QUANTUM GRAPHITE LIMITED — Regulatory Filings 2014

Mar 26, 2014

ASIA PACIFIC I EUROPE I NORTH AMERICA

ASX ANNOUNCEMENT

ASX: VXL ASX: VXLO

27 March 2014

HIGH PURITY GRAPHITE PROGRAM ADVANCES GRAPHENE MANUFACTURING AND GRAPHENE RESEARCH CENTRE UNDERWAY

HIGH$PURITY$GRAPHITE$

• Valence$Industries$advances$program$for$ production$of$value$adding$through$bulk$ high$purity$graphite$$

• High$purity$plant$designed$to$significantly$ value$add$to$base$flake$graphite$production$ by$Valence$Industries$

• High$purity$facility$permits$direct$entry$to$ further$high$value$graphite$markets$for$ Valence$Industries$

• CoHlocation$of$high$purity$plant$proposed$ with$the$program$for$development$of$new$ Graphene$Research$Centre$$

&$ GRAPHENE$

• Valence$Industries$and$University$of$Adelaide$ launch$development$of$the$joint$Graphene$ Research$Centre$$

• Agreement$for$Valence$Industries$to$ commercialise$all$new$graphene$applications$ and$develop$new$graphene$products$

• Graphene$Research$Centre$reflects$Valence$ Industries’$and$University$of$Adelaide$focus$on$ value$added$highHtech$manufacturing$$

• Initial$sales$of$graphene$by$Valence$Industries$ to$world$markets$can$occur$in$the$first$half$of$ 2014$

Valence'Industries'Limited'(ASX:'VXL'&'VXLO)'(VXL'or'the'Company)'is'continuing'its'program'of'bringing'its' existing'graphite'manufacturing'facilities'off'care'and'maintenance'and'to'bring'those'facilities'to'full' production'of'14,000'tonnes'per'year'over'the'coming'months'(Phase'1).''In'addition'the'program'to'complete' the'Phase'2'feasibility'study'to'increase'Valence'Industries’'graphite'manufacturing'capacity'by'up'to'60,000' tonnes'to'a'total'capacity'of'up'to'74,000'tonnes'of'graphite'per'year'is'progressing'to'schedule.''While'these' programs'continue,'Valence'Industries'is'building'on'its'program'for'advanced'manufacturing'and'value' adding'with'the'Company’s'previously'indicated'high'purity'program'(Phase'3)'and'new'initiatives'for'the' manufacturing'of'graphene'(Phase'4).'

High$Purity$Graphite$Program$on$Track$(Phase$3)$

Valence'Industries'is'continuing'its'focus'on'developing'new'markets'and'valueQadding'for'its'graphite.''The' Company'has'further'developed'its'existing'program'for'a'VXL'High'Purity'Graphite'Facility'with'a'targeted' capacity'of'30,000'tonnes'of'high'purity'graphite'a'year.''The'proposed'VXL'High'Purity'Graphite'Facility'is'in' addition'to'the'already'announced'program'for'the'development'of'a'Phase'2'expansion'of'the'existing' manufacturing'facilities'to'up'to'74,000'tonnes'of'graphite'a'year.'''From'that'total'74,000'tonne'capacity'

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Valence'Industries'will'allocate'a'relevant'portion'to'manufacture'VXL'High'Purity'Graphite'at'a'volume'the' Company'intends'to'grow'to'30,000'tonnes'per'year.''The'VXL'High'Purity'Facility'program'is'100%'owned'by' the'Company.'

The'VXL'High'Purity'Graphite'Facility'will'take'the'Company’s'Uley'Graphite'and'apply'new'and'innovative' purification'processes.''These'have'been'developed'and'established'by'Valence'Industries'metallurgical'batch' testing.''That'purification'process'works'with'the'existing'strong'qualities'of'Uley'Graphite'and'manufactures' graphite'with'a'purity'level'above'99.99%.'''

“ The$ability$to$produce$High$Purity$Graphite$permits$Valence$Industries$to$pursue$further$high; value$markets$including$to$directly$manufacture$expanded$graphite,$intercalated$graphite$and$ battery;grade$graphite ”'said'Christopher'Darby,'CEO'and'Managing'Director'of'Valence' Industries.''

This'VXL'High'Purity'Graphite'Facility'is'an'important'capability'for'Uley'Graphite.''The'value'of'that'High' Purity'program'to'Valence'Industries'both'now'and'in'the'future'is'significant.''The'price'for'such'highQpurity' graphite'starts'at'US$5,500'per'tonne'and'lies'in'a'range'that'can'exceed'US$10,000'per'tonne.''Importantly,' as'the'Company'develops'its'High'Purity'capabilities,'the'research'and'development'program'led'by'Valence' Industries'on'its'graphite'means'that'sales'of'highly'valued'flake'graphite'from'the'base'manufacturing' facilities'can'continue'to'be'pursued'and'implemented'for'use'in'these'high'purity'applications.''

The'capital'requirements'for'the'VXL'High'Purity'Graphite'Facility'are'currently'being'defined'along'with'the' technical'engineering,'design'and'process'optimisation'program.''The'Company'expects'to'fund'the'initial' stages'of'the'facility'progressively'from'current'cash'reserves'and'from'expected'cash'flows.'

The'Company'anticipates'making'further'announcements'around'the'development'of'the'Phase'3'VXL'High' Purity'Graphite'Facility'over'the'coming'months.'''

Graphene$Production$&$Centre$for$Graphene$Research$

Valence'Industries'is'pleased'to'advise'that'it'has'signed'a'Joint'Research,'Development'&'Commercialisation' Agreement'with'the'University'of'Adelaide'for'the'development'and'commercialisation'of'all'new'Graphene' Research'and'for'the'development'of'a'new'Graphene'Research'Centre'to'be'based'in'South'Australia.''The' Company'is'allocating'$800,000'over'3.5'years'to'this'research'program.'

This'graphene research'program is'an'initiative'that'has'grown'from'pioneering'work'by'Professor'Dusan'Losic' and'his'team'at'the'School'of'Engineering'in'the'University'of'Adelaide.''Professor'Losic'will'continue'to'lead' and'help'grow'the'research'program'as'Valence'Industries'pursues'the'commercialisation'of'products'from' that'research.'

'“ The$program$to$develop$the$Graphene$Research$Centre$places$Valence$Industries,$the$University$ of$Adelaide$and$South$Australia$at$the$forefront$of$real$global$markets$and$innovation$in$ Graphene ”'said'Christopher'Darby,'CEO'and'Managing'Director'of'Valence'Industries.'

The'launch'of'the'program'has'been'welcomed'by'the'University'of'Adelaide'as'its'Adelaide'Research'and' Innovation'(ARI)'arm'continues'to'deliver'on'commercial'development'of'the'leading'research'conducted'at' the'University'of'Adelaide.'''

“ This$is$an$exciting$time$for$the$University$of$Adelaide$and$for$our$team.$ This$strong$ commitment$by$Valence$Industries$to$the$development$of$leading$graphene$research$will$ attract$the$best$minds$to$South$Australia$for$the$creation$of$new$graphene$technologies ”'said' Professor'Dusan'Losic'at'the'University'of'Adelaide.'

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The'graphene'research'driven'and'owned'by'Valence'Industries'will'permit'the'development'of'new'and' significant'applications'for'graphene'products'and'sales.''Those'applications'range'from'heavy'industrial'uses' through'to'new'technology'and'medical'uses.'''

The'graphene'development'programs'will'be'used'by'Valence'Industries'to'develop'commercial'graphene' applications.''This'will'be'an'incubator'for'Valence'Industries'to'own'and'develop'new'graphene'product' manufacturing'opportunities'both'in'the'medium'term'and'as'a'future'growth'and'innovation'program'for'the' Company.'''

Graphene$Products$and$Graphene$Sales$

The'original'research'undertaken'by'Professor'Dusan'Losic'and'his'team'on'the'production'of'graphene'from' unprocessed'raw'graphite'was'performed'using'the'Company’s'Uley'Graphite.''That'proof'of'concept'has'been' further'developed'by'the'University'of'Adelaide'with'the'ability'to'produce'very'high'quality'graphene'from' processed'Uley'Graphite'clearly'established.'

Processed'graphite'from'the'Valence'Industries'is'now'being'made'available'to'the'University'of'Adelaide.'' That'graphite'will'be'used'for'ongoing'assessment'and'development'of'a'range'of'graphene'products'for' commercialisation'as'well'as'a'program'of'graphene'sales.'''

VALENCE INDUSTRIES – GRAPHENE POWDER

As'part'of'the'research'and'development'process'utilising'Uley'Graphite,'the'Company'anticipates'having' commercial'quantities'of'graphene'available'this'year.''Valence'Industries'expects'that'it'will'be'in'a'position' to'commence'initial'sales'of'graphene'in'the'first'half'of'2014.'''

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Further'announcements'relating'to'the'VXL'Graphene'Sales'Program'are'expected'to'be'made'by'the' Company'in'coming'months.''Inquiries'relating'to'the'VXL'Graphene'Sales'Program'under'the'VXL'GraffTEX' brand'can'be'directed'to'sales@valenceindustries.com.'

For$further$information,$please$contact:$$

Christopher'S.'Darby' Rebecca'Lawson' CEO'&'Managing'Director' Associate'Director'–'Media'Relations' Valence'Industries' Mercury'Consulting' info@valenceindustries.com' Rebecca.Lawson@mercuryconsulting.com.au'' +61'8'8418'8564'' +61'2'8256'3332'

About$Valence$Industries$

Valence'Industries'(ASX:VXL)'is'the'owner'and'operator'of'the'only'graphite'manufacturing'facilities'in' Australia'located'at'Uley'in'South'Australia'near'the'regional'centre'of'Port'Lincoln.'The'Company'is'bringing' existing'infrastructure'into'production'with'a'focus'on'global'markets'across'multiple'graphite'product'ranges.' Graphite'production'will'commence'in'early'2014,'with'plans'for'expanded'production'by'the'end'of'2014.'

Located'only'23'kilometres'from'Port'Lincoln,'the'regional'centre'for'the'Lower'Eyre'Peninsula'in'South' Australia,'Valence'Industries’'Uley'Graphite'project'is'recognised'as'a'significant'area'of'graphite' mineralisation,'and'one'of'the'largest'coarse'flake'graphite'deposits'in'the'world.'The'deposit'contains' disseminated,'highQgrade'flake'graphite'and'the'mineralisation'is'near'surface,'with'the'final'manufactured' graphite'products'recognised'and'purchased'by'many'customers'for'its'high'quality.''

The'company'holds'two'existing'Mining'Licences'and'two'associated'Retention'Licences,'along'with'an' extensive'Exploration'Licence,'for'the'conduct'of'its'operations.'In'addition'Valence'Industries'is'in'the' fortunate'position'of'owning'the'land'on'which'its'current'and'proposed'expanded'operations'are'conducted' along'with'the'extensive'existing'infrastructure.'

Manufacturing$A$New$Carbon$Future$

The'Company'operates'as'an'industrial'manufacturer'of'highQgrade'flake'graphite'products'for'distribution' and'sale'to'global'markets.'Valence'Industries'owns'established'processing'facilities'and'infrastructure'to' manufacture'a'wide'range'of'graphite'product'lines'for'multiple'applications'and'multiple'industries.'The' Company'produces'and'sells'its'graphite'products'from'its'Uley'Graphite'facilities'in'regional'South'Australia' for'delivery'to'diversified'markets'for'graphite'in'the'Asia'Pacific,'Europe'and'North'America.'

As'a'vertically'integrated'manufacturer'of'specialist'graphite'product'ranges'Valence'Industries’'branded' products'are'designed'to'meet'current'and'future'customer'demand.''This'program'includes'development'of'a' significant'VXL'High'Purity'Graphite'Facility'program'and'a'range'of'future'Graphene'applications.'

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