QUANTUM GRAPHITE LIMITED — Investor Presentation 2014

May 27, 2014

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

May 2014

Christopher S. Darby CEO & MD Deutsche Bank Presentation

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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%forward7looking%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%forward7looking% statements.% %Such%forward7looking%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%forward7looking%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%forward7looking%statements.%% Factors% that% could% cause% actual% results% to% differ% materially% from% those% in% forward7looking% 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%forward7looking%statements%to%reflect%actual%results%or% developments,%and%that%actual%results%or%developments%may%differ%materially%from%those%projected,%in%the%forward7%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.%

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

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ROM!Stockpile!
Processing!
First!Sale!
Scheduled!
of!!
Graphite!
Jul!Quarter!
Start!Graphite! Apr!Quarter! 2014!–!!
Reprocessing! 2014 Jan!Quarter!
2015!
Jan!Quarter!
2014
ASX!
Listed!
6!Jan!2014
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Cor orate Overview p

ASXCode:VXL&VXLO	ASXCode:VXL&VXLO
OrdinarySharesonissue	167.1m
Op,onsonissue	70.0m
Marketcap(@42cents)	$70.2m
Cash(EndQ12014)	~$8.1m
Debt	Nil

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4%

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Corporate Overview

MajorShareholders	MajorShareholders
StrategicEnergyResourcesLtd (Restricted)	13.04%
AvatarEnergyPtyLtd	4.60%
EERCAustralasiaPtyLtd	3.97%
HSBCCustodyNominees(Australia)Ltd	3.20%
ChimaeraCapitalLtd	2.79%
Top20shareholdershold45.40%

Directors!&!Senior!Management! Graham%Spurling%AM,%Chairman% Christopher%S.%Darby,%CEO%&%MD% Glenister%Lamont,%Non7exec%Director% Ian%Schache,%Non7exec%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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VXL Graphite Products

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Established Resource

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

Resource ClassifcaTon	LowerCutof Grade (%Graphi,c Carbon)	Tonnage (Mt)	AverageGrade* (%Graphi,c Carbon)
Indicated	3.5	1.9	10.7%
Inferred	3.5	4.5	5.5%
Total		6.4	7.1%

• No exploration drilling required to establish resource

• Existing resource open at depth

• Low cost open pit mining

• Existing Mining Licences

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8%

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Valence ROM Stockpiles

Exis,ng%Stockpiles%available%for%immediate%processing%

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Stockpile!
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Volume!m³!
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Average!SG!
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1! 25,903!! 1.7! !!!!!!44,035!!
2! 18,161!! 1.7! !!!!!!30,874!!
3!&!4! TBC! TBC! !!!!!!TBC!
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Independent%Survey%(Maptek%2014)% ISO%9001%Assay%(ALS%Adelaide,%2014)%

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9

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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%
Phase%I%
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Complete%Phase%II%BFS%
New%Plant%Capex%~
$34M%
Expand%Capacity%by%
~60000%tpa%
New%Open%Pit%Mining%
Operate%Exis,ng%
Facili,es%~14000%tpa%
90+%Personnel%
Increase%Sales%
Phase%II%
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Current Status

Company	Market	MarketCap ($M)	Mining Licences	Plant& Infrastructure	Mine&Tailings FaciliTes	Sales Agreements	FullyFundedto ProducTon	ProducTon	Country/ JurisdicTon
Valence
Industries (VXL/VXLO)	ASX	70	YES	YES	YES	YES	YES	2014	AUSTRALIA
Flinders
Resources	TSX.V	21	YES	YES	YES	NO	YES	NO	SWEDEN
(FDR)
Mason
Graphite	TSX.V	55	NO	NO	NO	NO	NO	NO	CANADA
(LLG)
Syrah
Resources	ASX	560	NO	NO	NO	MOU	NO	NO	MOZAMBIQUE
(SYR)
Northern
Graphite	TSX.V	37	NO	NO	NO	NO	NO	NO	CANADA
(NGC)
Focus
Graphite	TSX.V	60	NO	NO	NO	MOU	NO	NO	CANADA
(FMS)
Energiser
Resources	TSX.V	25	NO	NO	NO	NO	NO	NO	CANADA
(EGZ)
ZenyeOa
(ZEN)	TSX.V	105	NO	NO	NO	NO	NO	NO	CANADA

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1

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VXL Strategic Advantages

Quality!of! Regional! OperaTonal! Resource! Infrastructure! FaciliTes!

GeopoliTcal! Low%Sovereign%Risk% Stable%Poli,cal%&% Economic%Base% Close%to%Key%Asia% Pacific%Growth% Markets% Seen%as%Preferred% Supplier%by%Major% Regional%Customers% Government%Support% for%Advanced% Manufacturing%

Growth! Prospects!

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Valence Industries Global Graphite Market

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Graphite Facts

HIGH%PURITY%FLAKE% GRAPHITE%IS%IN% VERY%LIMITED% SUPPLY%

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NEW% TECHNOLOGIES%ARE% DRIVING%DEMAND% FOR%HIGH%PURITY% FLAKE%GRAPHITE%

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

• China,%the%world’s%major%graphite% producer%is%closing%pollu,ng%opera,ons%

• graphite%products%for%mul,ple% applica,ons%

• Selling%to%tradi,onal%&%new%technologies%

• New%technologies%require%high%purity% graphite%

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

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14%

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Graphite Facts

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GRAPHITE DEMAND GROWTH IS DRIVEN BY ITS UNIQUE PROPERTIES AND BENEFITS IN BOTH TRADITIONAL & NEW TECHNOLOGIES

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FLAKE!
GRAPHITE!
PROPERTIES!
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1

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Graphite Sales & Pricing

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MOBILE! • Baleries!
ENERGY!
Long!Term!! • Fuel!Cells!
Direct!Sales! 3!to!5!Year!
Contracts! Contracts!
with!Customers! Sought!by! • Solar!
ENGINEERING!
MATERIALS! • Semim
Customers!
conductors!
• ConducTve!
CARBON! PlasTc!&!Paint!
ADDITIVES!&!
POLYMERS! • Flame!
Retardants!
HOT!METAL! • Lubricants!
FORMING!
Opaque!Global! • Forging!
Industrial!Mineral!
Market!
Requiring!
Customer!
Technical!Sales! • Crucibles!
REFRACTORIES!
ConfidenTality! • Hot!Metal!
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FORMING! Opaque!Global! • Forging! Industrial!Mineral! Market! Requiring! Customer! Technical!Sales! • Crucibles! REFRACTORIES! ConfidenTality! • Hot!Metal! Valence%Industries%has%Graphite%for% MulTple!ApplicaTons! in% Diverse!Industries! in%New%&%Tradi,onal%Applica,ons%

16%

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Traditional Graphite Uses

• Established Base Industries

Graphite%&%Carbon%Electrodes%

• Steady Volumes Growth

• VXL Global Demand Drivers

• Graphite Critical for Industry

• Valence Breadth & Depth of Market

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Foundries%&%Hot%Metal%
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Brake%Linings%
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New Graphite Technology

• Li-Ion Batteries = Graphite Anode

• 40kg – 140kg of Graphite per EV

• E-Bikes, E-Motorcycles & E-Scooters

• Large Scale Fuel Cells Could Double Demand Volumes (USGS 2012 Survey)

• Graphite foils

• Graphite Conductive Polymers

• Conductive Paints

• Solar Power Generation

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New Graphite Technology

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• Pebble Bed Nuclear Reactors

• Graphite Coating Uranium Balls

• Smaller & Safer Reactors

• Cost Effective Technology

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• 3000 tonnes Graphite for startup 1GW Reactor

• 1000 tonnes Graphite annually for 1 GW Reactor

• Link to Graphite Energy Storage Cells

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Graphite Sales & Pricing

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Price!Range!for!Flake!Graphite!
+80!Mesh,!94m97%!C,!US$/tonne!
$3,250!
$3,000! • Long!term!15%!p.a.!
$2,750! underlying!price!growth!!
• Price!bubble!2011/12!due!
$2,500!
to!increasing!demand!&!
$2,250!
China!supply!restricTons!
$2,000!
$1,750!
$1,500!
$1,250!
$1,000!
$750!
$500!
$250!
$0!
Low! High! Trend!
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PRICE DRIVERS

• Long term growth in base markets

• UK & USA Supply Risk for Graphite

• Significant demand new markets

• Established production capability

• Quality is key to sustainable price

• Consistent and reliable supply

• Global delivery capability

• Market and customer knowledge

VXL!Flake!Graphite!Pricing!Range!is!! US$890!to!US$2500!per!tonne!

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20%

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Critical Material

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Strategic!&!CriTcal!for!industrial!naTons!including!USA!&!European!Commission!

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Global Production & Uses VXL Graphite

World Graphite Production 2014 1,573,000 tonnes

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20%
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11%
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21% Steelmaking Refractories Automotive Parts 25% New Materials Other applications Batteries

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22%

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VXL Product Ranges

• World class quality products

• Broad range of graphite products

• Globally diversified

• Vertically Integrated

• Near term revenue

• Extensive customer engagement

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+595%
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+895%
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7195%
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7295%
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7395%
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• Premium!Product!+!High!Demand!

• Consistent!High!Purity!+!High!QuanTty!

• Premium!Product!+!High!Demand!

• Consistent!High!Purity!+!High!QuanTty!

• High!Quality!+!Sustained!Demand!

• Consistent!High!Purity!+!Consistent!QuanTty!

• High!Quality!+!Sustained!Demand!

• Consistent!High!Purity!+!Consistent!QuanTty!

• High!Quality!+!Increasing!Demand!

• New!ApplicaTons!+!New!Markets!

• Consistent!High!Purity!+!Consistent! QuanTTes!

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IllustraTve!of!selected!VXL!95%!Graphite!Products!

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VXL Market Overview

Grade	LowUS$t	HighUS$t	Country	2004t	2008t	2012t	2014t
99%to99.9%C,+400mesh	$3,500	$35,000	China	678,230	799,554	924,283	967,805
			India	116,268	137,066	182,828	220,348
94%to97%C,+80mesh	$1,900	$2,500
			Brazil	73,958	87,188	113,575	141,075
90%C,+80mesh	$1,250	$1,375	NorthKorea	29,067	34,267	40,707	43,707
94%to97%C,780+100mesh	$1,650	$1,795	Canada	27,129	31,982	40,493	87,710
90%C,780+100mesh	$1,070	$1,150	Madagascar	14,534	17,134	20,354	22,376
85%to87%C,780+100mesh	$989	$1,020	Mexico	14,310	16,870	20,041	22,031
94%to97%C,+100mesh	$1,425	$1,489	CzechRepublic	9,689	11,422	16,069	22,308
			Ukraine	7,267	8,567	10,177	16,145
90%C,7100mesh	$975	$1,050
			Zimbabwe	9,948	11,728	13,932	15,315
Amorphouspowder80%to85C	$730	$850	Others	7,879	9,288	13,046	14,342
Synthe,c99.95%C2	$6,200	$19,000	Total	988,279	1,165,066	1,395,505	1,573,162

Graphite Pricing Overview

• Systematic price increase large flake

• New & Traditional Demand

• Demand for Quality Flake Graphite

World Graphite Production

• Demand / Supply Imbalance

• New Product Development

• Constrained supply from majors

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VXL HP Graphite Market

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• VXL High Purity 99.99%+ TGC

• Accelerating demand

• Favourable growth outlook

• EV Demand a game changer

• Energy storage far beyond EV

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VXL Graphene Future

VXL Has Produced Graphene

• 1 Atom thick layer of graphite

• 1gm = 600m2 coverage

• 1000 x Electrical Capacity Cu

• 200 x Stronger Structural Steel

• • 10 x Heat Conductivity of Cu

• Advanced Materials VXL GraffTEX

• • University of Adelaide Partnership

• VXL Flake Graphite for Graphene

• • Commercialisation Rights in Place

• Graphene Sales Scheduled in 2014

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s . c o m

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Valence Industries Summary

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ExisTng!Facility!
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ProducTon!and!
Sales!Commenced!
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Rapid!Growth!
Program!
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High!Purity!&!
Graphene!
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• ExisTng!Graphite!Resource,!Mine!&!14,000!tpa!Processing!infrastructure

• 6.4!Mt!JORC!2012!Indicated!&Inferred!Resource!@7.1%!TGC!+!exploraTon!upside!

• Proven!past!producTon!of!high!quality!Flake!Graphite!

• Processing!of!stockpiles!conTnues!in!Jun!Quarter!2014!and!into! Mar !Quarter!2015!

• Strong!expressions!of!interest!from!major!global!customers!

• New!60,000!tpa!Phase!II!plant!planned!to!be!in!producTon!in!2015!

• Scoping!Study!indicates!manufacturing!costs!of!<$600/t!&!average!pricing!US$1,400/t!

• Finance!FaciliTes!to!be!in!Place!H2!2014!for!New!Plant!ConstrucTon!

• Phase!III!High!Purity!program!&!Graphene!programs!ahead!of!schedule

• Increase!purity!to!>99.99%!at!esTmated!value!of!US$5,500!to!US$10,000/tonne!

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27%

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Contact

Christopher S. Darby CEO & Managing Director Valence Industries Limited

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