PATERSON RESOURCES LTD — Investor Presentation 2018

Jul 19, 2018

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HARDEY

RESOURCES LIMITED

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ASX ANNOUNCEMENT 20 July 2018

VANADIUM MINING INVESTOR PRESENTATION

“Building new vanadium supply chains”

Hardey Resources Limited (ASX: HDY) (“HDY” or “the Company”) releases a further investor presentation on the second acquisition to be read in conjunction with the first presentation released to the market on 4 July 2018. This presentation outlines more details on the proposed acquisition of six highly-prospective vanadium assets across Queensland and the Northern Territory (refer HDY ASX Release 19 July 2018).

For the full context of HDY’s two proposed vanadium transactions, shareholders are encouraged to read the Vanadium Mining release in conjunction with Nelly Vanadium Mine presentation (refer ASX Release 4 July 2018).

These releases will also be uploaded to the Company’s web site: http://www.hardeyresources.com.au/

For and on behalf of the Board

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Terence Clee Executive Chairman

Vanadium Mining “Building new vanadium supply chains”

Investor presentation July 2018

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Building new vanadium supply chains…

• ➢ Supply bottlenecks in China, coupled with accelerating new demand from the re-chargeable battery sector at the margin, have propelled the vanadium price to 10-year highs

• ➢ To meet this demand, Vanadium Mining (VanMin) has six projects across Queensland and Northern Territories which are highly prospective for vanadium mineralisation¬

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• ➢ Moreover, they are close to neighbours that have proven total resources, with supporting mining infrastructure and ready access to ports

• ➢ Australia is well-regulated, stable jurisdiction with low sovereign risk and comparative advantages for emerging vanadium suppliers aiming to fast track production

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¬ Refer HDY ASX Release 19 July 2018

…from Queensland and Northern Territory…

➢ QLD: There are four prospects in west QLD near to Intermin Resources (ASX: IRC) globally significant Richmond – project^ (Inferred Resource* 2,579Mt @ 0.32% V O cut-off of 0.29% V O 2 5 grade 2 5 grade), while Liontown Resources (LTR) acquired two prospects with historic resources¬

➢ NT: The two prospects are contiguous to TNG Ltd’s (TNG) Mt Peake project (Total – Resource* 160Mt @ 0.28% V 0 cut-off 2 5 O grade of 0.10% V2 5 grade), while TNG has a binding mine-life off-take and technology transfer agreement with Korea’s Woojin Metals^^¬

¬ Refer HDY ASX Release 19 July 2018

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…for fast-growing renewable battery sector

• ➢ China, which supplies around 50% of global vanadium, has started using more of its output following new rules to double reinforcing bar requirements, following recent earthquakes that caused considerable structural damage

• ➢ At the same time, the Chinse authorities have shut polluting mines, reducing output materially thereby propelling a search for new supply chains

• ➢ Traditionally, the steel industry consumes 90% of global vanadium, but demand from the renewable battery sector is starting to grow rapidly (Appendix A)

• ➢ In short, with demand for scalable energy storage accelerating, reflecting wider renewable energy adaption, Vanadium Redox Batteries (VRBs) are an emerging solution end-users prefer^

• ➢ Key VRB positives^ include: scalability, suitable for grid connection, 20-yr lifespan, instant energy release, excellent charge retention / discharge and using only one element in O

• electrolyte form: V2 5

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^ Refer LGO TSX Release 10 July 2018 p6

QLD: highly prospective for vanadium

• ➢ VanMin’s four projects in west Queensland – Sharptooth, Spike, Cera and Petrie – are in an area that favours shallow surface mining large tonnages of low-grade vanadium mineralisation

• ➢ They are near to IRC’s globally significant Richmond project (Inferred mineral resource* 2,579Mt @ 0.32% V2O5 cut-off grade of 0.29% V2O5) and ground held by LTR^¬

• ➢ However, while LTR’s tenure contains historic vanadium resources, they do not comply with the JORC (2012) code

• ¬ Refer HDY ASX Release 19 July 2018

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Sharptooth
project
Spike,
Cera &
Petrie
projects
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^IRC ASX Release 20 March 2018 & LTR ASX Release 28 November 2017 * Mineral Resources reported to the JORC (2012) Code

QLD: regional geology – Toolebuc Formation

• ➢ Within the Mt Isa region, areas known for the prevalence of oil shale usually have occurrences of vanadium and uranium mineralisation

• ➢ This combination of mineralisation is typically found within the Toolebuc Formation¬ (TF), which can have grades O

• up to 0.5% V2 5

• ➢ This is consistent with the underlying geology apparent at IRC and LTR’s respective projects

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¬ Refer HDY ASX Release 19 July 2018

Sharptooth project overview & legacy drilling

• ➢ Sharptooth is close to IRC’s Richmond project, while legacy exploration reports highlight multiple boreholes (in/external to the tenure) with elevated vanadium linked to TF subcrop & outcrops

• ➢ All five boreholes within the tenure have historic vanadium results

• ➢ Holes 3 to 5 targeted TF at depth that will potentially be amenable to open pit mining

• ➢ No further drilling was completed in the outcropping formation

• ➢ In the north of the tenure where TF is outcropping, shallow vanadium mineralisation is likely to be apparent

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For further details on the borehole assays refer to HDY ASX Release 19/07/2018

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Spike, Cera, Petrie: project overviews

• ➢ For Spike/Cera/Petrie legacy reports highlight 30/122/18 boreholes respectively targeting the TF for elevated vanadium, molybdenum and uranium within the tenures

• ➢ Numerous historic reports and research confirm the projects and greater region are highly prospective for vanadium mineralisation

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Spike
Cera
Petrie
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Spike, Cera, Petrie: historic drilling

• ➢ There are numerous legacy drillholes across the three projects

• ➢ All have been assayed and confirm elevated vanadium levels

• ➢ Potentially, utilising this legacy data and reviewing historic reports, there is an opportunity to fast-track modelling an inferred vanadium resource that complies with the JORC (2012) code

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Spike
project
Cera
project
Petrie
project
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Sharptooth / Spike projects: vanadium targets

➢ Vanadium targets selected from desktop work identified TF subcrop & outcrops

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Sharptooth Fieldwork & Drill Targets Spike Fieldwork & Drill Targets
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Cera / Petrie projects: vanadium targets

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NT: prospective for high-grade vanadium

• ➢ The two NT prospects, Wollagalong and Chisholm, are contiguous to TNG’s Mt Peake project

• ➢ They are in an area with higher-grade mineralisation associated with ore bodies that have the potential to be selectively mined by open pit methods

• ➢ Mt Peake is the most advanced vanadium project in the region, with a defined resource (Total Resource^^ 160Mt @ 0.28% V O O 2 5 cut-off grade of 0.10% V2 5 grade* ¬)

• and completed feasibility study

• ➢ TNG have a mine-life off-take agreement with Woojin Metal (Korea) and technology transfer agreement*

¬ Refer HDY ASX Release 19 July 2018

• TNG ASX Release 20 November 2017 & TNG ASX Release 26 March 2013

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• ^^ Mineral Resources reported to the JORC (2012) Code

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NT: magnetic image highlights mineralisation

• ➢ The magnetic response identified by aerial surveys indicates two phases of mineralisation, with E-W and N-S trending structures visible and intersecting within the project areas

• ➢ The projects have similar geological and magnetic features to Mt Peake’s declared resource for vanadium, titanium and iron

• ➢ These features are believed to be gabbro hosted magnetite deposits, which are key targets for follow up field work ¬

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¬ Refer HDY ASX Release 19 July 2018

Wollagalong & Chisholm exploration targets

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Cihisholm – Fieldwork & drill targets
Wollagalong – Fieldwork & drill targets
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APPENDICES

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A: Supply-side dynamics at work…

• ➢ On the supply side, China’s clamp down on polluting vanadium mines reduced its output nearly 5% YoY in 2017 to 43,000t

• ➢ Higher output from South Africa resulted in only a 2% increase in global production to 80,400t

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A: …limited new options available

• ➢ According to USGS, Australia has the fourth largest vanadium reserves globally, which are largely unexploited (Note: no data is available on South America)

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A: Demand-side applications accelerating

• ➢ Traditionally the steel industry has driven vanadium demand, but at the margin it is now the stored energy sector

• ➢ As such, with demand for scalable energy storage accelerating, reflecting wider renewable energy adaption, VRBs are an emerging solution end-users prefer^

• ➢ Key VRB positives comprise:

• ❖ Scalability and suitable for grid connection;

• ❖ 20-yr lifespan and instant energy release;

• ❖ Excellent charge retention / discharge; and

• ❖ O Using only one element in electrolyte form: V2 5

• ➢ This transformation is propelling vanadium towards energy commodity status

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^ Refer LGO TSX Release 10 July 2018 p6

B1: Vanadium explained

• ➢ Vanadium is a soft, ductile and very rare metal

• ➢ Periodic table symbol V and atomic number 23

• ➢ Vanadium can be found in numerous mineral forms and as a trace element in oil deposits

• ➢ Typical ores are vanadinite, carnotite and patronite

• ➢ Vanadium must be processed into vanadium O

• pentoxide (V2 5) for market requirements

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B2: Types of vanadium mineralisation

• ➢ Based on the location of VM’s projects in QLD and NT, it is geologically exposed to two differing types of vanadium mineralisation:

• ❖ Oil shale vanadium mineralisation: this grade of vanadium mineralisation ranges from 0.30-to-0.40% V within enormous deposits (from several hundred to > a billion tonnes) that are located near surface which facilitates easy and economic open-pit bulk mining methods

• ❖ Titano-magnetite vanadium mineralisation: the vanadium mineralisation grade is circa 0.30% V, comprising a polymetallic ore located at shallow depths enabling exploitation via open cut mining

  • Deposits potentially have economic mineralisation including TiO2, Fe, Al2O3, SiO2, and V O 2 5 which is the case with TNG’s Mt Peake deposit in NT

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C: Vanadium uses – traditional…

• ➢ Vanadium is used for alloys (85%), acid production, ceramics and batteries

• ➢ Vanadium is added in small amounts (< 0.2%) to structural steels

• ➢ The alloy improves steel toughness, ductility, and strength owing to the grain refining effect of vanadium carbide precipitates

• ➢ These steels are used in automotive components, such as hoods and door panels, in oil and gas pipelines, and in structural steel

• ➢ Notable legacy – Vanadium was first used in the production of the Ford Model T

Structural steel products

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Ford Model T

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C: …and hi-tech applications

• ➢ Vanadium Redox Battery (VRB) technology provides a commercial solution for the grid storage of green energy

➢ VRBs can connect to power plants, electrical grids or solar energy sources

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D: How VRBs work and key advantages

• ➢ Vanadium ions permit a rechargeable flow to store or dissipate energy

VRB Advantages:

• ➢ The fluid electrolyte storage tanks provide scalability in energy capacity

• ➢ The potential to be left completely discharged for long periods of time

• ➢ The electrolyte is aqueous and inherently safe and nonflammable

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DISCLAIMER

This presentation has been prepared by Vanadium Mining Pty Ltd (Company). It contains general information about the Company’s activities current as at the date of the presentation. The information is provided in summary form and does not purport to be complete. This presentation is not to be distributed (nor taken to have been distributed) to any persons in any jurisdictions to whom an offer or solicitation to buy shares in the Company would be unlawful. Any recipient of the presentation should observe any such restrictions on the distribution of this presentation and warrants to the Company that the receipt of the presentation is not unlawful. It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in the Company will be entered into on the basis of this presentation or any information, opinions or conclusions expressed in the course of this presentation.

This presentation is not a prospectus, product disclosure document or other offering document under Australian law or under any other law. It has been prepared for information purposes only. This presentation contains general summary information and does not take into account the investment objectives, financial situation and particular needs of any individual investor. It is not financial product advice and investors should obtain their own independent advice from qualified financial advisors having regarding to their objectives, financial situation and needs. The Company nor any of their related bodies corporate is licensed to provide financial product advice.

You should not act or refrain from acting in reliance on this presentation, or any information, opinions or conclusions expressed in the course of this presentation. This presentation does not purport to be all inclusive or to contain all information which its recipients may require in order to make an informed assessment of the prospects of the Company. You should conduct your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation before making any investment decision.

Recipients of this presentation must undertake their own due diligence and make their own assumptions in respect of the information contained in this presentation and should obtain independent professional advice before may any decision based on the information. No representation or warranty, express or implied, is made in relation to the fairness, accuracy or completeness of the information, opinions and conclusions expressed in the course of this presentation. To the maximum extent permitted by law, no representation, warranty or undertaking, express or implied, is made and, to the maximum extent permitted by law, no responsibility or liability is accepted by the Company or any of its officers, employees, agents or consultant or any other person as to the adequacy, accuracy, completeness or reasonableness of the information in this presentation. To the maximum extent permitted by law, no responsibility for any errors or omissions from this presentation whether arising out of negligence or otherwise is accepted. An investment in the shares of the Company is to be considered highly speculative.

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