QEM LIMITED — Interim / Quarterly Report 2021

Jan 24, 2021

ASX ANNOUNCEMENT ASX ANNOUNCEMENT

25 January 2021

Quarterly update for the period ending 31 December 2020

QEM Limited (ASX: QEM) ("QEM" or "Company") is pleased to provide an update on its activities for the quarter ending 31 December 2020.

The Company continued its focus on the exploration and development of its flagship Julia Creek vanadium and oil shale project, which covers 249.6km² in the Julia Creek area of North Western Queensland, Australia.

QEM Managing Director, Mr Gavin Loyden, said the Company remained focused on process route and extraction testing at Julia Creek during the December quarter, to ensure the continued development of its flagship project had the strongest foundations possible.

"We have extended the timeline for the processing route testing because during the course of the testing additional reagents and scenarios were identified," Mr Loyden said.

"We want to leave no stone unturned during the testing phase, so we can fully unlock the extraordinary value potential the Julia Creek dual commodity project possesses.

"I was delighted that post-quarter end we engaged UK based, GSA Environmental for further vanadium extraction testing, which will narrow in on the highly-successful and comprehensive vanadium extraction testing we have already conducted.

"GSAe's expertise in extracting vanadium from a variety of feedstocks including oil shale and petrochemicals is perfectly suited to QEM with our development of a vanadium and oil shale project."

Processing Route Testing Update

As stated in the ASX announcement dated 17 September 2020, QEM engaged an independent NATAaccredited laboratory company, HRL Technology Group Pty Ltd (HRL) to conduct tests to develop the optimal processing route for Julia Creek.

Results were initially scheduled to be finalised by the end of the December quarter (refer to ASX announcement dated 13 October 2020).

The timeline for this phase of testing was extended to facilitate the inclusion of additional scenarios that emerged as viable options during the course of the testing.

This phase of testing is now expected to be complete by the end of the current quarter.

Following the completion of these tests, engineering and costing activities to develop and evaluate the extraction process, including assessing economic viability, will be progressed by E2C Advisory Pty Ltd.

John Foley Chairman Gavin Loyden Managing Director Daniel Harris Non-Executive Director David Fitch Non-Executive Director

GSAe Engaged for Vanadium Extraction Tests

Post-December quarter end, QEM engaged UK-based engineering consultancy GSA Environmental Limited (GSAe), to conduct vanadium extraction test work on the Julia Creek shale.

GSAe operates a state-of-the-art R&D laboratory, staffed with industrially experienced, PhD qualified scientists based at the University of Lincoln in the UK and possesses intellectual property and patented technology related to the efficient extraction of vanadium from various feedstocks including petrochemicals and heavy crudes, which is extremely beneficial to QEM as a prospective vanadium and oil shale producer.

GSAe also has unique insight into the economic recovery of other metals that are inherent to crude oil.

This testing phase builds on the initial highly-successful vanadium extraction tests (refer to ASX announcement dated 11 August 2020), with tests carried out on other vanadium extraction scenarios, acid leaching and roasting reagents.

The test work will narrow in on the optimal temperature profile and run time for vanadium extraction at Julia Creek, and is expected to be finalised by the current quarter.

It will be complementary to the processing route test work currently being undertaken by HRL, as the Company methodically progresses Julia Creek towards the pre-feasibility study (PFS) stage.

COVID-19 Impacts

QEM is pleased to report that it continues to experience no material COVID-19 impacts on its operations.

The Company is maintaining adherence to Government directives to ensure it does its part to mitigate the risk of an outbreak.

John Foley Chairman Gavin Loyden Managing Director Daniel Harris Non-Executive Director David Fitch Non-Executive Director

Use of Funds

In line with obligations under ASX Listing Rule 5.3.4, QEM Limited provides the following information with respect to its Use of Funds Statement set out in its Replacement Prospectus dated 20 August 2018 and its actual expenditure since ASX admission on 17 October 2018.

Expenditure Item	UseofFunds(20.8.18)'000	ActualExpenditure(17.10.18–17.10.20)'000	Variance'000	Note
Opening cash	480	40	(440)	1
Proceeds from the Offer	5,000	5,000	-
Total	5,480	5,040	(440)
Estimated expenses of the Offer	510	340	170	2
Director fees, consulting fees and staff wages	1,070	1,125	(55)	3
Administration expenses and working capital	1,140	976	164	4
Exploration and development expenditure onthe Julia Creek Project	2,760	912	1,848	5
Interest income	-	(91)	91
R&D/Grant income	-	(372)	372
Total	5,480	2,890	2,590
Remaining Cash at 17 October 2020	-	2,150	2,150

Notes:

• 1. Cash balance on 20.8.18 varies to cash balance on 17.10.18 due to payments towards expenses of the Offer, director fees, consulting fees, staff wages and administration expenses over this period.
• 1. Expenses of the Offer paid post 17.10.18 totalled $340k. Expenses of the Offer paid prior to 17.10.18 were $165k giving a grand total of $505k. Actual expenses of the Offer are materially consistent with the use of funds budget, with variances related to timing not quantum.
• 1. Actual director fees, consulting fees and staff wages are materially consistent with use of funds budget. Note, for cashflow purposes the Company classifies its Managing Director and Exploration Manager wages as directly attributable to exploration and development expenditure on the Julia Creek Project.
• 1. Actual Administration expenses and working capital costs are materially consistent with use of funds budget.
• 1. Actual Exploration and development expenditure on the Julia Creek Project was under the use of funds budget by $1,848k. A further detailed breakdown of exploration and development expenditure.

John Foley Chairman Gavin Loyden Managing Director Daniel Harris Non-Executive Director David Fitch Non-Executive Director

Expenditure Item	UseofFunds(20.8.18)'000	ActualExpenditure(17.10.18–17.10.20)'000	Variance'000
Drilling programme	480	83	397
Engineering and feasibility studies	1,240	447	793
Environmental	708	-	708
Geology and geophysical surveys	228	336	(108)
Statutory compliance	104	46	58
Total	2,760	912	1,848

The major variance in exploration and development expenditure relates to engineering and feasibility studies and environmental costs. These costs largely relate to the preparation of environmental impact statements, pre-feasibility studies and mining application costs which are deferred until such time as the Company settled upon the most suitable processing technology for its vanadium / oil shale project. With the Company's Julia Creek Project containing an existing defined global resource of 2,760Mt Vanadium JORC resource with an average V2O5 content of 0.30%, and a 3C Contingent Oil Resource of 783 MMbbls of Oil, focus has predominately been on process development rather than on exploration. Development progress has been slower than anticipated due to factors outside of the Company's control with external providers, however the Company currently has a number of promising technologies which it is reviewing for application, using both internal resources and external consultants.

Related Party Payments

ASX Listing Rule 5.3.5: Payments to related parties of the Company and their associates during the Quarter totalled $61k. The Company advises that this relates to non-executive director's fees, executive directors' salaries and a technical consulting fee to Energy Source LLC (an entity associated with Mr Daniel Harris).

Other ASX requirements

ASX Listing Rule 5.3.1: Exploration and Evaluation Expenditure during the Quarter was $139k. Exploration during the quarter focused on oil and vanadium extraction testwork - full details of activity during the Quarter is set out above.

ASX Listing Rule 5.3.2, there were no mining production and development activities during the Quarter.

Tenement Schedule

In line with obligations under ASX Listing Rule 5.3.3, QEM Limited provides the following information with respect to its Mining Tenement holdings as at 31 December 2020.

Project	Country	Tenement	Status	% Held	Change DuringQuarter
Julia Creek	Australia	EPM25662	Granted	100%	-
Julia Creek	Australia	EPM25681	Granted	100%	-
Julia Creek	Australia	EPM26429	Granted	100%	-
Julia Creek	Australia	EPM27057	Granted	100%	-

- END -

John Foley Chairman Gavin Loyden Managing Director Daniel Harris Non-Executive Director David Fitch Non-Executive Director

This announcement was authorised for release on the ASX by the Board of QEM Limited.

For further information, please contact:

Gavin Loyden Managing Director P: +61 7 3303 0161 E: gavin@qldem.com.au Shane Murphy Investor Relations P: +61 420 945 291 E: shane.murphy@fticonsulting.com

ABOUT QEM

QEM Limited (ASX: QEM) is a publicly listed company which is focussed on the exploration and development of its flagship Julia Creek Project, covering 250km² in the Julia Creek area of North Western Queensland.

The Julia Creek vanadium / oil shale project is a unique world class resource with the potential to deliver innovative energy solutions, through the production of energy fuels and vanadium pentoxide. QEM strives to become a leading producer of liquid fuels and in response to a global vanadium deficit, also aims to become a global supplier of high-quality vanadium pentoxide, to both the nascent energy storage sector and the Australian and international steel industry.

This globally significant JORC (2012) Mineral Resource of 2,760 Mt @ 0.30% V2O5 is one of the single largest ASX listed vanadium resources and represents a significant opportunity for development.

The tenements form part of the vast Toolebuc Formation, which is recognised as one of the largest deposits of vanadium and oil shale in the world and located less than 16km east of the township of Julia Creek. In close proximity to all major infrastructure and services, the project is intersected by the main infrastructure corridor of the Flinders Highway and Great Northern Railway, connecting Mt Isa to Townsville.

John Foley Chairman Gavin Loyden Managing Director Daniel Harris Non-Executive Director David Fitch Non-Executive Director