Allkem : March Quarter Activities Report (Updated)

ASX / TSX RELEASE

14 April 2022

March 2022 Quarterly Activities Report

Allkem Limited (ASX|TSX: "AKE", the "Company") provides an update on its global lithium portfolio, business activities and financial position1 at 31 March 2022.

HIGHLIGHTS

ALLKEM STRATEGY

• • Plans to increase lithium production 3-fold by 2026 and maintain a 10% share of the global lithium market over the next decade were outlined at an investor briefing in early April

• • 2.5x increase in the resource at Olaroz from 6.4 million tonnes ("Mt") lithium carbonate equivalent ("LCE") to 16.2 Mt LCE

• • Total Allkem resources at the Olaroz and immediately adjacent Cauchari basins are now 22.5 Mt LCE in all resource categories, making it one of the largest lithium resources in the world

• • 40% increase in lithium carbonate production capacity defined at Sal de Vida with 45ktpa in two stages - Stage 1 of 15ktpa and Stage 2 of 30ktpa, plus a 10% increase in resource to 6.85Mt LCE

• • ~33,000 metre resource and exploration drilling program at Mt Cattlin to commence in April and will test immediate mine-life extension opportunities

OPERATIONS

• • Mt Cattlin produced 48,562 dry metric tonnes ("dmt") of spodumene concentrate and shipped 66,011 tonnes in the March quarter, generating record revenue of US$143.8 million with a gross cash margin of 84% based on average pricing of US$2,178/dmt CIF

• • June quarter pricing is approximately US$5,000/dmt SC6% CIF on sales of ~50,000 dmt

• • The Olaroz Lithium Facility2 produced 2,972 tonnes of lithium carbonate with sales of 3,157 tonnes, generating record revenue of ~US$86 million with a gross cash margin of 86% based on average pricing of US$27,236/tonne FOB3 (44% battery grade lithium carbonate)

• • Lithium carbonate prices for Q4 FY22 are expected to be approximately US$35,000/t FOB

DEVELOPMENT PROJECTS

• • Olaroz Stage 2 reached 77% construction completion with first production expected to commence in H2 CY22

• • At Naraha, plant commissioning works will occur during the June quarter with first production in the September quarter

• • Pond construction at Sal de Vida Stage 1 commenced in January and first production from Stage 1 is anticipated to occur by H2 CY23

• • Permitting progressed at James Bay with additional information provided to both federal and provincial authorities during the quarter

FINANCIALS

• • Group revenue for the quarter was approximately US$235 million and group gross operating cash margin1 was approximately US$189 million reflecting strong market demand and high sales prices

• • At 31 March group cash was US$421.3 million. A further $73.4 million of cash was collected in early April from a Mt Cattlin shipment that occurred in March

• • Strong balance sheet and future cashflow expected to fund delivery of growth strategy

• 1 All figures presented in this report are unaudited and contain non-IFRS metrics. Gross operating cash margin is calculated as revenue less cash cost of goods sold, freight and insurance.

• 2 All figures 100% Olaroz Project basis

• 3 "FOB" (Free On Board) excludes insurance and freight charges included in "CIF" (Cost, Insurance, Freight) pricing. Therefore, the Company's FOB reported prices are net of freight

(shipping), insurance and sales commission.

SUSTAINABILITY

Allkem has appointed a new Chief Sustainability and External Affairs Officer, Karen Vizental who will be joining the executive team in April 2022. Karen will lead the Allkem efforts to continually improve sustainability performance and contribute to decarbonisation.

As a founding core member of the International Lithium Association, Allkem is supporting a landmark project launched in March to develop a clear understanding of key ESG issues in the lithium landscape so they can be addressed on a global level.

Allkem has been working with consultants to develop and deliver a Respectful Workplace Behaviours training program to all Allkem employees. Course materials developed for employees, contractors and leaders were recently piloted in the Perth office. This program forms part of a workplace culture assessment that is being developed at the group level.

Safety performance

The Allkem group recorded a Total Recordable Injury Frequency Rate at the end of the March quarter of 3.4 for the rolling 12 months. A Lost Time Injury occurred at Mount Cattlin. The worker has made a full recovery and returned to work and an investigation has been completed, including a site review of prohibited tooling standards.

All operations are now aligned in reporting of Significant (High-Potential) Events, as well as all events and field observations, using the Intelex reporting system. The medium-term focus is to enhance the investigation quality of these events and align the organisation's leadership to a high standard. The final Risk Assessments were completed in the Mount Cattlin Principal Hazard Management program which complements the Western Australian ("WA") Government's new Work Health Safety legislation.

COVID-19 response

Biosecurity Protocols across all global operations ensured resilient operations with minimal impacts. Protocols are reviewed on an ongoing basis in line with the relevant jurisdiction and the business continues to actively plan for and manage COVID-19 impacts across its global operations.

Community and Shared Value Program

Allkem is committed to regularly engaging with community stakeholders across all assets and providing positive and lasting benefits. The Shared Value team in Argentina provides long-term value to the local communities through initiatives based on five pillars; empowerment; transparency, education; health; local production and natural resources. Community engagement and consultation continues at the Sal de Vida project as well as ongoing projects associated with Olaroz.

The Mt Cattlin Community Consultation Group continues to meet every two months with two meetings held during the quarter. The James Bay project is also maintaining regular engagement activities with the Cree Nation of Eastmain, Waswanipi and Waskaganish as part of the ESIA and IBA process and with the ultimate objective to ensure long-term benefits to the communities.

OPERATIONS

MT CATTLIN

Spodumene concentrate

Ravensthorpe, Western Australia

In line with FY22 guidance, 48,562 dmt of spodumene concentrate was produced at 5.4% Li2O grade in the March quarter. As previously disclosed, this was slightly lower than the prior quarter due to head grade returning to its life of mine average.

Mining and processing

Mining activities during the quarter continued to source ore from the 2NE pit with pre-stripping activities continuing at the 2NW pit. Due to closure of the WA border for most of the quarter, total forecast mining volume has been revised down and as a result cash cost of production for FY22 has been revised down to US$380-410 tonne. Mining activities in the June quarter will prioritise ore and forecast production volumes will continue to be supplemented from low-grade ore stockpiles.

Stable processing volumes continued during the quarter and recovery of 57.5% was slightly higher quarter on quarter ("QoQ") due to lower final product grade.

Sales and financial performance

66,011 dmt of spodumene concentrate was shipped during the quarter at an average grade of 5.6% Li2O, generating revenue of US$143.8 million at an average sales price of US$2,178/dmt CIF.

Cost and margins

The FOB cash cost of goods sold for the quarter was US$349/tonne and gross cash margin for the quarter was 84% or US$1,835/tonne (~US$121 million). This is expected to increase further with higher prices anticipated for the remainder of the June half.

Table 1: Mt Cattlin operational and sales performance against FY22 forecast production metrics

Metric	Units	FY22 Forecast	Mar 22	Dec 21	Sep 21
Production
Recovery	%	55 - 59	57.5	57.0	61.7
Concentrate produced	dmt	200,000 - 210,000	48,562	52,225	67,931
Grade of concentrate	% Li2O	5.4	5.7	5.7
produced
Sales
Concentrate shipped	dmt	66,011	38,071	89,640
Grade of concentrate shipped	% Li2O	5.6	5.7	5.7
Realised price1	US$/dmt CIF	2,178	1,620	796
Revenue1	US$ million	143.8	61.7	71.4
Production Costs
Cash cost per tonne	US$/t FOB	380-410	349	324	351
produced2

• 1. Revenue and realised price are stated on a CIF basis to be consistent with Statutory accounting practices. Prior periods have been adjusted to this basis.

• 2. Excluding marketing and royalties

Sales outlook

Strong conditions in the spodumene market are supporting advanced discussions for spodumene concentrate pricing in the June quarter of approximately US$5,000/dmt SC6% CIF on sales of approximately 50,000 tonnes.

Drilling program

Metric	Units	Mar Q	Dec Q	QoQ %	PCP Mar 21	PCP %
Production	tonnes	2,972	3,644	-18%	3,232	-8%
Sales	tonnes	3,157	3,293	-4%	3,032	4%
Average price received	US$/tonne	27,236	12,491	118%	5,853	365%
Cash cost of goods sold1	US$/tonne	3,811	4,336	-12%	3,867	-1%
Revenue	US$M	86	41	109%	18	386%
Gross cash margin	US$/tonne	23,425	8,155	187%	1,986	1080%
Gross cash margin	%	86%	65%	21%	34%	52%
Export Tax	US$/tonne	949	444	114%	210	352%

Allkem will commence a three-phase resource extension drilling program in April which will total 147 holes for 32,685 metres of reverse circulation ("RC") drilling with the aim of materially extending the mine life.

Drilling in the first two phases will target the immediate extension to mine-life at depth. The first phase is aimed to convert 3.2Mt of inferred to indicated resource category and the second phase will test two pegmatite lenses along strike and at depth, immediately north of current mine operations. A scoping study will also be conducted to evaluate either the opencut or underground development of resource extensions. The third phase will explore ore body extensions to the SW of current mining operations.

OLAROZ LITHIUM FACILITY

Lithium Carbonate

Jujuy Province, Argentina

Production

Production for the March quarter was 2,972 tonnes, down from 3,232 in the previous corresponding period ("PCP") due primarily to a scheduled 10-day maintenance shutdown during February. The shutdown included tie-in´s to interconnect the expansion assets with the existing site facilities. Battery grade lithium carbonate production for the quarter was 35% which was in line with sales requirements for this period, the split for the remainder of the year will return to approximately 50/50.

Sales and financial performance

Quarterly product sales of 3,157 tonnes of lithium carbonate included 44% of battery grade material, in line with customer requirements as technical grade product was delivered to Naraha for commissioning and future production at that site. The sales volume was up 4% PCP but down 4% QoQ.

Total sales revenue of ~US$86 million was up 109% QoQ and up 386% from the PCP. The average price received was up 118% QoQ to US$27,236/tonne on an FOB2 basis reflecting strong market conditions.

Pricing for the June quarter is anticipated to be approximately US$35,000/tonne FOB2.

Cost and margins

Cash cost of goods sold for the quarter was US$3,811/tonne reflecting increased technical grade material sold QoQ (44% vs 65%), an increased Puna incentive and strong cost control even though inflation (~16%) again outran devaluation (~8.1%) for the quarter. Export duties for the quarter were US$949/tonne reflecting the higher revenue.

Gross cash margin for the quarter was 86% or US$23,425/tonne (~US$74 million) which is expected to increase further with higher prices anticipated for the June quarter.

Table 2: Olaroz production metrics

1.

Excludes royalties, export tax and corporate costs

Stage 2 Expansion

Construction of the Olaroz Stage 2 Lithium Facility is progressing well. Commissioning of individual project components is continuing as they are completed. First production is anticipated in H2 CY22.

By the end of March 2022, overall project construction had reached over 77% completion. This includes a new lime plant with evaporation ponds now commissioned and operating with brine concentration underway for use in the Stage 2 carbonation plant. The key items yet to be completed included the carbonation plant, soda ash facilities and product finishing area.

Standalone economic analysis of the Stage 2 expansion released on 4 April demonstrates a pre-tax NPV10% real of US$2.674 billion and pre-tax IRR of 192% on a 100% basis, based on an average FOB selling price of US$14,000/tonne. Post tax analysis delivers an NPV10% real of US$1.704 billion and an IRR of 137% on a 100% basis.

Figure 1: Olaroz Stage 2 - construction 77% complete

Resource update

The 2022 Interim Upgraded Resource published on 4 April 2022, substantially expands Allkem's resource in the Olaroz basin from 6.4 Mt LCE to 16.2 Mt LCE, with 5.1 Mt of Measured resource and 4.6 Mt of Indicated resource, with the remainder in Inferred resource status (on a 100% basis). Total Allkem resources at the Olaroz and immediately adjacent Cauchari basins are now 22.5 Mt LCE in all resource categories, making it one of the largest lithium resources in the world.

BORAX ARGENTINA

Boron Minerals

Salta-Jujuy Province, Argentina

Sales in Q3 FY22 of 12,184 tonnes of boron minerals and refined products represents a quarterly decrease of 5% and an approximate increase of 18% from the PCP(Table 3). Total sales revenue was up 7% QoQ with a 13% increase in the average realised price resulting from a concerted effort with customers to maximise recovery of increased costs due to inflation, higher reagent costs and higher fuel and logistics costs. Revenue was up 18% from the PCP.

Table 3: Borax Argentina sales volumes

Units	Current period	QoQ %	PCP	PCP %
March	tonnes	12,184	-5%	10,282	18%
December	tonnes	12,828	-2%	10,573	21%
September	tonnes	13,083	17%	8,964	46%
June	tonnes	11,188	9%	12,278	-9%