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July 2019 Corporate Presentation• SUPPLY/DEMAND PROJECTIONS• BATTERY TECHNOLOGY/RAW MATERIALS DYNAMICS

APPENDIX 2: BATTERY MARKET

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Brazil - Premier Battery Metals Jurisdictions

www.southstarbatterymetals.com 2TSXV: STS | OTCQB: STSBF

Global Battery Market

• Brazil is largest graphite producer of high-quality graphite outside of China with 80+ years of continuous production and 3rd most important country in EV Battery Supply Chain.

Graphite Supply 2020 by Country

EV Supply Chain RankingBy Country

Brazil - Premier Battery Metals Jurisdictions



Top 3 Most Profitable Operating Mines in World are in Located in Brazil

Graphite Demand is in a Perfect StormFor Battery Metals


Global Markets

Source: 2020 World Bank - Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition 2DS Scenario

0%

1%

1%

4%

7%

9%

11%

18%

37%

56%

99%

189%

231%

460%

488%

494%

0% 100% 200% 300% 400% 500% 600%

Titanium

Iron

Chromium

Manganese

Copper

Aluminum

Moly

Lead

Neodymium

Silver

Nickel

Vanadium

Indium

Cobalt

Lithium

Graphite

2018 to 2050Growth % (t)

1.73

3

8

15

33

138

366

415

644

694

781

1,378

2,268

4,590

5,583

0 1,000 2,000 3,000 4,000 5,000 6,000

Indium

Titanium

Neodymium

Silver

Moly

Vanadium

Chromium

Lithium

Cobalt

Manganese

Lead

Copper

Nickel

Graphite

Aluminum

2050 Demand Kt

Projected Large Increase in Graphite Demand


Global Markets

• Brazil has large internal demand for natural graphite (80-90kt/p.a.)• Graphite has many uses outside of battery metals

• High tech, graphene, military, etc…

• Natural graphite has advantages over synthetic:• Lower cost• Smaller environmental impacts• Easier to scale• Higher energy density

• Need 10-15 new mines by 2025 to meet 2x demand

Graphite Supply / Demand is a Perfect Storm



• Automobile manufacturers have committed $300B to Evs & LiBs• China currently dominates the battery supply chain

• China supplies:• 32% of nickel mine production• 71% of graphite mine production• 52% of cathode production• 81% if anode production• 100% of spherical graphite production

Supply by Mesh Size Vs. Graphite Demand



• Growth in all flake sizes• Natural graphite is logical choice to scale faster, cleaner and meet future demand• Investment in new graphite production has not started yet to meet 2025 demands • Requires diversification away from Chinese supply chain dependence

EV Demand is Taking Off & Only in Beginning Stages



Number of EVs By Cia. - 2025

SOURCE: BLOOMBERG NEF ELECTRIC VEHICLE OUTLOOK 2019

SOURCE: WOOD MACKENZIE 2040 FORECAST

EV Sales By 2040

EVs Require Large Amounts of Flake Graphite



• Natural flake graphite blends dominate the anode materials• Every kWh requires approximately 1.15kg of flake graphite• Typical EV will require 85 – 115kg of flake graphite for anode materials

Megafactory History & Projections



Source: Benchmark Mineral Intelligence

• Over 200 Gigafactories currently in planning and pipeline with a total of 3.4 TWh at full operational capacity by 2030

EV Demand is Taking Off & Only in Beginning Stages



SOURCE: BENCHMARK MINERAL INTELLIGENCE

• At the beginning of unprecedented growth in battery storage revolution

• Natural graphite is logical choice to scale faster, cleaner and meet future demand

• Flake graphite must play a leading role in coming electricification

• There has been little recent investment in graphite production

• Supply pressures will be great and prices should reflect this growing trend

• Conceptual Battery Schematic & Anode Materials




• Graphite amounts to over 95% of anode material for commercial battery technologies

• No substitutes on the horizon

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•

•

Battery Anode Material Assessment & History



Anode Trends



Conceptual Battery Schematic & Cathode Materials




• Typical lithium-nickel-cobalt-al oxide battery cathode contains:• 2% aluminum• 73% nickel• 14% cobalt• 11% lithium

•

•

•

Battery Cathode Material Assessment & History



Anode Qualification Schedule



✓ Approved Environmental Permit for Pilot Plant

✓ South Star Completed

✓ South Star Completed

• Typically takes 10-18 months to qualify anode materials prior to firm off-take/PO commitments

• Dry Stack Tails and No Tailings Dam• Low Impurities & Highly Crystalline Structure• Low CAPEX (<US$35M) in 2 Phases

• Phase 1 – Pilot Plant (5000tpy of Concentrate)

• Phase 2 – Large Plant (20-25ktpy of Concentrate)

• Low OPEX in First Quartile of Costs• Competitive with Chinese Producers

• Detailed Engineering for Phase 1 Pilot Plant Complete

• Modular Construction• 1-5kg samples sent to over 20 clients.

• Ready to move into qualification stage

Key Project That’s Ready For Construction to Meet Growing Demand


Santa Cruz Graphite Project

COMPETITIVE ADVANTAGES


GLOBAL GRAPHITE MARKET- CONCENTRATE PRICE BENCHMARKING

Prices are firming and starting to increase based on supply/demand dynamics and global macro impacts according to the company Benchmark Mineral Intelligent.

Supply demand indicators indicate growth in the next 6-12 months in the use of graphite in the industry, which should pressure and increase in the average price of the product.

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