QUANTUM GRAPHITE LIMITED — Investor Presentation 2014

Sep 10, 2014

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Valence Industries Manufacturing our Carbon Future Asia Pacific I Europe I North America

September 2014 Christopher S. Darby CEO & MD

Valence (noun). the combining power of an element, especially as measured by the number of hydrogen atoms it can displace or combine with: carbon always has a valence of 4.

© Valence Industries Limited ASX : VXL ASX : VXLO 1

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Disclaimer

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This
presenta,on
includes
certain
statements
that
may
be
deemed
forward-­‐looking
statements.
All
statements
in
these
presenta,on
materials
(other
than
statements
of
historical
facts)
which
address future
produc,on,
reserve
poten,al,
explora,on
ac,vi,es
and
events
or
developments
that
the
Company
expects,
are
forward-­‐looking
statements.

Such
forward-­‐looking
statements
include,
without limita,on:
(i)
es,mates
of
future
graphite
prices,
supply,
demand
and/or
produc,on;
(ii)
es,mates
of
future
cash
costs;
(iii)
es,mates
of
future
capital
expenditures;
(iv)
es,mates
regarding
,ming
of future
development,
construc,on,
produc,on
or
closure
ac,vi,es;
(v)
statements
regarding
future
explora,on
results;
(vi)
statements
regarding
cost
structure,
project
economics,
or
compe,,ve posi,on,
and;
(vii)
statements
comparing
the
Company’s
proper,es
to
other
mines,
projects
or
metals.
Although
the
Company
believes
that
such
forward-­‐looking
statements
are
based
on
reasonable assump,ons,
such
statements
are
not
guarantees
of
future
performance
and
actual
results
or
developments
may
differ
materially
from
those
in
the
forward-­‐looking
statements.
Factors
that
could
cause actual
results
to
differ
materially
from
those
in
forward-­‐looking
statements
include
market
prices,
exploita,on
and
explora,on
successes,
con,nued
availability
of
capital
and
financing,
and
general economic,
market
or
business
condi,ons.

Investors
are
cau,oned
that
any
such
statements
are
not
guarantees
of
future
performance,
that
the
Company
expressly
disclaims
any
responsibility
for revising
or
expanding
the
forward-­‐looking
statements
to
reflect
actual
results
or
developments,
and
that
actual
results
or
developments
may
differ
materially
from
those
projected,
in
the
forward-­‐ looking
statements.

No
representa,on
or
warranty
is
given
by
the
Company
as
to
the
accuracy
or
completeness
of
the
informa,on
contained
in
this
presenta,on.
Neither
the
Company
nor
its
officers
or
employees
accept responsibility
or
liability
(to
the
maximum
extent
permiOed
by
law)
for
any
loss
of
damage
suffered
or
incurred
by
any
other
person
or
en,ty
however
caused
and
rela,ng
in
any
way
to
these presenta,on
materials
including,
without
limita,on,
the
informa,on
contained
in
the
presenta,on
material
and
its
accuracy,
completeness,
currency
or
reliability.
This
presenta,on
does
not
cons,tute
a recommenda,on
regarding
the
securi,es
of
the
Company,
and
should
not
be
construed
as
legal
or
financial
advice.

It
has
been
prepared
for
informa,on
purposes
only
and
contains
general
summary informa,on
and
does
not
take
into
account
the
circumstances
of
any
individual
investor.
Prospec,ve
investors
in
the
Company
are
encouraged
to
obtain
separate
and
independent
advice
with
regard
to any
investment
in
the
Company.
By
accep,ng
the
presenta,on
materials,
the
recipient
agrees
to
keep
permanently
confiden,al
the
informa,on
contained
herein.

The
informa,on
in
this
presenta,on
which
relates
to
Indicated
and
Inferred
Mineral
Resources
compiled
in
accordance
with
the
JORC
Code
2012
is
based
on
informa,on
supplied
by
Ms.
Karen
Lloyd,
Mr. Ingvar
Kirchner
and
Ms.
Ellen
Maidens
as
detailed
in
the
Company’s
Replacement
Prospectus
released
as
an
ASX
announcement
on
18
November
2013.
The
Company
confirms
that
it
is
not
aware
of
any new
informa,on
included
in
this
presenta,on.

Valence
confirms
that
all
material
assump,ons
underpinning
the
es,mates
in
this
report
con,nue
to
apply
and
have
not
materially
changed.

The Company
confirms
that
the
form
and
content
in
which
the
Competent
Person’s
findings
are
presented
have
not
been
materially
modified.
The
informa,on
in
this
announcement
that
relates
to
the Mineral
Resources
pertaining
to
the
Company’s
in-­‐fill
drilling
campaign
results
is
based
on
informa,on
compiled
by
Ms
Karen
Lloyd,
who
has
been
engaged
as
General
Manager
–
Technical
Delivery
by Valence
Industries.
Ms
Lloyd
is
a
Member
of
the
Australian
Ins,tute
of
Mining
and
Metallurgy.
Ms
Lloyd
has
sufficient
experience
that
is
relevant
to
the
style
of
mineralisa,on
and
type
of
deposit
under considera,on
and
to
the
ac,vi,es
being
undertaken
to
qualify
as
Competent
Persons
as
defined
in
the
2012
Edi,on
of
the
“Australasian
Code
for
Repor,ng
of
Explora,on
Results,
Mineral
Resources
and Ore
Reserves”.
Ms
Lloyd
consents
to
the
inclusion
in
this
release
of
the
maOers
based
on
their
informa,on
in
the
form
and
context
as
it
appears.

Photographs,
maps,
charts,
diagrams
and
schema,c
drawings
appearing
in
this
presenta,on
are
owned
by
and
have
been
prepared
by
or
commissioned
by
the
Company,
unless
otherwise
stated.
Maps and
diagrams
used
in
the
presenta,on
are
illustra,ve
only
and
may
not
be
drawn
to
scale.
Unless
otherwise
stated,
all
data
contained
in
charts,
graphs
and
tables
is
based
on
informa,on
available
at
the date
of
this
presenta,on.
By
accep,ng
this
presenta,on
the
Recipient
agrees
to
be
bound
by
the
foregoing
statements.

©
Valence
Industries
Limited

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Valence Industries 2014

Listed
on
ASX 6
Jan
2014

80,000 tonnes
of MOUs Aug
2014 First
Sale of
Graphite Apr
2014

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Cor orate Overview p

ASX Code: VXL & VXLO
Ordinary Shares on issue	168.4m
Op,ons on issue	68.6m
Market cap (@70 cents) (COB: 2/9/14)	$118m
Cash (End Q2 2014)	~$6.9m
Debt	Nil
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Corporate Overview

Major Shareholders	Major Shareholders
Strategic Energy Resources Ltd (Restricted)	12.94%
Avatar Energy Pty Ltd	4.56%
EERC Australasia Pty Ltd (Restricted)	3.94%
HSBC Custody Nominees (Australia) Ltd	3.50%
Chimaera Capital Ltd	2.65%
Top 20 shareholders hold 46.28%

Directors
&
Senior
Management Graham
Spurling
AM,
Chairman Christopher
S.
Darby,
CEO
&
MD Glenister
Lamont,
Non-­‐exec
Director Ian
Schache,
Non-­‐exec
Director Jarek
Kopias,
CFO
&
Co.
Sec. Karen
Lloyd,
GM
Technical
Delivery David
J.
Salari
(P.Eng),
Chief
Dev.
Officer

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Vertically Integrated Manufacturing

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Pit
&
Process
Op,misa,on
&
QA
QC
Systems
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Mul,ple
Specialist
Graphite
Products
Packaged
&
Delivered
to
Global
Customers
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Uley Graphite Three Phases

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Recommission
14000/t
Primary
Process
Circuit
2ndry
Process
Circuit
30+
Personnel
Start
Manufacturing
9+
Month
Stockpiles
First
Customer
Sales
PEPR
Approvals
Recruitment
Phase
I
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Complete
Phase
II
BFS
New
Plant
Capex
~$34-­‐$35M
Expand
Capacity
by
~50000
tpa
++
New
Open
Pit
Mining
Operate
Exis,ng
Facili,es
~14000
tpa
90+
Personnel
Increase
Sales
Phase
II
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2014

2014
-­‐
2015

2014
-­‐
2016

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Valence Industries Geology & Resource

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Resource Update

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Valence
Industries Uley
Graphite
Main
Road Open
Pit
#1
(JORC
2012)

Resource ClassifcaRon	Lower Cutof Grade (% Graphi,c Carbon)	Tonnage (Mt)	Average Grade* (% Graphi,c Carbon)
Indicated	3.5	1.9	10.7%
Inferred	3.5	4.5	5.5%
Total		6.4	7.1%
**see JORC Statement on Page 2

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ROM Stockpiles

Total 174,000 tonnes @ 6.23% Graphitic Carbon

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SG
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Tonnes
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1
25,903
2.5
2
18,161
2.6
174,000
3
24,748
2.4
4
1,406
2.1
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Independent
Survey
(Maptek
2014) ISO
9001
Assay
(ALS
Adelaide,
2014) **see
JORC
Statement
on
Page
2

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2014 Drilling campaign

• In fill drilling campaign completed

• Assay results underway

• Geo-model indicates old Uley Pit 1 did not intersect high grade zones (GREEN) (despite sitting on regional geophysical high)

• Uley Pit 2 (PINK) targeting fold limb extension of Uley Pit 1

• Uley Pit 2 is across higher grade zones & has simpler geology (discrete & continuous lodes)

• Initial grades higher than anticipated

• Discovery of new mineralised graphitic zone

• Revised JORC statement in 6-8 weeks

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2014 Drilling campaign

• Revised model indicates continuous lodes dipping west (representational schematic shown opposite)

• Assays indicate high grade flake

• Hole MD600 29.8% graphite over 16m including 38% graphite over 10m (in area of previously known graphite mineralisation)

• New graphite zone discovered (mineralised pegmatite)

• Visual interpretation of new zone indicates high grade graphite (full assays pending)

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Core
sample
from
new
pegma,te
zone

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Valence Industries VXL Graphite Market

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VXL Graphite Products

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Graphite Facts

• HIGH
PURITY
FLAKE Graphite
is
rela,vely
common,
but
high GRAPHITE
IS
IN purity,
large
flake
graphite
is
rare • VERY
LIMITED China,
the
world’s
major
graphite SUPPLY producer
is
closing
pollu,ng
opera,ons

• Graphite
  is
  rela,vely
  common,
  but
  high purity,
  large
  flake
  graphite
  is
  rare

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• Valence
  manufactures
  high
  purity
  flake graphite
  products
  for
  mul,ple applica,ons

• Selling
  to
  tradi,onal
  &
  new
  technologies

NEW TECHNOLOGIES
ARE DRIVING
DEMAND FOR
HIGH
PURITY FLAKE
GRAPHITE

• New
  technologies
  require
  high
  purity graphite

• Valence’s
  Uley
  graphite
  is
  very
  low
  in impuri,es

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VXL Product Ranges

• Broad range of graphite products

• Globally diversified by region

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+595
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• Product review initiated using historical production stored at site

• **Premium
  Product

• High
  Demand**

• **Consistent
  High
  Purity

• High
  QuanRty**

• Valence seen as a politically stable source of supply for customers

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+895
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• **Premium
  Product

• High
  Demand**

• **Consistent
  High
  Purity

• High
  QuanRty**

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+195
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• **High
  Quality

• Sustained
  Demand**

• **Consistent
  High
  Purity

• Consistent
  QuanRty**

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-­‐195
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• **High
  Quality

• Sustained
  Demand**

• **Consistent
  High
  Purity

• Consistent
  QuanRty**

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-­‐295
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• **High
  Quality

• Increasing
  Demand**

• **New
  ApplicaRons

• New
  Markets**

• **Consistent
  High
  Purity

• Consistent QuanRRes**

IllustraRve
of
selected
VXL
+50
Mesh
95%
Graphite
Products

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Commercialisation & Sales

• Phase I & Phase II first target traditional markets as baseline (refractories, crucibles, foundry applications and lubricants)

• Phase III targets specialist & high purity markets (batteries, fuel cells etc)

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• Customer engagement and product review process takes a long time (Uley Graphite products have been in qualification process for 2+ years)

• Long term strategy - value add & build on direct relationships with customers

• Ongoing strategy - diversify customer base across end markets & geographic regions

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• Bageries • Fuel
Cells

• Solar • Semi-­‐ conductors

• ConducRve PlasRc
&
Paint • Flame
Retardants

• Lubricants • Forging

• Crucibles • Hot
Metal

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MOUs Exceed 80,000 t

MOU’s signed with separate customers & agents representing 29,000+ tonnes of annual graphite production over 2+ years

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Diverse
Products
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Diverse
Regions
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Critical Material

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Strategic
&
CriRcal
for
industrial
naRons
including
USA
&
European
Commission

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Valence Industries Summary

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ExisRng
Facility
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ProducRon
&
Sales
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Rapid
Growth
Program
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• ExisRng
  Graphite
  Resource,
  Mine
  &
  14,000
  tpa
  Processing
  infrastructure

• • **6.4
  Mt
  JORC
  2012
  Indicated
  &Inferred
  Resource
  @7.1%
  TGC

• exploraRon
  upside**

• • Proven
  past
  producRon
  of
  high
  quality
  Flake
  Graphite

• **IniRal
  sales
  of
  large
  flake

  95%
  purity
  graphite
  commenced
  in
  April**

• • Processing
  of
  stockpiles
  for
  9
  to
  12
  months
  from
  2014
  through
  2015

• • Strong
  expressions
  of
  interest
  from
  major
  global
  customers

• New
  Phase
  II
  plant
  planned
  to
  be
  in
  producRon
  in
  2015

• • Phase
  III
  High
  Purity
  Program

• • Phase
  IV
  Graphene
  Program

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Contact

Christopher S. Darby CEO & Managing Director Valence Industries Limited

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i n f o @ v a l e n c e i n d u s t r i e s . c o m I + 6 1 8 8 4 1 8 8 5 6 4

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