Neometals : Quarterly Activities Report

Level 1, 672 Murray Street West Perth WA 6005

Locked Bag 8

West Perth WA 6872

t. +61 8 9322 1182

f. +61 8 9321 0556

info@neometals.com.au neometals.com.au

Neometals Ltd ABN 89 099 116 631

Mt Marion Lithium Operation

• Production ramp up continued during the quarter with 91,917t of concentrate produced, including, 47,196t 6% Li2O concentrate and 44,721t 4% Li2O concentrate.

• Shipments totalled 84,636t with another shipment due to depart in early July due to port capacity constraints.

  Lithium Hydroxide Project

• Completed site selection study and commenced vendor testwork as part of the evaluation of producing Lithium Hydroxide in WA.

  Lithium Brine Processing Technology Project

• Successful completion of 'Proof of Concept' testwork of process to selectively recover lithium and potassium via adsorption onto a titanate based adsorbent.

  Lithium Battery Recycling Project

• Process flowsheet development continued and pilot plant procurement phase started at the facilities in Canada to recover Cobalt and other metals from Lithium Ion Batteries from consumer electronic devices and electric vehicles.

  Lithium Titanate Research Project

• Successfully produced lithium titanate ("LTO") with superior performance characteristics based on cycle testing in the US. LTO is a leading anode material, which is superior to graphite.

  Barrambie Titanium Project

• Practical completion of update to PFS for construction of Titanium Hydrolysate (+99% TiO2) as intermediate product for direct supply into Titanium Pigment Production.

  Corporate

• Cash and restricted access term deposits $46.1 million.

• Net receivables and listed securities $16.5 million.

All the right elements

Figure 1: Neometals Lithium and titanium Project locations

Figure 2: Schematic of Neometals' position in the lithium ion battery supply chain

Production ramp up continued during the quarter, achieving:

• 2.907 M tonnes mined;

• 572,429 tonnes processed; and

• 91,917 tonnes concentrate produced

Shipments of lithium concentrates to Ganfeng increased during the quarter with 17,718 tonnes departing in April, 31,072 tonnes in May and 35,846 tonnes in June, totalling 84,636 tonnes for the quarter.

During the quarter the RIM successfully finalised the re‐negotiations for the offtake pricing mechanism with offtake partner Ganfeng Lithium Co, which will deliver pricing linked to international lithium carbonate and hydroxide prices rather than bilateral spodumene market prices. Based on analysis of market trends, the supply/demand balance of the lithium compounds will be more robust than that of the spodumene concentrates which are forecast to be more volatile against commodity pricing supply cycles. This fundamental shift should provide less variability in long‐term pricing and greater returns from the Project with the new pricing model taking effect on 1 July 2017. The price for the September Quarter was agreed at US$841/t up from US$750/t CIF China.

Ganfeng Lithium issued a company announcement to its home stock exchange to the effect that processing of Mt Marion concentrates had resulted in very good conversion plant performance and confirmed its satisfaction with Mt Marion concentrates as its feedstock (see attached translation Appendix C).

Throughput of the beneficiation plant has been surpassing nameplate since de‐bottlenecking technical development work was completed. This is forecast to improve further once the 4% flotation plant is in operation.

The upgrade of process water purification units has also assisted improvement in the beneficiation process.

Mining in Pit 2 West continued with 2.907 MT mined in the quarter.

Construction of the flotation circuit is progressing and on track for commissioning in July 2017.

The Mt Marion Project is operated by MRL and is a joint project between MRL (43.1%), Neometals (13.8%) and one of the world's largest lithium producers, Ganfeng Lithium Co (43.1%).

On 23rd March 2017, Neometals advised that it gave notice to its joint venturers in the Mt Marion Lithium Project that it proposes to sell all its 13.8% stake in the project vehicle, Reed Industrial Minerals Pty Ltd ("RIM"), for a price of US$96,001,080. Under the terms of the Shareholders' Agreement for RIM, the other shareholders had 30 days to decide whether to exercise a pre‐emptive right to buy Neometals' shares in RIM at the nominated price. Neither shareholder exercised their rights within the required timeframe. Neometals conducted a process to dispose of its equity interest in RIM to a third party on terms no less favourable than those offered to its joint venture partners.

The 60 day period that was available for this sale process was insufficient for some parties to complete the evaluation and lodge a compliant offer to purchase the shareholding.