ASX ANNOUNCEMENT AND MEDIA RELEASE

20 April 2022

ALTECH - OUTSTANDING PRELIMINARY FEASIBILITY STUDY FOR SILUMINA ANODESTM

BATTERY MATERIALS PROJECT

Highlights

  • Highly positive preliminary feasibility study for 10,000tpa Silumina AnodesTM project

  • Low capital cost (US$95 million) with outstanding economics

  • Pre-tax Net Present Value (NPV8) of US$507 million

  • Attractive Internal Rate of Return (IRR) of 40%

  • Site in Saxony, Germany already purchased

  • Green accredited project using renewable energy

  • European high quality graphite and silicon supply

  • Pilot plant engineering for product qualification underway

  • NDA executed with two German automakers and one European battery maker

Altech Chemicals Limited (Altech/the Company) (ASX: ATC) (FRA: A3Y) is pleased to announce the outstanding results from a Preliminary Feasibility Study (PFS) for the development of a 10,000tpa silicon/graphite alumina coating plant, in Saxony, Germany. The plant would be constructed by Altech Industries Germany GmbH (AIG), (ownership: 75% Altech, 25% Frankfurt stock exchange listed Altech Advanced Materials AG (AAM)), and would produce high capacity silicon/graphite battery anode materials "Silumina AnodesTM" under exclusive license from Altech. Silumina AnodesTM products are targeted to supply the burgeoning European electric vehicle market.

With a capital investment of US$95 million, the Company estimates a project net present value of US$507 million (NPV8), with net cash of US$63 million per annum generated from operations. The internal rate of return is estimated at 40%, with investment capital paid back in approximately 3.1 years. Total annual revenue at the 10,000tpa full rate of production is estimated US$185 million per annum.

Managing Director, Mr Iggy Tan, stated "Whilst Altech's top priority continues to be financing its Johor HPA project, the Silumina AnodesTM project represents an exciting downstream opportunity to utilise its HPA coating technology in silicon/graphite battery materials. We are pleased and excited about the results of the 10,000tpa Silumina AnodesTM PFS. Due to the attractive economics of the study, a decision has been made by the AIG board to immediately progress to a definitive feasibility study (DFS) for the project. AIG has already purchased land in Germany suitable for the project, and the plan is

Altech Chemicals Limited

Suite 8, 295 Rokeby Road,

Telephone: +61 8 6168 1555

ASX:ATC

Subiaco, Western Australia

e-mail:info@altechchemicals.com

ABN 45 125 301 206

6008 Australia

Website:www.altechchemicals.com

for the AIG team in Saxony to immediately commence DFS work. We believe that the production of Silumina AnodesTM materials could be a game changing technology for the lithium-ion battery industry".

Tesla, a global leader in the electric vehicle and lithium-ion battery industry, has declared that the required step change to increase lithium-ion battery energy density and reduce costs is to introduce silicon in battery anodes, as silicon has ~ten times the energy retention capacity compared to graphite. Silicon metal has been identified as the most promising anode material for the next generation of lithium-ion batteries. However, until now, silicon was unable to be used in commercial lithium-ion batteries due to two critical drawbacks. Firstly, silicon particles expand by up to 300% in volume during battery charge, causing particle swelling, fracturing and ultimately battery failure. The second challenge is that silicon deactivates a high percentage of the lithium ions in a battery. Lithium ions are rendered inactive by the silicon, immediately reducing battery performance and life. Industry has been in a race to crack the silicon barrier.

Through in-house research and development, Altech announced late last year that it has cracked the "silicon code" and successfully achieved 30% higher energy retention in a lithium-ion battery, with improved cyclability and battery life. Higher density batteries result in smaller, lighter batteries and substantially less greenhouse gases, and are destined for the EV market. To achieve its breakthrough, Altech successfully combined silicon particles that had been treated with its innovative and patented alumina coating technology, with alumina coated battery grade graphite, producing the Silumina AnodesTM product. So far, the major drawbacks outlined above for using silicon in lithium-ion battery anodes, have been substantially overcome with Altech's Silumina AnodesTM product.

The European graphite and silicon feedstock supply partners for AIG's plant in Saxony will be SGL Carbon GmbH (SGL) and Ferroglobe Innovation S.L. (Ferroglobe), respectively. The project has already received green accreditation from the independent Norwegian Centre of International Climate and Environmental Research (CICERO). To support the development, AIG has commenced construction of a pilot plant in Germany, at a location adjacent to the proposed site of 10,000tpa plant. Product from the pilot plant will be provided to potential buyers, such as automakers, to fast-track the Silumina AnodesTM product qualification process. AIG already has non-disclosure agreements (NDAs) in place with two German automakers, as well as with a European based lithium-ion battery manufacturing company.

Altech Chemicals Limited

Suite 8, 295 Rokeby Road,

Telephone: +61 8 6168 1555

ASX:ATC

Subiaco, Western Australia

e-mail:info@altechchemicals.com

ABN 45 125 301 206

6008 Australia

Website:www.altechchemicals.com

PRELIMINARY FEASIBILITY STUDY (PFS)

A Preliminary Feasibility Study (PFS) has been completed for the development by Altech Industries Germany GmbH (AIG), in Saxony, Germany, of a plant to produced 10,000tpa of alumina coated silicon/graphite battery material (Silumina AnodesTM), under exclusive European Union licence from Altech (the Project).

The PFS incorporates up-to-date project assumptions including the final capital cost estimate from European venders at a plus or minus 30% accuracy level. The costs include an estimate of engineering, procurement and construction (EPC) contract value for the construction of the Silumina AnodesTM plant in Saxony, Germany using local rates. In addition, the capital cost estimate includes owner costs during plant commissioning. The Silumina AnodesTM plant capacity is 10,000tpa with assumptions for operating costs, selling price, plant production ramp-up, and exchange rates.

  • 1.0 ANODE PRODUCT MARKET

  • 1.1 Graphite Anode Products

    Lithium-ion batteries are nowadays playing a pivotal role in everyday life thanks to their excellent rechargeability, suitable power density, and outstanding energy density. A key component that has paved the way for this success story in the past almost 30 years is graphite, which has served as a lithium-ion host structure for the negative electrode (anode). Despite extensive research efforts to find suitable alternatives with enhanced power and/or energy density, whilst maintaining the excellent cycling stability, graphite is still used in the great majority of presently available commercial lithium-ion batteries. The vast majority of current batteries use either natural or synthetic graphite anode material, and often a blend of both, to achieve the best combination of performance and cost.

  • 1.2 Graphite Market

    Altech's Silumina AnodesTM material would be a premium product compared to the graphite used in current lithium-ion batteries, so tracking graphite demand is sound proxy to establish potential demand for the Silumina AnodesTM products. Global demand for graphite is estimated to grow at 18% each year to 2030. Market forecaster Roskill predicts that global graphite demand from battery makers will grow to a total of 1.7 million tonnes per annum (blue and green in Figure 1.1). Benchmark Mineral Intelligence forecast that planned production capacity and projects in development will not be able to meet this growing demand by as early as 2025 (refer to Figure 1-2).

Altech Chemicals Limited

Suite 8, 295 Rokeby Road,

Telephone: +61 8 6168 1555

ASX:ATC

Subiaco, Western Australia

e-mail:info@altechchemicals.com

ABN 45 125 301 206

6008 Australia

Website:www.altechchemicals.com

Figure 1-1 Global Demand Forecast by End User, 2020-2030

5,000

4,500

4,000

3,500

Kttonnes

3,000

2,500

2,000

1,500

1,000

500

0

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

BatteriesElectrodesRefractoriesRecarburisingFoundriesOther

Source: Roskill

Figure 1-2 Supply and Demand for Graphite Anode Materials

Source: Benchmark Mineral Intelligence

1.3

European Graphite Market

AIG's Silumina AnodesTM strategy is to solely supply to the European battery and electric vehicle sector. According to the European Union Commission, the European Union could produce enough batteries by 2025 to power its fast-growing fleet of electric vehicles without relying on imported cells. By 2025, the EU will be able to produce enough battery cells to meet the needs of the European automotive industry.

As part of its plan to become climate neutral by 2050, the EU wants to boost local production of the building blocks for green industries and batteries to power clean vehicles. Today, China hosts approximately 80% of the world's lithium-ion cell production, but Europe's capacity is set to expand rapidly. Europe has 15 large-scale battery cell factories under construction, including Swedish company Northvolt's plants in Sweden and Germany, Chinese battery maker CATL's German facility, and South Korean firm SK Innovation's second plant in Hungary.

The EU Commission said that by 2025, planned European facilities would produce enough cells to power at least 6 million electric vehicles. Whilst the coronavirus pandemic has seen overall car sales plummet, combined sales of battery and plug-in hybrid cars in Europe are

Altech Chemicals Limited

Suite 8, 295 Rokeby Road,

Telephone: +61 8 6168 1555

ASX:ATC

Subiaco, Western Australia

e-mail:info@altechchemicals.com

ABN 45 125 301 206

6008 Australia

Website:www.altechchemicals.com

expected to roughly double this year, to one million units, according to the NGO Transport & Environment.

With the Commission expecting 13 million low-emission vehicles on Europe's roads by 2025, further investments will be needed. The EU's 750 billion euro ($890 billion) coronavirus recovery fund was a "ready-made tool" to support projects. The Altech strategy fits into the domestic supplies of the raw materials needed to make lithium-ion battery cells in Europe. As estimated by Roland Zenn, lithium-ion battery cell manufacturing capacity already under construction in Europe amounts to 600GWh annually by 2030 (See Figure 1-3).

Calculated graphite demand using the Roland Zenn data, the Roskill data and Pansonic data, estimate the demand for graphite anode for Europe alone is to rise to around 600,000tpa by 2030. Market pricing for high quality, carbon coated graphite used in the manufacture of lithium-ion EV batteries is in the range of US$10,000 to US$12,000 per tonne.

Figure 1-3 Planned European Battery "Gigafactories"

Source: Roland Zenn, Q1 2021

Figure 1-4 Demand for Graphite Anode Materials in Europe

Altech Chemicals Limited

Suite 8, 295 Rokeby Road,

Telephone: +61 8 6168 1555

ASX:ATC

Subiaco, Western Australia

e-mail:info@altechchemicals.com

ABN 45 125 301 206

6008 Australia

Website:www.altechchemicals.com

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Altech Chemicals Limited published this content on 19 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 April 2022 22:34:02 UTC.