QUANTUM GRAPHITE LIMITED — Investor Presentation 2015

Nov 24, 2015

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Robert Mencel, (As of 1 December 2015) Managing Director Presentation

Manufacturing Our Carbon Future[TM] ASIA PACIFIC I EUROPE I NORTH AMERICA

WWW.VALENCEINDUSTRIES.COM

25 November 2015

ASX : VXL & VXLO

Disclaimer

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This presentation includes certain statements that may be deemed forward-looking statements. All statements in these presentation materials (other than statements of historical facts) which address future production, reserve potential, exploration activities & events or developments that the Company expects, are forward-looking statements. Such forward-looking statements include, without limitation: (i) estimates of future graphite prices, supply, demand &/or production; (ii) estimates of future cash costs; (iii) estimates of future capital expenditures; (iv) estimates regarding timing of future development, construction, production or closure activities; (v) statements regarding future exploration results; (vi) statements regarding cost structure, project economics, or competitive position, &; (vii) statements comparing the Company’s properties to other mines, projects or metals. Although the Company believes that such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance & 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, exploitation & exploration successes, continued availability of capital & financing, & general economic, market or business conditions. Investors are cautioned 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, & that actual results or developments may differ materially from those projected, in the forward- looking statements.

No representation or warranty is given by the Company as to the accuracy or completeness of the information contained in this presentation. Neither the Company nor its officers or employees accept responsibility or liability (to the maximum extent permitted by law) for any loss of damage suffered or incurred by any other person or entity however caused & relating in any way to these presentation materials including, without limitation, the information contained in the presentation material & its accuracy, completeness, currency or reliability. This presentation does not constitute a recommendation regarding the securities of the Company, & should not be construed as legal or financial advice. It has been prepared for information purposes only & contains general summary information & does not take into account the circumstances of any individual investor. Prospective investors in the Company are encouraged to obtain separate & independent advice with regard to any investment in the Company. By accepting the presentation materials, the recipient agrees to keep permanently confidential the information contained herein.

Valence Industries confirms that it is not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning the estimates in this announcement continue to apply and have not materially changed. The announcements previously released and referenced in the announcement are: “Valence Doubles Existing ROM Stockpiles” (6/8/14), “Discovery of High Grade Arterial Flake Graphite” (9/10/14), “Uley Graphite Grade Increases to 11.7%” (17/11/2014), “Maiden High Grade Graphite Ore Reserve” (17/12/14) and “VXL Feasibility Study Expansion and Adv Manufacturing” (2/1/2015) , “50% Increase in Uley Graphite Resource” (5/5/2015), “VXL Uley Graphite NPV Up 38% to $90M” (2/6/15), “Major Increase to Graphite Ore Reserve and Mine Life” (14/5/15).

The Company cautions that the Exploration Target of 9 Mt to 12 Mt at 9% to 12% gC referenced in this presentation is conceptual in nature. The Exploration Target estimation is an expression of the potential for geological extensions to the Uley Pit 2 prospect based on prior work by third parties and interpretation of that data by Valence Industries. There has been insufficient exploration to estimate a Mineral Resource on the extension and it is uncertain if further exploration will result in the determination of a Mineral Resource on the extension. The Company notes that the work in relation to the Exploration Target has relied upon historic data from open file and archived reports and the information relied upon cannot be duplicated or otherwise verified by the Company. The estimate made here is an Exploration Target under JORC 2012 Clause 17.

Photographs, maps, charts, diagrams & schematic drawings appearing in this presentation are owned by & have been prepared by or commissioned by the Company, unless otherwise stated. Maps & diagrams used in the presentation are illustrative only & may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs & tables is based on information available at the date of this presentation. By accepting this presentation the Recipient agrees to be bound by the foregoing statements. © Valence Industries Limited

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Operational Plan

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Corporate Strategy

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“To be a lowest quartile cost , highly profitable graphite producer“

Valence will achieve this by

• Maximising cash flow – Improving early cash flow (highest grade first), minimising capital and debt requirements

• Improved efficiency – De-bottlenecking of process plant, increased instrumentation and automation, improved reliability and optimised manning levels

• Exceed customers expectation - Supplying a consistent, high quality product, to specific customer specs, on time and at a price customers value

• Reserve development - Establishing additional long life, low cost reserves at Uley

• Maintain and maximise shareholder value through disciplined allocation of Capital

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Current Status

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• Original 1990’s Uley Graphite plant refurbished & recommissioned – September 2015

• Installed secondary grinding, screening and bagging capacity found to be undersized at nameplate capacity

• Technical review has identified enhancements necessary to remove bottlenecks and increase capacity

• Plant throughput rate reduced in the short term to maintain customer product specifications 90%-96% LOI, reflecting limited grinding capacity

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• Current plant operating with reduced manning levels. Production rate 1- 2 “In-spec” tonnes per day

• Continued strong customer demand

• To date 75 tonnes of in-specification product created in readiness for first commercial sales

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Operational Focus

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Short Term

• Address immediate bottlenecks by installing a spare ball mill with related process upgrades to increase production to 240 tonnes per month

• Planned upgrades to cost $500,000

Long Term

• Remedy the larger plant deficiencies and expand output to 21,000 tonnes per annum

• Full upgrade is subject to further technical engineering and design, however is expected to included the installation of 2 or 3 vertical mills and improvements in drying, screening and bagging circuit

• The longer term upgrade is subject to debt funding and is expected to be completed for an estimated capex of $7m

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Plant Modification /Expansion

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• Independent review completed by Orway Mineral Consultants (Process engineering arm of the Lycopodium Group)

What are the planned major improvements?

Grinding Additional regrinding to delaminate flakes & release gangue materials but no major reductions in flake size Installation of 2 or 3 vertical (50kw100kw) mills and associated services

~~What are the key advantages of the program?~~ Dry, Screen & Additions to drying, screening & BagProduction bagging capacity to increase grade 50% increase in output by removing control & graphite product specificitybottlenecks

Plant improvements – ROM Pricing	Plant improvements – ROM Pricing
Met test work, Engineering	$1.0m
Regrinding Circuit Upgrade	$4.5m
Drying, Screening, Bagging Upgrade	$1.0m
Contingency	$0.5m
Total	$7.0m

Final upgrade design and budget is subject to further technical engineering and design.

Lower Cost Low capex @~A$7m subject to detailed engineering & design

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Development Timeline

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----- Start of picture text -----

•Production at reduced throughput
•Building stocks in warehouse for customer qualification and in readiness for first commercial sales
Q4 CY2015
•Secure financing
•Engineering & design program for immediate expansion completed
Q1 & Q2 CY
2016
•Implement short term and long term plant upgrade programs
•Stocks to warehouse & initiate exports
Q3 & Q4 CY
•New mining from Uley Pit 2
2016
•Graphite production reaches 21,000 tpa
Q1 CY 2017
----- End of picture text -----

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Financing Plan

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Financing Plan

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• The company’s shares are currently in voluntary suspension

• Negotiations underway with numerous parties to secure capital to meet both short term and long term requirements

• Shares will come out of suspension as soon as the company concludes its financing program

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Financing Plan

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• Financing required due to

• Refurbished process plant’s poor performance and resulting absence of early cash flows

• Payments to creditors

• Requirement for additional capital to upgrade plant

• Forecast capital requirements – next 12 months

• $5.5m Payment of creditors

• $5.5m Payment of debt

• $7.0m Process plant upgrade

• $22m Working capital to being cash flow positive, build inventories of product, interest and other costs

• $40m Total (Up to)

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Summary

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Summary

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• Currently operating plant at reduced throughput rate to meet sales/marketing requirements

• Processing issues identified, and solutions specified by independent technical review

• Operational focus

• Short Term - $500k Installation of spare ball mill/ minor plant improvements, increase production to 240t per month

• Long Term - $7m plant upgrade to fix identified problems and expand the plant to 21,000 tpa.

• Forecast capital requirements – next 12 months

• $5.5m Payment to creditors

• $5.5m Payment of debt

• $7.0m Process plant upgrade

• Potentially up to $22m Working capital to cash flow positive, interest and other costs

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