christopher darby, tech minerals consulting group: graphite projects – pit to market

WWW.VALENCEINDUSTRIES.COM1

VALENCE'INDUSTRIES'

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.'

Australia’s'most'advanced'Graphite'Project'Industrial'Manufacturing'&'Sales'to'commence'in'Q1'2014'

November120131Christopher1S.1Darby,1MD1&1CEO1

©'Valence'Industries'Limited'(ASX:VXL)'

(formerly'Strategic'Graphite'Limited)'


Disclaimer1

21

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 and 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 and/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, and; (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 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, exploitation and exploration successes, continued availability of capital and financing, and 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, and 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 and relating in any way to these presentation materials including, without limitation, the information contained in the presentation material and its accuracy, completeness, currency or reliability. This presentation does not constitute a recommendation regarding the securities of the Company, and should not be construed as legal or financial advice. It has been prepared for information purposes only and contains general summary information and does not take into account the circumstances of any individual investor. Prospective investors in the Company are encouraged to obtain separate and 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.


Background1

•  Late11800s1to1199311•  AcOve1Care1&1Maintenance11•  Corporate1History1•  Demerger1•  3,6001Shareholders1•  TSX1&1AlternaOves1•  ASX1Compliance1LisOng1(VXL)1•  Graphite1producOon1&1sales1

31


Three1pillars1for1graphite1success1

Resources1&

1Mining1 •  JORC120121

• Low1Strip1RaOo1• Open1Pit1

• ExisOng1Stockpiles1• Mine1Life1

• Secondary1Targets1• Mining1Licences,1RetenOon1Licences1

&1ExploraOon1Licence1 Pr

ocessin

g1&1M

etallurgy1

• ExisOng1FaciliOes1• ExisOng1

Infrastructure1• Experienced1

Processing1• Metallurgy1

• Scoping1Study1• Globally1CompeOOve1

MarkeOn

g1

• High1Grade1• Flake1Graphite1• Customer1Engagement1

• ProducOon1&1Sales1• MulOple1Products1• Stable1&1Close1• R&D1Focus1

41


Board1&1ExecuOve1Management1GRAHAM'SPURLING'AM1Chairman1B.Tech1(Mech.1Eng.),1Masters1in1Mech.1Eng.1

Graham1is1a1qualified1mechanical1engineer1and1the1former1MD1&1CEO1of1Mitsubishi1Motors1Australia.1He1has1significant1knowledge1of1both1the1foundry1and1ba`ery1industries1directly1relevant1to1graphite,1a1deep1understanding1and1experience1in1global1markets1and1in1delivering1producOvity1in1manufacturing.1Mr1Spurling1served1as1Chairman1of1Phoenix1Copper1Limited1unOl1November12012.11

CHRISTOPHER'S.'DARBY'Managing1Director1&1CEO1BA1LLB1GAICD1GDM(AGSM)1

Globally1experienced1director1and1execuOve1of1graphite1mining1and1processing1operaOons.11Chris1has1worked1as1an1execuOve1and1consultant1on1engineering,1processing,1markeOng1and1sales1of1industrial1minerals1including1MEGA1Graphite,1Poddar1Industries,1Archer1ExploraOon1and1Lincoln1Minerals1as1well1as1customers1across1the1Asia1Pacific,1Europe1&1North1America.11With1more1than1201years1work1on1significant1engineering,1mining1and1construcOon1projects1he1has1worked1on1industrial1minerals,1hard1rock,1oil1and1gas1projects1of1up1to1$600m1in1value.11

GLENISTER'LAMONT'NoncExecuOve1Director1BEng1Mining1(Hons),1MBA1(IMD1Switzerland)1FAICD,1FFin.1

Experienced1director,1equity1and1mining1analyst,1Glenister1started1his1career1as1an1engineer.11He1brings1detailed1knowledge1of1the1Australian1resources1sector1underlined1by1his1role1as1Chairman1of1Strategic1Energy1Resources1Ltd,1Director1Golden1Rim1Resources1Limited1and1as1former1GM1of1Ashton1Mining1Ltd.1He1has1been1an1ExecuOve1Director1at1UBS1Warburg,1conducOng1financial,1technical1&1strategic1evaluaOon1of1mining1companies.11

IAN'SCHACHE''NoncExecuOve1Director'B.Sc1(Met.),1B.Econ1Qld11

Ian1has1over1401years1experience1across1a1diverse1range1of1development,1operaOons1and1producOon1acOviOes1in1the1mining1industry.11Ian1is1a1Director1of1New1South1Resources1Limited1and1was1previously1ExecuOve1General1Manager1for1Bemax1Resources1Ltd,1Senior1VP1and1COO1for1Tiomin1Resources1Inc.1and1ExecuOve1General1Manager1OperaOons1for1Westralian1Sands/Iluka1Resources1Ltd.11Prior1experience1includes1161years1in1engineering1and1management1with1Mount1Isa1Mines1Ltd.1

DAVID'J.'SALARI'Chief1OperaOng1Officer1BASc1(Metallurgy1&1Material1Science),1P.1Eng.1

A1highly1capable1metallurgical11engineer1with1more1than1301years1mining1and1mineral1processing1experience1including1engineering1and1manufacturing1graphite1processing1plant1&1equipment.1Recognised1for1Omely1delivery1of1soluOons1that1increase1producOon1and1sales1in1the1industrial1minerals1space.1

JAREK'KOPIAS'Company1Secretary1&1CFO1B.Com1(Acc),1CPA,1ACIS,1ACSA1

Has1worked1in1numerous1financial1roles1for1public1and1private1companies,1specialising1in1the1resource1sector.11This1includes151years1at1WMC’s1Olympic1Dam1operaOons,151years1at1Newmont1Mining1CorporaOon,151years1at1oil1and1gas1producer1and1explorer1Stuart1Petroleum1Limited1(prior1to1its1merger1with1Senex1Energy1Limited).1

51


Resources1&1Geology1

•  JORC120121Completed1•  Extensive1exploraOon1areas11•  Coffey1JORC120041potenOal1for1

251to11501million1tonnes1at16%1to19%1average1grade1

61

Valence'Industries'Uley'Facility'Main'Road'Open'Pit'#'1'

Resource'Classifica[on'

Lower'Cutoff'Grade''(%1GraphiOc1Carbon)1

Tonnage'(Mt)'

Average'Grade*'(%1GraphiOc1Carbon)1

Indicated1 3.51 1.91 10.7%1

Inferred1 3.51 4.51 5.5%1

Total' 6.4' 7.1%'*1Using1Cut1Off1Grade1of13.5%1Graphite1/1Whole1Rock1Grades1Reported1Ordinary1Kriged1EsOmate1using1a1Parent1Block1of14mN1x110mE1x14mRL1


Industrial1Manufacturing1Infrastructure1in1Place1

•  Infrastructure'

!  Established1Roads1

!  Established1Power1

!  Established1Process1Facility1

!  Established1Engineering1Workshops1

!  Established1CRIB1&1AdministraOon11

!  Established1Laboratory1Buildings1

!  Tailings1&1Ponds1

•  Freehold'Title'

71


Proven1ProducOon1Capability1–1ExisOng1Infrastructure1

81

•  Capacity1&119931

•  MulOple1Graphite1Products1

•  Global1Customers11

•  Extensive1Upgrades1

•  Significant1Stockpiles1

•  Program1to1Restart1ProducOon1•  Local1Personnel1&1Contractors1•  151Minute1Drive1to1Site1from1Port1Lincoln1•  Scoping1Study1Completed1for150,000c60,0001

TPA1Plant1&1New1Mining1•  AddiOonal1Funding1for1Full1Scale1New1Plant1–1

sales1contract1factoring,1royalty1and1debt1finance1


Phase1I1c1Restart1Product1Lines1–1Early120141

•  Significant1Stockpiled1Material1•  Stockpile1One1circa1800T1•  Stockpile1Two1circa174,000T1•  Immediate1Revenues1thru1to1

Midc20141

91

Exis[ng'Stockpiles'

Improvements1&1Work1over1last121years1includes:11*11plant1refurbishment11*11electrical1work11*11resource1definiOon11*1111*11site1

remediaOon11*11tailings1ponds11*11water1reclamaOon1ponds11*11stockpile1surveys11*11metallurgy11*11scoping1study1*11customer1engagement111


Phase1I1Manufacturing1Program1c1Key1Benefits1

The1primary1benefit1of1stockpile1processing1is1to1provide1current1product1to1key1target1customers1to1qualify1mulOple1Graphite1product1lines1&1secure1long1term1supply1contracts11Other'benefits'include:'•  Early1posiOve1cash1flows1•  UOlise1exisOng1infrastructure1•  Build1&1Deliver1on1exisOng1Customer1Engagement1•  Product1Available1to1precqualify1New1Customers1•  OpOmise1Metallurgy1•  OpOmise1Design1for1Full1Scale1New1Plant1•  Train1Personnel1&1Contractors1in1Graphite1

101


Phase1II1–1Modular1ProducOon1Growth1

111

•  Detailed1Scoping1Study1Completed1•  New1Plant1&1New1Open1Pit1•  50,0001to160,0001tonnes1of1ProducOon1

p.a.1•  New1Plant1ProducOon1Commencing1end1

of1Q41201411•  Adding1to1ExisOng1Plant1ProducOon1

•  Phase1II1Capex1of1$34M1•  Capex1thru1AddiOonal1Funding1using:1

–  Revenues1–  Sales1Contract1Factoring1–  Royalty1Finance1–  Debt1FaciliOes1

•  Previous1expressions1of1interest1received1to1provide1circa1$30M+1in1Capex1funding1

•  Scoping1Study1–1full1scale1engineering,1markets1&1economics11

•  CompleOon1of1financier1driven1BFS1in1Q1120141

•  Indicated1&1Inferred1JORC120121of16.4Mt1at17.1%1Average1Grade1

•  SubstanOal1ExploraOon1Upside1


Industrial1Manufacturing1of1Graphite1

121


•  Highly1advanced1project:1–  Extensive1exisOng1faciliOes1

–  Extensive1exisOng1infrastructure1

–  Graphite1experienced1engineering1&1metallurgy1personnel1

•  Sourcing1Equipment1to1Expand1ProducOon1

•  Program1for1Delivery1

•  New1full1scale1producOon1thru1end1of120141

131

NEW'PROCESSING'PLANT1'

50,0001Tonne1Plant1Capex1 A$34.0m1

Mining1Cost1Pit1#111(p.a.)1 A$3.9m1

50,0001Tonne1Plant1Opex1(p.a.)1 A$23m1

Mining1&1Opex1Cost/Tonne1 A$550/t1

Average1Graphite1Product1Price1 US$1,400/t1

Phase'II'Capex'expected'to'be'fully'financed'from'Phase'I'Revenues,'Sales'contract'factoring,'Royalty'

finance'&'Debt'finance''

New1Facility1&1Projected1Economics1

1.  Based1on1Scoping1Study1201312.  1.5%1royalty1payable1to1Strategic1Energy1Resources1Ltd1


Strong1long1term1price1growth1for1Graphite1

141

Source:1Industrial1Minerals120131

$0'

$250'

$500'

$750'

$1,000'

$1,250'

$1,500'

$1,750'

$2,000'

$2,250'

$2,500'

$2,750'

$3,000'

2004' 2005' 2006' 2007' 2008' 2009' 2010' 2011' 2012' 2013'

Price'Range'for'Flake'Graphite'+80'Mesh,'94m97%'C,'US$/tonne'

Low' High' Trend'

Growth'Rate'15%'

•  Long'term'15%'p.a.'underlying'price'growth''•  Price'bubble'in'2011/12'due'to'increasing'demand'

and'Chinese'supply'restric[ons'


Defined1Path1to1Global1markets1

151

“Graphite)is)not)like)gold)or)iron)ore.)There)is)no)general)trading)market.)We)have)to)know)our)customers)&)deliver)the)product)they)need)to)their)precise)specifica<ons.)This)skill)in)the)market)does)not)come)easily.)Valence)Industries)has)this)key)piece)in)the)graphite)puzzle.”11

(Christopher1Darby,1MD1&1CEO)1

High'Quality'Flake'Graphite1"  Process1puriOes11"  High1Purity1"  OffcthecShelf1"  Graphite1Experience11"  Plant1AutomaOon1"  CRM1&1QC1"  Export1Quality1"  Preferred1supplier11

Valence1Industries1–1Processed1&1Bagged1Graphite1


Market1Engagement1

161

Iden[fied'Export'Markets'&'Customer'Engagement'

" MulOcmodal1Transport1"  Global1Markets11"  Customer1Engagement1" Near1Term1Export1Sales1

through120141"  Diversified1Customer1Base11"  Targeted13c51Year1Contracts1


Diverse1product1lines1

•  MulOple1high1purity1flake1Graphite1Product1Lines1•  Diverse1Revenue1streams1reduce1risk11•  Customer1Specific1refinement1for1premiums1•  Future1High1Purity1•  Globally1compeOOve1cost1base1

171

Mesh'Size' Micron' 'Processed'C%'

+501 3001 94%1

c401to1+801 1801 94%1

c801to1+1501 1061 99%1

c1501to1+3001 501 94%1

Valence1Industries1–1Uley1Main1Haul1Road1#111


Graphite1Global1Supply1Risk1

•  CriOcal1industrial1mineral1USA1&1UK1

•  BriOsh1Geological1Survey11

•  China11•  Global1Supply1•  Global1Demand1•  Customers1•  Valence1Industries1

Supplies1

181


MulOple1ApplicaOons1+1Diverse1Industries1=1Lower1Risk1

191

'MOBILE'ENERGY'

''

Alkaline'Baperies''

ZincmC'Baperies''

LithiummIon'Baperies''

Fuel'Cells'

'ENGINEERING'MATERIALS'

'Solar'Power'

'SemimConductor'Coa[ngs'&'Paints'

'Powder'Metallurgy'

'Graphite'Foils'

'CARBON'ADDITIVES'

&'POLYMERS''

Conduc[ve'Plas[cs''

Conduc[ve'Coa[ngs'&'Paints'

'Carbon'Fibers'

'Flame'Retardants'

'HOT'METAL'FORMING'

'Lubricants'for'Seamless'Tubes'

'Descaling'Agents'

'Forging'

'REFRACTORY'

''

Refractories''

Crucibles''

Hot'Metal'Toppings'

Valence1Industries1is1targeOng1Mul[ple'Applica[ons'in1Diverse'Industries'Customers1will1come1from1both1New1&1TradiOonal1ApplicaOons1


Timeline1to1ProducOon1

Q4120131Phase1I1Process1Engineering11TerOary1metallurgy1program1Delivery1Program1ASX1LisOng1Noncequity1finance1negoOaOons1

Q1120141Commence1Phase111Processing1Complete1Produce1Approvals1Commence1Shipments1Extended1Metallurgy1Program11Phase121Process1Engineering1Complete1BFS1Lab1Design1&1Upgrade1Workshop1Upgrade1Tailings1&1Storage1Ponds1

Q2120141Commence1Stockpile1Two1Processing1Stockpile1Two1Shipments1Phase121Product1QualificaOons1Phase121Plant1Program1Commences1Complete1Main1Road1Pit1Design1Commence1overburden1removal1&1retenOon1IniOal1Phase121Sales1Contracts1Conclude1noncequity1finance1negoOaOons1

Q3120141Construct1Phase121Facility1Buildings1InstallaOon1of1Phase121Plant1&1Equipment1Commence1mining1&1build1new1material1stockpiles1TransiOon1exisOng1plant1producOon11Commence1preccommissioning1of1Phase121full1process1plant1

Q4120141Phase121Full1scale1mining1underway1Phase121Full1scale1plant1commissioned1Program1to1increase1producOon1to150,0001to160,0001tonnes1p.a.11Commence1shipments1across1all1product1lines1

201


Valence1Industries1Prospectus1&1ASX1LisOng1

Offer'Details'•  Share1ConsolidaOon111for121•  Raising1$6.5M1c1$10.1M1•  Underwri`en1to1$6.5M1•  Placement1at1$0.201•  Rights1Issue131for181at1$0.201•  11for111A`aching1OpOon1•  OpOons1at1$0.251to1311July120161•  Subcunderwriter1OpOons111for121

at1$0.251to1311July120161escrowed1for1241months1

•  CondiOonal1on1ASX1LisOng1

211


IndicaOve1Timetable1

221

Descrip[on' Time'Offer1Opened1 191Nov1Closure1of1Rights1Issue1 51Dec1Se`lement1of1Shorxall1 Early1Dec1CompleOon1of1ASX1Compliance1LisOng1expected1 201Dec1Commencement1of1Graphite1ProducOon1 Early1Q1120141

Note:)the)<metable)is)indica<ve)only)&)is)subject)to)change.)

WWW.VALENCEINDUSTRIES.COM1 231

ValuaOon1Metrics1at1LisOng1

At IPO

Total Shares on issue 168.9m

Market capitalisation at issue price (20 cents) $33.8m

Net Starting Cash $10m

Enterprise Value $23.8m

Current JORC Resource 6.4Mt

Target production end 2014 50,000 tpa

Average selling price US$1,400/t

Mining and operating costs at 50,000 tpa production <A$600/t


Summary1

241

•  Established1Graphite1Resource1•  Established1Mine1&1Processing1infrastructure1•  Current1mining1licences,1retenOon1licences1and1

exploraOon1licence1•  Metallurgy1for1high1grade1flake1Graphite1at194%+1TGC1•  New1Board1&1Management1focus1on1immediate1recstart11•  ProducOon1to1commence1in1Q11201411•  ProducOon1to1increase1to150,000Tc60,000T1thru1end1

20141

•  Scoping1Study1graphite1producOon1costs1of1<$600/tonne11•  Scoping1Study1average1product1pricing1of1US$1,400/tonne1•  Market1Cap1$33.8m1at1the1Offer1Price1(201cents)11•  Cash1of1$10m1for1full1raising1•  Fully1Underwri`en1to1minimum1required1$6.5m1•  ASX1Compliance1LisOng1expected1in1Q4120131•  Significant1exploraOon1upside1for1expansion1


Contact1

251

Christopher1Darby1Managing1Director1&1CEO1Valence'Industries'Limited'

[email protected]+611404180718001

Tim1Hosking1Director,1Corporate1Finance1Patersons'Corporate'Finance'

[email protected]+611319242140861+611416108410061

WWW.VALENCEINDUSTRIES.COM1 261

Valence1Industries1(VXL)1–1Uley1High1Grade1Flake1Graphite1

christopher darby, tech minerals consulting group: graphite projects – pit to market

Business

forwardlooking statements

certain statements

statements of historical

future production

future exploration results

future performance

presentation materials

actual results