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Creative Resources Leadership
CorporateUpdate
February2017
Overview§ Lepidico (ASX: LPD)isanASX-listed lithium exploration and
development company withamanagement teamexperienced inproject andbusiness development
§ Lepidico’s strategicobjective istobecome asustainable lithiumproducer withaportfolio of quality assets andpipeline ofprojects
§ Lepidico isdifferentiatedby havingsuccessfully produced lithiumcarbonate andasuite ofby-products fromnon-traditional hardrocklithium bearingminerals using itsregistered L-Max®processtechnology
§ PFS completed for Phase1L-Max®Plant February 2017andDFSworks havecommenced
§ Lepidico provides exposure toaportfolio oflithium explorationassets through itswholly ownedproperties, JV’s andIPlicenceagreements inAustralia, Canada, Europe andSouth America
§ At31December 2016 Lepidico hadA$2.1Mincashandnodebt
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Lepidico Strategy&AssetOverviewStrategy:toleverageitsregisteredL-Max®technologytoprocesshigh-quality lithiummicaResourcesviahigh-return,strategicallylocateddevelopmentprojectsthatproducelithiumchemicalsandasuiteofvaluableproducts.
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MineralResourceDevelopment
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SeparationRapids*§ TheSeparationRapidsdeposit isoneofthelargest“complex-type”lithiumpegmatitedepositsintheworld
§ NI43-101PEAcompleted onthePetalite MineralResource
§ Excellent recoveries andhigh-specification, 99.88%batterygradelithiumcarbonateproduced inL-Max® testwork programme
§ OutcroppingLepidolite zonelargelyundrilled – Resource drillingscheduledtocommenceMarch2017 forcompletion inJuneQtr
§ LetterofIntentwithAvalonAdvancedMaterials Inc.(TSX:AVLandOTCQX:AVLNF)foranintegratedLepidoliteminingand lithiumcarbonateproductionpartnership inCanada
Reference: ASXAnnouncement, LithiumAlliance withAvalonAdvancedMaterials Inc,6February 2017
MineralResourceDevelopment
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PioneerDome*§ Pegmatite9:lithium-caesium-tantalum (LCT)pegmatite,outcroppingintwo
parallel structuresovera200m strike
§ Rockchip samples returnedgradesupto3.94%Li2O
§ PEG009 isadrillreadytarget– drilling cancommence oncesite accesspermitsaregranted
§ Flotation andL-Max® leachtestresultsencouraging– finallithium carbonateresults pending
§ Lepidico farm-in toPEG009viadelineationofalithium-mica Resourceof500,[email protected]%Li2Oormoretoearna75% interest
§ PEG009occurswithinaclusterof13LCT-typepegmatitesdefined byPioneerResources alonga20km trend
*Reference: ASXAnnouncement, Lepidico toFarm-in toPioneer DomePEG009Lepidolites,23February 2017vand PioneerResources (ASX:PIO)announcementdated19May2016
MineralResourceDevelopment
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Lemare*§ LemareCentralZone– spodumene pegmatitestrikeof300mand
opentotheNE
§ Drillresults havereturned: [email protected]%Li2O;[email protected]% Li2O;[email protected]% Li2O
§ Newspodumene pegmatiteidentified atLemare SW, 600mstrike,upto4.26%Li2O inrockchipsamples,averagegradeof 2.19%Li2O
§ Lemare claims cover74km2 intheJamesBayregion, 60km fromNemaska, 30kmeastofNemaska Lithium’s Whabouchi deposit
§ Earn-inforuptoa75%interestinLemare fromCritical Elements Corp. Nextdrill phaseC$350k,March2017.
*Reference: ASXAnnouncement,Drilling torecommence at Lemare LithiumProject,16February 2017andtheCompany’sannouncement)dated24November 2016
PositivePhase1L-Max®PlantPFS*§ PFShighlights economicpotential toconstructastrategically locatedPhase1L-Max®processfacility inKenora,Canadadueto:
- Closeproximity toabundant,low-costsourcesofbulkconsumables
- Locationadjacent tomarketsforbulkby-products(particularly SOPandsodiumsilicate)
- Established infrastructure (particularly road,railandportinfrastructure)
- Closeproximity toaskilled labourforcewithcompetitive labourrates
§ Lepidico hascommitted tocommence aDFSatacostofc.US$5million(A$6.5million),assoonasfundingissecured
- Currently formulatingplanstoundertakeapro-ratanon-renounceable RightsIssue,toraisebetween A$3M– A$8M
*RefertoASXAnnouncement, PositivePhase1L-Max®PlantPre-Feasibility Study””dated 27February2017forfurther details
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Element L-Max®FeedGrade
RecoverytoProduct
Lithium 2.10% 94%
Potassium 6.77% 85%
Silicon 23.10% 85%
Caesium 0.05% 81%
Tantalum 0.03% 70%
ProductRecoveries
ExpectedConstructionCostsItem US$MFeasibilityStudyand2017OwnersCosts 5.0L-Max®plantdirectcosts 16.2L-Max®plantservices 4.6Infrastructure 2.6Indirectcosts 6.7Contingencyat20% 6.0Total 41.1
Phase1L-Max®PlantProjectProgressingtoDFS§ Keymetrics fortheDFSscope* willbe:
- Plantthroughput rate3.6tphoflithium-mica concentrate(annualised rateof29,000tpa – 91.4%operating time)
- Batterygradelithium carbonate equivalent (LCE)production ofc.3,000tpa
- AverageC1Costs nil tonegativeafterby-products
- AverageC3Costs ofUS$1,000-2,000/t afterby-productcredits including amortisation ofdevelopment capital
- Capex ofUS$40-45M (incl. 20%contingency andUS$5MforDFScosts)
- Valuable suite ofby-products including sulphate ofpotash(SOP), caesium, tantalumconcentrate andsodium silicate
*Theassumptionssetoutaboveandelsewhereinthisannouncementcontainreferencetobroadindicativeplantoperatingparameters(Parameters) forthepurposeoftheDFSwhichhavebeendevelopedthroughscopinglevelworkandsubsequentPFSwork.Fortheavoidanceofdoubt,investorsareadvisedthattheParametersexpectedtobeadoptedfortheDFSdonotconstituteaproductionforecastortargetinrelationtomineralresourcesassociatedwithanyprojectownedbytheCompany.TheCompanywishestoexpresslyclarifythatanyreferencesinthisannouncementorthePFStoannualproductionratesrelatetoscopingandplanningparametersandarenotaproductiontarget.TheCompanycautionsinvestorsagainstusinganystatementsmadeineitherthisannouncementorthePFSwhichmayindicateoramounttothereportingofaproductiontargetorforecastfinancialinformation,asabasisformakinganyinvestmentdecisionsaboutsharesintheCompany.TheprimarypurposeofdisclosingtheDFSParameters istoinformonthescopeofworkforthestudyandprovideanestimateoftheintendedscaleofapotentialfuturePhase1Plant.
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Item US$/tofConcentrateProcessed(currentprices)
Concentratepurchase 350Concentratetransport 4Inboundconsumableslogistics 144ConsumablesFOB 286Processingcostsother 186Sales,marketing,andoutbound logistics 55Generalandadministration 104TotalUnitCost 1,130
KeyParameter KeyMetric
LithiumCarbonate(>99.5%)Production 3,000tpaSOP(>95%K2SO4)Production 3,000-4,000tpaSodiumSilicate(40wt%solutionatSiO2:Na2Oratioof2.0)Production 40,000-50,000tpa
Caesium(asmetalcontainedinformate)Production 10-100tpaTantaliteCon(30%Ta2O5)Production 20-25tpaLiCarbonate C1costafterby-productscredits <=US$0/tLiCarbonate C3costafterby-productcredits US$1,000-2,000/t
ExpectedOperatingCosts
ProjectPlanningKeyMetrics
PeerAnalysisPhase1L-Max®PlantisFavourablyPlacedontheGlobalCostCurve*
*LithiumCarbonateCostCurve2016co-productbasis(Source:Roskill)
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TheL-Max® Advantage
ü L-Max®leaches lithium from certainmicasandphosphates withoutroasting– conventional processing ofspodumene requires capitalandenergyintensive roasterstoextractlithium, oftenwithnoby-products
ü L-Max®reagentsandoperation havestraightforwardhealth, safetyandenvironmental characteristics
ü L-Max®utilises common use, inexpensive reagents&isenergyefficient
ü L-Max®is novel bututilises conventional equipment andstraightforwardprocesses – aseries of agitatedtanks, crystallisers andfilters
ü By-products include potassium sulphate fertiliser (SOP), sodium silicate,gypsum andpotentially caesiumandrubidium formates
ü Fastleachkinetics, high recoveries andmoderate process costestimatesmakeforcompelling economics
Elementleachcurves underL-Max®- PFSsample10
Lepidolite
K(Li,Al,Rb)3(Al,Si)4O10(F,OH)2
Zinnwaldite
KLiFeAl(AlSi3)O10(OH,F)2
Ambygonite
(Li,Na)AlPO4(F,OH)
0
20
40
60
80
100
0 2 4 6 8 10 12 14 16 18 20 22 24
Metalex
tractio
n(%)
Time(hrs)
Lithium
Cesium
Potassium
TheL-Max® Process– DemonstrableSuccess
Gypsum
Pending
LepidoliteZinnwaldite Amblygonite 11
Lithium carbonate >99.5%orHydroxide
Sodiumsilicate or‘water-glass’
Potassium sulphate Caesiumformate
Sulphuricacid
Limestone
Benign Residue
Qualitytobedetermined
L-Max®- 100%OwnedbyLepidico
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§ L-Max®isaproprietary,‘straight-forward’yetnovelhydrometallurgicalprocess
§ L-Max®usescommonindustrialreagentsatatmosphericpressureandmoderatetemperature(c.100oC)
§ AninternationalpatentapplicationhasbeenfiledunderthePCTforL-Max®
BusinessModel
OperatingBusiness RoyaltyBusiness
L-Max®processplant(whollyowned/JV)
Integratedwithconcentrator
andmines
Third-partyconcentratefeed
Third-partymineorefeed
L-Max®third-partylicences
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Opportunities
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Miningandprocessingsustainablyfor21st centuryproducts
Phase1L-Max®Plantc.3,000tpaLCEH2SO4 ~50,000tpaDFS~US$5MDevelopment~US$35-40M
FullScale1L-Max®[email protected],000tpaLCEH2SO4 ~400,000tpaStudies~US$10MConstruction~$Pending
Phase1L-Max®PlantPFSDFS
Permits&ApprovalsEarlyWorks/FEEDImplementation
Operation
FullScaleL-Max®PlantScopingStudy
PFSDFS
Permits&ApprovalsEarlyWorks/FEEDImplementation
Operation
2017 2018 2019 2020 2021
FID
FID
Mini-plant trial&duediligence
OverviewCapital Structure (ASX:LPD) Directors and Senior Management
Share Price
Description Amount
SharePrice(Close24February2017) 1.5c
Shares O/S(Current) 1.75B
MarketCap(Close 24February2017) $26.3M
Cash(31December2016) $2.1M
Top20Shareholders(31January 2017) 51.5%
Name Title
GaryJohnson Non-ExecutiveChairman
JoeWalsh ManagingDirector
TomDukovcic Executive DirectorExploration
MarkRodda Non-ExecutiveDirector
ShontelNorgate ChiefFinancialOfficer
GavinBecker GMBusinessDevelopment
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Lithium Carbonate Price
DirectorsandSeniorManagementTeam
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Mr. Gary JohnsonMAusIMM, MAICD
Chairman
Mr. Tom DukovcicBSc (Hons), MAIG, MAICDDirector Exploration
Mr. Joe WalshBEng, MSc
Managing Director
Mr. Mark RoddaBA, LLB
Non-Executive Director
Mark is a lawyer with 20 years experience in the resources sector including the management of local and international mergers and acquisitions, divestments, exploration and project joint ventures, strategic alliances, corporate and project financing transactions and corporate restructuring initiatives.
Tom is a geologist with over 25 years experience in exploration and development. He has worked in diverse regions throughout Australia, including the Yilgarn, Kimberley, central Australia and northeast Queensland. Tom is a Member of the Australian Institute of Geoscientists and a Member of the Australian Institute of Company Directors.
Joe is a resources industry executive and mining engineer with over 25 years experience working for mining companies and investment banks. Joe also has extensive equity market experience and has been involved with the technical and economic evaluation of many mining assets and companies around the world.
Gary has over 30 years experience in the mining industry as a metallurgist, manager, owner, director and managing director possessing broad technical and practical experience of the workings and strategies required by successful mining companies.
Mr. Gavin BeckerARSM, BSc (Eng), MBA,
FAusIMM, CP(Met), GAICDBusiness Development
Gavin is a metallurgist with 40 years industry experience. During that time he has worked in senior operational, R&D, feasibility study and consulting roles on lead/zinc, gold, uranium, copper and nickel/cobalt/scandium mines and/or projects.
Ms. Shontel NorgateB.Bus
Chief Financial Officer
Shontel is a finance executive with over 20 years commercial experience in the resources industry including debt and equity finance, financial reporting, project management, corporate governance, commercial negotiations and business analysis
InvestorHighlights
CompetitiveAdvantage
§ AfarlesscompetitivelandscapeexistsforLi-micaandLi-phosphateexplorationproperties§ L-Max®isexpectedtohaverelativelycompetitivecapitalintensity
§ By-productpotentialmeansL-Max®shouldhaveacompetitiveoperatingcoststructure
L-Max®
§ Employsconventionalprocessesusingindustrystandardequipment,operatedatambientpressureandmoderatetemperature§ Employscommonuse,inexpensivereagentswithstraightforwardhealth,safetyandenvironmentalcharacteristics
§ Hasanovelflowsheetthatisthesubjectofaninternationalpatentapplication
§ PFSconfirmedviabilityofconstructingastrategicallylocatedPhase1L-Max®PlantatKenora,Canada,processinglithium-micaconcentratespurchasedfromthirdparties
§ DFSworkhascommenced§ Firstproductionprojectedfor2019
ProvenTeam
§ Managementteamexperiencedinnewprocess,projectandbusinessdevelopment§ Astrongindustrytrackrecordthatincludescompanytransformingprojectandtechnologydevelopment
§ Significantmilestonesaccomplishedinashortperiodoftime– Lepidicoisjustgettingstarted……
FeedSources
§ Lepidicoisbuildingaportfolioofqualitylithiumassetsaroundtheworld§ InboundenquiriesrevealexplorersthatdiscoverLi-richmicasaredrawntoL-Max®
§ TailingsandwastedumpsrichinLi-micaofferneartermproductionopportunities
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PathwaytoProduction
LithiumCarbonate/Hydroxide
Supply&MarketBalance“Liisnotrare,justanunderdevelopedmarket”1: depositsclosetoinfrastructure,andofsufficientscaleandqualityforsaleablebatterygradeproductarelesscommon
Committednewsupply: hardrockminedevelopmentswillseenewsourcesoflithiumsupplyfrom2016to2018bringingmarketbacktobalance
Longertermsupplygrowthlesscertain: mostcommentatorsexpectbrineproducerstoincrementallyincreaseoutput tobalancedemand– todatethishasnotbeenthecaseandenvironmental/regulatoryissuesabound
L-Max®willprovideanewsourceoflowcostlithium,frommicas
1DeutcheBank research May2016 18
DBlithiumsupply-demandbalance
DBpriceforecasts(May2016)
LithiumCarbonate/Hydroxide
Usage&DemandSteadygrowth intraditionaluses: fluxes,toughenedglass,medical, andcementandadhesiveadditives
UniquepropertiesforLi-ionbatteries(LIB): Li-ionsmovefromtheanode (-ve carbon)tothecathode(+ve Libased)duringdischargeandbackwhencharging. LIBuseanintercalated lithiumcompoundinthecathode
Stronggrowth inLIBusage: LiCoO1 – highenergydensitybutsafetyrisksifdamaged;LiFePO2/LMO3/NMC4 – longer lifeandsafer;NCA5/LTO6 – moreselective use;andLiS7 – pioneering higherperformance toweight ratio
1LiCoO– Lithium Cobalt Oxide;2LiFePO– Lithium IronPhosphaste; 3LMO– LithiumManganeseOxide;4NMC– (Lithium) Nickel ManganeseCobalt;5NCA– (Lithium) NickelCobalt Aluminum Oxide;6LTO–
Lithium Titanium Oxide;7LiS– Lithium Sulfur;electrolyte – Lisaltinorganicsolvent
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Batterycostsarefalling
DBGloballithiumdemand forecast
L-Max®:utilises commonuse,inexpensivereagents
L-Max® reagentshavestraightforwardhealth,safetyandenvironmentalcharacteristics
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Lepidolite Acid consumption (kg/t of mica)
Metal Grade (%) 98% H2SO4 32% HCl 70% HNO3 70% HF
Lithium 2.34 169 385 303 96.3
Rubidium 2.17 12.7 29.0 22.9 7.25
Cesium 0.83 3.12 7.12 5.62 1.78
Potassium 7.65 98.1 224 177 56.0
Aluminum 8.32 462 1054 832 264
Iron 0.36 6.43 14.7 11.6 3.67
Manganese 0.92 16.7 38.2 30.1 9.56
Silicon 27.1 0.00 0.00 0.00 1659
TOTAL (kg/t acid) 768 1,752 1,382 2,098
ACID COST ($/tonne) $100 $150 $250 $800
ACID COST ($/tonne mica) $77 $263 $346 $1,678
Forahostofreasons(including costefficiency, downstream processing simplicity, materialsofconstructin andOH&Sissues)sulphuric acidisclearlyfavouredoverother leachingreagents(such ashydrochloric, nitric andhydrofluoric acids).
SodiumSilicate
8milliontonnes perannumglobalmarketWidecommercialandindustrialapplications,usedin:cement/plaster(reducesporosity),detergents,wastewatertreatment(coagulant),passivefireprotection,textileandlumberprocessing,refractories,andautomobiles/metalrepair
Existingsupply: fromcombiningvariousratiosofsandandsodaashat1,100-1,200oC;Na2CO3 +SiO2 →Na2SiO3 +CO2
Quality: propertiesvarydependingontheSiO2/Na2Oratio;highervalueproductswitharatioof<2.0
L-Max®willprovideanewsourceoflow-costsodiumsilicate:PFStestworkhasproducedsodiumsilicatewitharatioof1.6
SolutionPrice:US$650-700/tex-works1;US$250/tdelivered21SourcePQCorporation website; 2 Lepidico PFSassumption
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Source:PQCorporation website
Caesium&Rubidium
NicheglobalmarketMainindustrialapplications:caesium (Cs)formate isusedasacompletionfluidinoilwells(c.80%recycled)aswellasinelectricitygeneration,electronics,andchemistry
ExistingCssupply: minedpollucite supplyislimited
Quality: highdensityCsformate brinewithaspecificgravityofc.2.3requiredforoildrilling
L-Max®willprovideanewsourceoflow-costCs&Rb:PFStestworkhasproducedCs/Rb formatewithanSGof2.0
Price:nomarketpricesareavailableforthesealkalimetals.Contractprices1 arestatedasUS$12,000-15,000/tCsmetalcontainedinformate
1Sourceproducer andmarketparticipant22
PotassiumSulphate (SOP)
Highvalue,chloridefreefertiliserMainindustrialapplications:chloridefreefertilsers areusedextensivelyinfruitandvegetablegrowingandtoreducechlorideaccumulationinsoilsusedforagriculture
ExistingSOPsupply: ac.2milliontonne perannummarketglobally
Quality: 41%Kand17%S,withnochloridecontent
L-Max®canprovideanewsourceoflow-costSOP:ScopingStudytestworkproducedSOP– novalueassumedinPFS
Price:ex-worksprices1 rangedbetweenUS$500-US$550/tin2016
1Sourceproducer andmarketparticipant
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Gypsum
CloseproximitytomarketrequiredMainindustrialapplications:fertiliser – softenshardgroundincreasingyieldandreducingwearonmachinery,andasthemainconstituentinmanyformsofplaster,wallboardandchalk
ExistingCaSO4·2H2Osupply: 246milliontonnes globallyin2014fromnumeroussmallscalede-centralised openpitoperationsandrecycling
Quality: lowimpuritiesrequiredforagriculturaluse,buildingmaterialusemoreflexible
L-Max®canprovideanewsourceoflow-costgypsum:ScopingStudytestworkproducedgypsumwithinresidue– novalueassumedinPFS
Price:highlyvariabledependingonimpuritiesandproximitytomarket
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IndependentViewofL-Max®RoskillWeeklyRound-up– 23January 2017
Lithium:Lepidico producesbatterygradelithiumcarbonateusingtheL-Max®technology
Roskillview:“Lepidicoproducedabatterygradelithiumcarbonateproductgrading99.75%Li2CO3 froma30kgsampleoflepidolite andlithiummicabearingtailings.ThetailingsweregatheredfromanexistingminingoperationandformoneofthreesamplesgatheredatseparatedepositstobeprocessedaspartofaprefeasibilitystudyontheL-Max®plant.Asaresultofthesuccessfulresults,LepidicoexpectstobeginadefinitivefeasibilitystudyoncontinuousL-Max®mini-planttrailsinFebruary2017.
Theproductionofthebatterygradelithiumcarbonateproductfromlepidolite andlithiummicabearingtailingsmaterialrepresentsanattractivepotentialsourceoflithiumchemicalsifprocessingcostsarecomparablewithexistingprimarylithiumproduction. Therecoveryoflithiumcarbonatereportedat91%isalsocomparablewithspodumene processingatChineseconversionplants.Iftest-workontheothersamplesprovessuccessful,thepossibilityofacentralisedplantprocessingtailingsmaterialfrommultiplesourcesimprovesprojectviability.Completionofthepre-feasibilitystudyinQ1-2017anddefinitivefeasibilitystudyscheduledforQ4-2017isawaitedtodeterminehowLepidicoseetheL-Max®plantwouldfittingintothelithiummarket,thoughfirstresultsappearpositive”.
AsubsequentASXannouncement(25January)revealedtestresultsonsecondPFSsamplewithafurtherimprovedproductgrade(99.88%)andoverallrecovery(93%)
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ImportantNotice
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ThispresentationhasbeenpreparedbythemanagementofLepidico Ltd(the'Company')forthebenefitofbrokers,analystsandinvestorsandnotasspecificadvicetoanyparticularpartyorperson.
Theinformationisbasedonpubliclyavailableinformation,internallydevelopeddataandotherexternalsources.Noindependentverificationofthosesourceshasbeenundertakenandwhereanyopinionisexpressedinthisdocumentitisbasedontheassumptionsandlimitationsmentionedhereinandisanexpressionofpresentopiniononly.Nowarrantiesorrepresentationscanbemadeastotheorigin,validity,accuracy,completeness,currencyorreliabilityoftheinformation.TheCompanydisclaimsandexcludesallliability(totheextentpermittedby law),forlosses,claims,damages,demands,costsandexpensesofwhatevernaturearisinginanywayoutoforinconnectionwiththeinformation,itsaccuracy,completenessorbyreasonofreliancebyanypersononanyofit.WheretheCompanyexpressesorimpliesanexpectationorbeliefastothesuccessoffutureexplorationandtheeconomicviabilityoffutureprojects,suchexpectationorbeliefisbasedonmanagement’scurrentpredictions,assumptionsandprojections.However,suchforecastsaresubjecttorisks,uncertaintiesandother factorswhichcouldcauseactualresultstodiffermateriallyfromfutureresultsexpressed,projectedorimpliedbysuchforecasts.Suchrisksinclude,butarenotlimitedto,explorationsuccess,commoditypricevolatility,futurechangestomineralresourceestimates,changestoassumptionsforcapitalandoperatingcostsaswellaspoliticalandoperationalrisksandgovernmentalregulationoutcomes.Formoredetailofrisksandotherfactors,refertotheCompany'sotherAustralianSecuritiesExchangeannouncements andfilings.TheCompanydoesnothaveanyobligationtoadviseanypersonifitbecomesawareofanyinaccuracyin,oromissionfrom,anyforecastortoupdatesuchforecast.
CompetentPersonStatementTheinformationinthisreportthatrelatestoExplorationResultsisbasedoninformationcompiledbyMrTomDukovcic,whoisanemployeeoftheCompanyandamemberoftheAustralianInstituteofGeoscientistsandwhohassufficientexperiencerelevanttothestylesof mineralisationandthetypesofdepositunderconsideration,andtotheactivitythathasbeenundertaken,toqualifyasaCompetentPersonasdefinedinthe2012editionofthe“AustralasianCodeforReportingofExplorationResults,MineralResourcesandOreReserves.”MrDukovcicconsentstotheinclusioninthisreportofinformationcompiledbyhimintheformandcontextinwhichitappears.
