Core Lithium : Quarterly Activities and Cashflow Report 31 December 2021

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ASX: CXO Announcement

27 January 2022

Centralised Company Announcements Platform

Australian Securities Exchange

10th Floor, 20 Bond Street

SYDNEY NSW 2000

QUARTERLY ACTIVITIES AND CASHFLOW REPORT 31 DECEMBER 2021

Please find attached the Quarterly Activities and Appendix 5B Quarterly Cashflow reports for the quarter ended 31 December 2021.

Yours faithfully,

Stephen Biggins

Managing Director

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ASX Release

Quarterly Activities Report for Three Months Ended 31 December 2021

For personal use only

27 January 2022

CORE LITHIUM LTD

Level 1, 366 King William Street Adelaide SA 5000

[phone]

Contact:

Stephen Biggins | Managing Director

Jarek Kopias | Company Secretary

Email | [e-mail] | www.corelithium.com.au

Directors:

Greg English | Non-Executive

Chairman

Stephen Biggins | Managing

Director

Heath Hellewell | Non-Executive

Director

Malcolm McComas | Non-Executive

Director

Issued Capital:

• 1,674,486,818 Ordinary Shares
• 81,268,292 Unquoted Options
• 19,238,332 Unquoted Performance Rights

Highlights

The Board of Core Lithium Ltd ("Core" or "Company") is pleased to present its Quarterly Activities Report for the period ended 31 December 2021.

During the December quarter, Core was focused on a number of initiatives aimed at advancing the construction stage of its wholly owned Finniss Lithium Project, located near Darwin in the Northern Territory.

During the reporting period, Core:

• Reached a landmark milestone having commenced construction at the Finniss Project;
• Advanced its offtake agreement with Ganfeng to 'unconditional' status;
• Executed the acquisition of six highly prospective mining leases located adjacent to the Finniss Project; and
• Further progressed exploration initiatives at Finniss.

ASX: CXO

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Finniss Lithium Project, NT

The Finniss Lithium Project ("Finniss Project") is Australia's most advanced new lithium project on the ASX and places Core at the front line of new global lithium production. The Finniss Project is one of the most capital efficient lithium projects and has arguably the best logistics chain to markets of any Australian lithium project.

The Project lies within 25km of power station, gas, rail and one hour by sealed road to workforce accommodated in Darwin and importantly to Darwin Port - Australia's nearest port to Asia.

Lithium is the core element in batteries used to power electric vehicles. The Finniss Project boasts world-class,high-grade and high-quality lithium suitable for this use and other renewable energy sources.

Figure 1. Lithium resources within Core's 100%-owned Finniss Project - new ML's in green.

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December Quarter Activities

Construction commences on Australia's newest lithium project

During the reporting period, Core reached a definitive milestone in the Company's history, with the start of construction at its Finniss Project.

Commencement of construction at the Finniss Project follows the announcement of a Final Investment Decision (FID) last September, along with the award of the Finniss mining services contract to Lucas Total Contract Solutions and the process plant EPC contract to Primero Group in late 2021.

Site construction and establishment works are underway following heritage and vegetation management. Road access works, site establishment and construction of communications, fuel and water supply infrastructure has also commenced.

Project early works on site at Grants have started in preparation for the commencement of mining activity later this year, followed by Dense Media Separation (DMS) process plant construction by Primero which is on-track to commence in March 2022.

Commissioning of the DMS plant and the first production of lithium concentrate from the Finniss Project are scheduled for Q4 2022.

Core is committed to safely delivering one of the most capital efficient and cost competitive lithium projects in Australia.

The Finniss Project has gained all NT government and environmental approvals required to commence mining and is fully funded following the successful raising of $150 million from institutional investors and shareholders - including $34 placement to Ganfeng alongside a 4 year offtake agreement last year.

Approximately 80% of the Finniss Project's initial output is covered under 4-year offtake agreements with Ganfeng, one of the world's largest lithium producers by production capacity, and Yahua, a key lithium supplier to Tesla.

Offtake agreement and equity investment with Ganfeng Lithium becomes unconditional

During the December quarter, Core announced its binding offtake agreement with a subsidiary of Jiangxi Ganfeng Lithium Co., Ltd (Ganfeng) for the supply of 75,000 tonnes of Li2O spodumene concentrate per annum over 4 years (Offtake) and an associated $34 million equity issue had become unconditional following receipt of all necessary regulatory approvals in China.

The Offtake provides for pricing referenced to the market price for 6.0% Li2O spodumene concentrate, adjusted for actual Li2O content, and includes an agreed floor price. The Offtake adds to the previously announced binding offtake agreement with Yahua for 75,000tpa over 4 years.

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The Offtake is now unconditional following satisfaction of the following conditions precedent:

• Chinese regulatory approvals;
• Approval of the share placement by Core shareholders (received on 17 September 2021); and
• Core entering binding arrangements for a minimum total financing of no less than $80 million, which was satisfied by an institutional placement in August 2021 (see ASX announcement dated 11 August 2021).

Following satisfaction of the conditions precedent, in addition to the Offtake, Core also received $34m of funds from Ganfeng during the reporting period and completed their subscription for 100,591,715 fully paid ordinary shares in the Company, under the terms announced to the ASX on 9 August 2021. Ganfeng now holds approximately 6.1% of Core shares. The proceeds of the equity investment contribute toward the development of the Finniss Project.

Core executes acquisition of six highly prospective mining leases adjacent to Finniss in the NT

In December, Core executed the acquisition of six prospective Mineral Leases (MLs) adjacent to the Finniss Project. It follows the announcement in March 2021, when Core entered into an option agreement to acquire these six granted MLs, Ih have a history of tin and tantalum mining and production from pegmatites with similar chemistry to the pegmatites on Core's adjacent Finniss Project tenements.

During the 2021 drilling season, a first pass drill assessment of five of these MLs immediately adjacent to Core's Finniss Project was completed.

A total of 29 RC holes were drilled for 4,530m to test ten separate targets. Assays have now been received for 18 of the holes (Figure 3). Large downhole thicknesses of pegmatite were intersected at some prospects. For example, 67m in CRC002 (Centurion), 21m in CRC014 (Northern Reward) and 25m in CRC026 (Bilatos).

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