NEOMETALS LTD — Capital/Financing Update 2019

Oct 16, 2019

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MOU TO COMMERCIALISE LITHIUM-ION BATTERY RECYCLING PROCESS WITH GLOBAL PARTNER

HIGHLIGHTS

• MoU with leading global processing plant manufacturer, SMS Group, to form a JV to accelerate commercialisation of Neometals’ lithium-ion battery recycling technology

• Successful completion of current pilot plant program will precede a decision to form a 50:50 JV to design and construct a Demonstration Plant and complete a Class 3 Engineering Cost Study

• Demonstration Plant to be operated in a hub and spoke configuration with Comminution and Beneficiation at SMS sites in Germany and the Hydrometallurgical Plant in Austria. All costs to be borne equally

• MoU contemplates SMS Group constructing and operating multiple commercial scale lithium-ion battery recycling plants on behalf of JV

• Agreement represents significant commercial validation of the Neometals recycling technology

Neometals Ltd ( ASX: NMT ) ( “Neometals” or “the Company” ) is pleased to announce that it has executed a binding memorandum of understanding (“ MoU ”) with German company, SMS Group GmbH (“ SMS ”), to jointly fund and evaluate the next stage of development work on the proprietary Neometals lithium-ion battery (“ LIB ”) recycling technology (“ Recycling Technology ”). SMS is a well-regarded German group with a global footprint and renowned capabilities in design, construction and operation of metallurgical plant and machinery for industrial processing.

Neometals has agreed to grant SMS an exclusive due diligence period to evaluate the results of Neometals’ Pilot Trial (which is currently in its final stages in Canada), after which point the parties propose to form a 50:50 incorporated joint venture (“ JV ”) to commercialise the Recycling Technology. Activities include the design, manufacture and operation of a circa2 tonne per day demonstration-scale plant at SMS sites in Germany and Austria. The demonstration test-work will run in parallel with an engineering cost study to generate operating and capital cost estimates and market evaluation (collectively “ JV Commercialisation Activities ”). All Commercialisation Activity costs will be shared equally.

Upon successful completion of the Commercialisation Activities, a final investment decision (“ FID ”) will be considered by the JV to construct its first commercial-scale LIB recycling plant. A positive FID would see Neometals contributing its technical and commercial know-how to the venture, including transfer of the Recycling Technology to the JV. SMS would contribute to the engineering design, fabrication, operation and maintenance of future recycling plants. SMS will also, on a best endeavours basis, procure debt financing for no less than 50% of the capital expenditure required. The remaining equity required would be contributed equally as would efforts to secure feed supply and offtake arrangements.

This MoU provides significant validation of the value of Neometals’ proprietary Recycling Technology and innovative business model. Co-developing our projects with strong operating and financial partners is a central tenet of Neometals corporate strategy, it allows projects to be exploited expeditiously at their optimal scale to achieve a superior risk-weighted return for its shareholders.

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

ACN 099 116 361 Locked Bag 8 Level 3, 1292 Hay Street West Perth WA 6872 West Perth WA 6005

T: +61 8 9322 1182 F: +61 8 9321 0556

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SMS and Neometals have been in confidential discussions for some time and will establish a working committee to govern the scope, timelines and budget for the JV Commercialisation Activities following completion of the Neometals Pilot Trial. The commercialisation activities are targeted to enable consideration of a FID for a commercial LIB recycling plant in first quarter of calendar year 2021.

Neometals Managing Director Chris Reed commented:

“Neometals is delighted to have agreed formal collaboration terms with SMS. SMS is a very well-respected name, particularly in Europe which is expected to be home to half the world’s battery megafactories outside of China. We are nearing completion of our Pilot Trial in Canada and the time is right to bring in a partner to accelerate commercialisation and underwrite the delivery of recycling services to the lithium-ion battery supply chain.

Having a brand name partner with best in class expertise on large scale design, operation and plant maintenance will provide confidence to our prospective feedstock supply partners, the cell and car makers who ultimately have the responsibility for endof-life recycling.

The strategic approach with this project, and the other Neometals growth opportunities, share a common thread. They revolve around an ecosystem to build and realise the inherent value of our mineral and technology assets to produce cashflows that we can share with our shareholders.”

SMS Group Director Herbert Weissenbaeck said:

“For the SMS group, entering into a joint venture with Neometals for the demonstration and commercialisation of its technology is a logical move towards quickly capturing a strong position in the value chain of the fast-growing lithium-ion battery market. We have familiarised ourselves with Neometals’ process, recognise the results of its R&D and are confident that it will provide a solid, environmentally friendly, economically attractive basis for advanced battery recycling solutions.”

About SMS

SMS group is one of world’s leading suppliers of metallurgical equipment and plants, offering state-of-the-art plant solutions across the complete value chain. Headquartered in Dusseldorf Germany and with 95 locations worldwide, the privately-owned SMS has grown successfully over 140 years, employs more than 13,000 people and turns over approximately 3 Billion Euro per annum.

Overview of Proposed JV Structure

• Following successful completion of the Pilot Trial, Neometals and SMS will form a German incorporated JV company (“ JVCo” ) to carry out the commercialisation activities.

• Terms to be finalised for shareholders agreement and decision on formation of the JV to occur within 4 months.

• The JVCo will be owned 50:50 by Neometals and SMS and have equal Board representation from both parties.

• Following a positive FID, JVCo will progress and develop a commercial LIB recycling business, managing construction, operation and maintenance of Recycling Plants.

• Neometals will contribute its technical and commercial know-how and it will transfer the Recycling Technology to the JV once a decision is made by the JV to proceed with commercial operations and contribute its share of future equity financing.

• SMS will undertake the engineering design, construction and operation of commercial Recycling Plants. SMS will, on a best endeavours basis procure no less than 50% of the debt financing required.

• Following successful operations and cash flow generation, it is proposed that the parties will receive dividends from JVCo, with distributions occurring as regularly as practicable and to the maximum extent possible.

• The parties will negotiate in good faith to agree a shareholders agreement capturing the above matters and other principles set out in the MoU, together with other provisions customary for an incorporated joint venture.

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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

About Neometals Ltd

Neometals innovatively develops opportunities in minerals and advanced materials essential for a sustainable future. The strategy focuses on de-risking and developing long life projects with strong partners and integrating down the value chain to increase margins and return value to shareholders.

Neometals has three core projects:

• Lithium-ion Battery Recycling – a proprietary process for recovering cobalt and other valuable materials from spent and scrap lithium batteries. Pilot plant testing currently underway with plans established to conduct demonstration scale trials with potential JV partner SMS Group;

• Lithium Refinery Project – Progressing plans for a lithium refinery development to supply lithium hydroxide to the battery cathode industry, underpinned by a binding lifeof-mine annual offtake option for 57,000 tonnes per annum of Mt Marion 6% spodumene concentrate; and

• Barrambie Titanium and Vanadium Project - one of the world's highest-grade hard-rock titanium-vanadium deposits, working towards a development decision in mid2021.

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