed to prepare new Operating and Capital Cost Estimates.

• The Barrambie deposit sits on a granted mining lease, with full native title agreement and ministerial approval for

• the development of an open-cut mine and processing plant in 2012, extension of term currently pending.

• Updated Barrambie Defintive Feasibility Study scheduled for completion in the June quarter 2019.

Industrial minerals project developer, Neometals Ltd (ASX: NMT) (“ Neometals ” or the “ Company ”), is pleased to announce the formal commencement of an update to its 2009 Definitive Feasibility Study ( “DFS”) that considered primary vanadium production from the traditional salt roast-leach operation at the Barrambie Vanadium-Titanium-Magnetite (“ VTM ”) project (“ Barrambie ”). The updated DFS (“ Updated DFS ”) will be JORC 2012 compliant based on the latest Neometals 2018 Mineral Resource Estimate ( see Neometals ASX announcement dated 17[th] April 2018 ).

Barrambie is one of the world’s highest-grade hard rock titanium deposits and hosts one of the largest vanadium projects globally. Optionality afforded by distinct high-grade zones and co-product streams has driven Neometals to consider a staged development approach. The Company is investigating direct shipping ore (“ DSO ”) being toll concentrated for sale to processors in China in parallel with the development of on-site concentration and refining operations (see Figure 5).

Neometals has engaged a range of expert consultants to work on various parts of the Updated DFS, which will collectively reveal the technical feasibility and economic viability of each individual stage of development with completion expected in the June quarter 2019. In parallel, the Company is continuing to advance discussions with potential offtake parties for supply of ore, concentrates and chemical products.

Chris Reed, Neometals Managing Director said “ With strong vanadium pricing and end-users demanding secure supply of quality feedstocks from low-risk jurisdictions, Neometals is moving quickly to capitalise on this significant market opportunity. Barrambie has played second fiddle in recent years to our lithium endeavours, however it is to our knowledge, the most advanced, undeveloped greenfields vanadium project globally. Our extensive historical exploration and evaluation works enable us to fasttrack an updated DFS. This step-wise approach is consistent with the staged development and de-risking strategy we employed to successfully develop our lithium business.”

info@neometals.com.au neometals.com.au

ACN 099 116 361 Locked Bag 8 T: +61 8 9322 1182 Level 3, 1292 Hay Street West Perth WA 6872 F: +61 8 9321 0556 West Perth WA 6005

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16 November 2018 – NEOMETALS COMMENCES UPDATE OF BARRAMBIE DEFINITIVE FEASIBILITY STUDY
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Background on Barrambie

Located approximately 80km North West of Sandstone in Western Australia, Barrambie has a granted mining permit and is 100% owned by Neometals through Australian Titanium Pty Ltd. Barrambie has had approximately A$30M exploration and evaluation expenditure invested in it since 2003 and is one of the world’s highest-grade titanium-vanadium hard-rock assets. Barrambie development was paused after completion of the 2009 DFS where prices remained stagnant for more than six years following the global financial crisis. A strong market backdrop for both vanadium and titanium has driven Neometals to accelerate its development plans at Barrambie where optionality afforded by distinct high-grade zones and the possibility of co-products is driving staged development evaluation for multiple products.

Figure 1: (Left) Barrambie project location and (Right) Plan of Project tenure over outline of the Mineral Resource. Distribution of titanomagnetite (VTM) mineralization along strike and to the west of Barrambie is based on interpretation of aeromagnetic data.

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Figure 2 : Cross section showing typical distinct layers of high-grade vanadium and titanium bands

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Figure 3 : Chart showing Barrambie project scale against select Primary Vanadium Projects.

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Figure 4 : Mineral Resource Estimate – April 2018.

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Barrambie Evaluation and Development Strategy

Since 2017 there have been significant increases in vanadium prices which has seen record highs traded (> US $ 130/kg V). The strong vanadium market has been driven by reduced long-term production capacity (from shutdowns caused by environmental regulation in China), limited new mine production, increased vanadium requirements in new Chinese rebar standards, and increasing consumption of vanadium in aerospace alloys and stationary storage applications.

The Updated DFS will evaluate a range of processing options for a staged Barrambie development. Phase 1 contemplates extraction of the high vanadium Central Bands and/or the high-titanium Eastern Band, onsite crushing and screening before being processed into concentrates offshore (DSO option). Early revenues from toll concentrate sales to processors in China could provide capital to pursue integrated on-site vanadium concentrate (Phase 2) and chemical production via a standard salt roast leach process (either vanadium pentoxide flake (99% V2O) and/or Ferrovanadium (FeV)(see Figure 4 below). Similar to the Neometals integrated lithium strategy, the Barrambie development will look to generate earnings, de-risk each stage of the flowsheet and attract strong partners where appropriate.

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Figure 5 : Image depicting the staged development strategy being evaluated in the Updated DFS.

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Figure 6 : Image depicting the processing steps being investigated in the Updated DFS on the Central and Eastern Bands. The dotted ‘Battery Limit’ lines show where the scope of the Updated DFS stops.

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Historical 2009 DFS Highlights

The 2009 DFS assessed a salt roast leach vanadium project based on an open pit mine with crushing, milling, beneficiation and refinery to produce 6,300t of vanadium. Key highlights from the 2009 DFS were as follows:

• Production of 6,160t of Vanadium as Ferrovanadium (FeV80);

• Indicated and Inferred Resource of 65Mt of 0.82% V2O5, using a cut-off of 0.5% V2O5;

• Probable Ore Reserves of 39.7 Mt of ore at a grade of 0.82% V2O5;

• Minimum of 12 years mine life at throughput of 3.2 Mt per annum;

• Capital cost estimated at A$628.9 million*; and

• Total operating cost of less than US$20/kg vanadium as FeV.

*This cost estimate provides a Definitive Feasibility level capital cost for the defined scope to an assessed accuracy of +12.5% and -10.9% at the 90% confidence range.

CAUTIONARY STATEMENT

The information in relation to the 2009 DFS was prepared and first disclosed under the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code)(2004 Edition). It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

The Mineral Resource Estimate underpinning the 2009 DFS & Ore Reserves for Barrambie were updated by Neometals and are set out in the announcement of 17 April 2018 available at www.neometals.com.au/reports/2018-04-17-5645-BarrambieP.pdf.

The proposed throughput rate and minelife takes into account the Probable Ore Reserves at April 2009 which were based on an Indicated Mineral Resource. The Probable Ore Reserve below is reported for a diluted cut-off grade of 0.6% V2O5. All tonnes are estimated as dry tonnes.

Ore (Mt) diluted*	V2O5 (%) diluted*	TiO2 (%) diluted*	Fe2O3 (%) diluted*	Al2O3 (%) diluted*	SiO2 (%) diluted*
39.7	0.82	15.69	48.77	11.59	16.12

The long-term price assumption of vanadium used for mine planning and financial modelling purposes for the 2009 DFS was US$30/kg of contained V and a USD exchange rate of 60 cents. The current price of vanadium is US$120-130/kg of V and the spot exchange rate 72 cents.

There is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised.

This financial year Neometals commissioned two EPC engineering companies to conduct external reviews of the operating and capital costs which separately confirmed the operating and capital costs are within the assessed accuracy levels. Neometals management believes there is a reasonable basis for disclosing these costs.

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Figure 7 : Barrambie published 2009 DFS operating costs against current global cash cost curve and various international prices.

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Tenure and Approvals

The Barrambie Mineral Resource sits entirely within granted mining lease M57/173, which is in good standing. Neometals is party to a Native Title Agreement covering all tenure within the project. Neometals received Ministerial Statement 911 approving its Public Environmental Review document for the development of a mining and processing operation to produce vanadium chemicals in 2012, the environmental approval process began in late 2009. The approval document gives the proponent 5 years to implement the project, in September 2018 Neometals lodged a section 46 application seeking extension of term in which to implement the project. Neometals expects to receive the extension in the March Q 2019.

A Mining Proposal for an initial open pit mining operation producing 1Mtpa of ROM ore is materially complete and will be lodged this month with the Western Australian Department of Mines, Industry Regulation and Safety (DMIRS) and is expected to be received in the March Q 2019. A Mining Proposal producing the full 3.2Mtpa of ROM ore, which is the optimal extraction rate for Phase 1 DSO and for the integrated vanadium chemical operation, is expected to be lodged with DMIRS in the March Q 2019.

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Project Timeline

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* Subject to board approval

ENDS

For further information, please contact:

Chris Reed Jeremy Mcmanus Managing Director General Manager - Commercial and IR Neometals Ltd Neometals Ltd T: +61 8 9322 1182 T: +61 8 9322 1182 E: info@neometals.com.au E: jmcmanus@neometals.com.au

Competent Person Attribution

The estimated Ore Reserves underpinning the production target in the 2009 DFS in this report have been prepared by a competent person in accordance with the requirements in the JORC Code (2004 Edition). The estimated Mineral Resources underpinning the production target in the 2009 DFS in this Report have been prepared by a competent person in accordance with the requirements in the JORC Code (2012 edition).

Information in this report that relates to the Barrambie project Ore Reserve and Mineral Resource estimate is based on information compiled by Mr Christopher Reed. Mr Reed is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity to which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the JORC Code. Mr Reed is a full-time employee of Neometals Ltd and consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

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Table A: Supporting Information for Vanadium Project Comparisons by Status, Mineral Resource Estimate and Grade

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About Neometals Ltd

Neometals Limited (“Neometals” - ASX:NMT) is a developer of industrial mineral and advanced materials projects. Neometals has two key divisions – a fully integrated Lithium business and a Titanium-Vanadium development business. Both are supported by proprietary technologies that assist downstream integration through revenue enhancement and cost efficiencies.

Neometals owns a 13.8% stake in the Mt Marion lithium mine near Kalgoorlie, which operates one of the world’s biggest lithium concentrators. Neometals holds an offtake option, which forms the backbone to its fully-integrated lithium business aspirations which include a Lithium Hydroxide Refinery and Lithium-ion Battery Recycling process. The 100%-owned Barrambie Titanium-Vanadium Project in WA’s Mid-West is one of the world’s highest-grade hard-rock titanium-vanadium deposits.

Neometals’ strategy focuses on de-risking and developing long life projects with strong partners and integrating down the value chain to increase margins. The company aims to leverage its cashflows to grow opportunities that provide sustainable mineral and material solutions to customers and to return value to shareholders.

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