QUANTUM GRAPHITE LIMITED — Investor Presentation 2015

Feb 10, 2015

VALENCE INDUSTRIES

Australia's Only Graphite Producer

CORPORATE PRESENTATION FEBRUARY 2015

ASX : VXL & VXLO WWW.VALENCEINDUSTRIES.COM

Disclaimer

This presentaOon includes certain statements that may be deemed forward-looking statements. All statements in these presentaOon materials (other than statements of historical facts) which address future producOon, reserve potenOal, exploraOon acOviOes & events or developments that the Company expects, are forward-looking statements. Such forward-looking statements include, without limitaOon: (i) esOmates of future graphite prices, supply, demand &/or producOon; (ii) esOmates of future cash costs; (iii) esOmates of future capital expenditures; (iv) esOmates regarding Oming of future development, construcOon, producOon or closure acOviOes; (v) statements regarding future exploraOon results; (vi) statements regarding cost structure, project economics, or compeOOve posiOon, &; (vii) statements comparing the Company's properOes to other mines, projects or metals. Although the Company believes that such forward-looking statements are based on reasonable assumpOons, 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, exploitaOon & exploraOon successes, conOnued availability of capital & financing, & general economic, market or business condiOons. Investors are cauOoned 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 representaOon or warranty is given by the Company as to the accuracy or completeness of the informaOon contained in this presentaOon. Neither the Company nor its officers or employees accept responsibility or liability (to the maximum extent permiced by law) for any loss of damage suffered or incurred by any other person or enOty however caused & relaOng in any way to these presentaOon materials including, without limitaOon, the informaOon contained in the presentaOon material & its accuracy, completeness, currency or reliability. This presentaOon does not consOtute a recommendaOon regarding the securiOes of the Company, & should not be construed as legal or financial advice. It has been prepared for informaOon purposes only & contains general summary informaOon & does not take into account the circumstances of any individual investor. ProspecOve investors in the Company are encouraged to obtain separate & independent advice with regard to any investment in the Company. By accepOng the presentaOon materials, the recipient agrees to keep permanently confidenOal the informaOon contained herein.

Valence Industries confirms that it is not aware of any new informaOon or data that materially affects the informaOon included in this announcement and that all material assumpOons and technical parameters underpinning the esOmates in this announcement conOnue to apply and have not materially changed. The announcements previously released and referenced in the announcement are: "Valence Doubles ExisOng 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). Photographs, maps, charts, diagrams & schemaOc drawings appearing in this presentaOon are owned by & have been prepared by or commissioned by the Company, unless otherwise stated. Maps & diagrams used in the presentaOon are illustraOve only & may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs & tables is based on informaOon available at the date of this presentaOon. By accepOng this presentaOon the Recipient agrees to be bound by the foregoing statements.

© Valence Industries Limited

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Corporate Overview

Capital Structure (ASX: VXL)

Ordinary shares	186.7m
OpOons	68.4m
Market Cap (@45c)	\$84m
Cash (@ 31/12/14)	~\$8.3m
Debt	Nil
12 month share price range	87c – 23c

Major Shareholders

Strategic Energy Resources Ltd**	11.67%
HSBC Custody Nominees (Aust) Ltd	5.08%
Avatar Energy Pty Ltd	4.11%
EERC Australasia Pty Ltd**	3.55%
Top 20 shareholders own	43.9%

Board & Management

Graham Spurling, AM	Chairman
Christopher Darby	Managing Director & CEO
Glenister Lamont	Non-execuOve Director
Ian Schache	Non-execuOve Director
Ian Patson	Non-execuOve Director
Jarek Kopias	Company Secretary
Chris Whiteley	Chief MarkeOng Officer
Chris Hall	Chief OperaOng Officer
Greg Sando	GM Info & Tech Services

Christopher Darby Managing Director & CEO Glenister Lamont Non-execuOve Director Ian Schache Non-execuOve Director Ian Patson Non-execuOve Director Chris Whiteley Chief MarkeOng Officer Chris Hall Chief OperaOng Officer Greg Sando GM Info & Tech Services

**escrowed to 6 January 2016

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COMPANY HIGHLIGHTS

Established Graphite Producer

Listed on ASX Jan. 2014 & best performing ASX IPO of 2014

Established Mine & Processing Infrastructure (roads, electricity, water, workshops, laboratories, plant & equipment)

Processing Facility Commissioning Commenced Late December 2014

ProducOon Capacity of 14000 tpa targeted from Q2 2015

Mining Licences & Environmental OperaOng Approvals in Place

Only ASX Company with Graphite Mining & Processing OperaOons

Only ASX Graphite Ore Reserve & Very High Grades @ 12.9% gC

Completed Feasibility Study for Expansion & Unique High Purity OperaOons

ESTABLISHED FACILITIES

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Uley GraphiteTM Site

Uley GraphiteTM Site - Eyre Peninsula, South Australia

Close to Major Regional Centre with Light Industry, Trades, Road, Port & Rail

Licences cover area of 75 km2

Mining Licences, Uley Pit 2 & Extension on freehold land owned by company

Full Mining Licences & Environmental Approvals in place for OperaOons

Graphite resources Very High Grade @ 12.9% graphiOc carbon (gC)

Graphite grades in ore body include Arterial FlakeTM @ 60%+ gC

Unique Maiden High Grade Graphite Ore Reserve of 2035000t @ 12.9% gC containing 261000t of graphite (Uley Pit 2)

Ø Ore Reserve Supports 5+ Year Mine Life

Ø Uley Pit 2 Extension Drilling Underway targeOng extended mine life

Major JORC 2012 ExploraOon Target 9Mt to 12 Mt @ 9%gC to 12% gC

Feasibility Study for Expansion of Established Plant Complete (see below)

CURRENT PRODUCTION PROGRAM

Flake Graphite ProducKon from Uley GraphiteTM FaciliKes, Eyre Peninsula South Australia

Phase I ProducOon Full Commissioning commenced Late December 2014 Reprocessing of 1000t Fines Stockpiles Underway with 100t processed

Ø Significant QuanOty Large Flake +35 (Super Jumbo) +50 (Jumbo) & +80

Ø Consistent Grades to Match Customers from 90%gC to 95%gC

Sizing & Classifying of 174000 t ROM Stockpiles Underway

Processing of ROM Stockpiles scheduled for 10+ months from Q1 2015

Rated Capacity of 14000 tpa from Q2 2015 to match customer orders

Phase II & Phase III Eyre Peninsula & Port Adelaide (Feas. Study see below) Phase II Increase to base capacity from 14000tpa to 39000tpa by Q4 2016 Phase II Increase to base capacity from 39000tpa to 64000tpa 2018-2019 Phase III Advanced Product Handling & Graphite Refining from Q4 2016

CURRENT PRODUCTION PROGRAM

ULEY FACILITIES

Established 14000tpa Plant

Plant Commissioning Jan-Mar 2015

Ramping Up Current ProducOon

Exports Commence in Q1 2015

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GRAPHITE SALES

Established Customer Base

Graphite Sales Commenced in mid-2014

Customer NegoOaOons Underway in Europe, Asia Pacific & Nth America

Graphite Samples Shipped to more than 15 customers for QualificaOon

New Purchase Orders Signed with 6 Customers in 2015 targeOng over 8000t in Year 1

Signed MOUs 29000tpa for 3 years across mulOple end use applicaOons

QualificaOon Samples Shipped to more than 15 customers worldwide for industries from refractories through to electronics

Further Sales Contracts in NegoOaOon Exceeding Current Capacity

First Customer Export Shipments Scheduled for Q1 2015

Average Base Price as per Feasibility Study @ AUD\$1669 per tonne

VALUE ADD GROWTH MODEL

The focus shi{s from bulk tonnages to value added tonnes

FEASIBILITY STUDY

MulK-Stage Expanded TradiKonal ProducKon

Phase I & Phase II

14000tpa Current Capacity 2015

Increase to 39000tpa Capacity 2016

Increase to 64000tpa Capacity 2018-2019

New Mining Uley Pit 2 2016-2022

Ore Reserve Uley Pit 2 Extension 2016

Globally CompeOOve Mine Gate Opex AUD\$400-\$500 per tonne

Strong demand forecast & shor|all in supply over coming years

New Advanced Product Handling & High Purity & Micronised ProducKon

Phase II & Phase III

Specialist Flake Graphite Blending

Advanced & Specialist Packaging

High Purity Graphite 99% to 99.95%

Micronised Graphite for High Tech App.

PotenOal Increased Capacity 2017 Onwards

Capital Cost over 3 Years AUD\$37M Advanced Debt Discussions Underway

Opex Cost AUD\$750-\$950 per tonne (FOB Adelaide)

Av. Price AUD\$1669-\$4774 per tonne

Feasibility Study - Results

DescripKon	Outcome	Element	AssumpKon / Input
NPV 10 (a{er tax)	\$65m	Model Start Date	Dec 2014
		Modelling period	Monthly
IRR	46%	Key Financial Output	Free Cash Flow to Equity
Total Ore Mined	2,035kt	Real/Nominal Basis	Real
Average Head Grade	12.9%	Exchange Rate USD/ AUD	0.80
Life of Mine	5 Years	Discount rate	10% (a{er tax)
		Tax Modelling	A{er tax
Total Graphite Concentrate Sold	235kt	Graphite Resource Mined	2,035kt (Uley pit 2)
NOTE: This analysis is based on current formal Ore Reserve only as the key determinant of NPV. Every 1Mt of Ore Reserve adds A\$32M to NPV.		NOTE: A{er Tax Free Cash to Equity representaOve of cash flows likely over CURRENT life of the expanded operaOons as determined by current Ore Reserve only

Revenue & Dividend Forecast

Note: ConservaOve esOmate at <5% of volume contributed by advanced processing. Margin & revenue increases for each tonne of advanced processing.

w ww.valenceindustries.com 13 **Data sourced from Feasibility Study, 31 December 2014

Capital AllocaOon & Funding

• § Capital allocaOon spread across 4 years to match planned sales growth
• § Phased capital approach offers flexibility as capacity increases
• § Modest capital draw relaOve to revenue and EBIT target over period
• § Term sheets and negoOaOons with a range of potenOal debt funders in progress
• § Intended funding sources include capital reserves, revenues, debt and equity

** Data sourced from Feasibility Study, 31 December 2014 & Working Capital Not Included

SUMMARY

• Producing Unique High Quality Flake Graphite from Uley GraphiteTM FaciliOes on Eyre Peninsula
• Graphite producOon commenced in late 2014
• Customer Sales Commenced mid 2014
• New Sales Orders Signed in 2015
• MulOple MoUs @ 29000tpa for 3 years

• Strong Demand & Strong Prices from AUD\$1669-AUD\$4447

• Significant High Grade Ore Reserve @ 12.9% gC

• Major Immediate ExploraOon Targets 9mt-12Mt @ 9%-12%
• PosiOve Feasibility Study for TradiOonal & Advance Graphite Products
• First & Only High Purity Facility in Western Economy
• Phase II & Phase III ProducOon Scheduled for Late 2016
• Globally CompeOOve Opex Costs from Mine Gate to Shipped Products
• Advanced Debt Finance Discussions Underway

Contact

Christopher S. Darby CEO & Managing Director Valence Industries Limited

info@valenceindustries.com I +61 8 8418 8564

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AddiOonal Materials & Background InformaOon

APPENDIX

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FLAKE GRAPHITE PROCESSING

Reserves and Resources

ORE RESERVE – ULEY PIT 2 (JORC 2012)
ClassificaOon	Tonnage	Average Grade %C
Proved	319,000	17.9
Probable	1,716,000	11.9
Total	2,035,000	12.9

MINERAL RESOURCE & EXPLORATION TARGETS (JORC 2012)
ClassificaOon	Tonnage	Average Grade %C
Measured	340,000	17.92
Indicated	1,850,000	11.84
Indicated (Stockpiles)	174,000	6.23
Inferred (Uley Pit 2)	850,000	8.89
Total	3,214,000	11.54
ExploraKon Target	9,000,000 to 12,000,000	9 to 12

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Reserve & Resource Growth Potential

• Uley Pit 2 Extension drilling underway 9900m @ 25M grid.
• Designed to deliver Reserve and Resource upgrade to support Phase II expansion.
• Results due Q2, 2015.

AREAS

• Further longer term expansion potenOal from 75km2 exploraOon tenure within project area – south and west of Uley Pit 2.

Mining Tenements

VALENCE INDUSTRIES MINING TENEMENTS
Number	Status	Area
ML5561	Current	44 ha
ML5562	Current	22 ha
RL 66	Current	225 ha
RL 67	Current	187.5 ha
EL 4778	Current	75km2

• (**Renewal and extension of tenements is an2cipated to be granted in the normal course)

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