Hannans : Expansion to Major European EV Markets

1 February 2022

Expansion of lithium battery recycling footprint to

major European EV markets

HIGHLIGHTS

• Hannans executes Heads of Agreement with Greenhouse Investments Ltd providing Hannans with right to expand its lithium battery recycling commercialisation activities into the United Kingdom, Ireland, Italy, and the Balkans.
• Hannans sub-licenses and rights now cover territories incorporating 49% of the population of the EU271 and 38% of all motor vehicles registered in the EU2 giving it tremendous leverage to the rapidly growing European LiB recycling sector, and specifically countries with the highest penetration rate of electric vehicles.
• Hannans focus turns to securing lithium battery feedstock agreements with companies requiring a recycling solution for scrap and end-of-life lithium batteries in compliance with EU battery regulations.3
• Hannans to raise up to $3.5M at 3.5 cents per share to fund activities in the new territories.

Hannans Ltd (ASX: HNR) (Hannans or the Company) is pleased to advise it has executed a heads of agreement (Greenhouse Agreement) with private company Greenhouse Investments Ltd (Greenhouse) effectively granting Hannans the right to enter the lithium battery (LiB) recycling markets in the United Kingdom, Ireland, Italy, and the Balkans (Greenhouse Transaction). In addition, Hannans has secured Greenhouse's market intelligence and relationships in these regions. The Greenhouse Agreement more than doubles Hannans addressable market for scrap and end-of-life batteries.

Late 2021 Hannans executed an agreement with Critical Metals Ltd (Critical) providing it with a right to commercialise a LiB recycling technology in Sweden, Norway, Finland, and Denmark4, and by combining these territories with the United Kingdom, Ireland, Italy, and the Balkans Hannans has established tremendous leverage to the rapidly growing European LiB recycling sector, and specifically countries with the highest penetration rate of electric vehicles.5

Damian Hicks, Executive Director of Hannans said, "We are extremely pleased to deliver this increase in size and scope of our recycling opportunity for Hannans shareholders. It is abundantly clear that Europe needs a scalable, safe, and sustainable, lithium battery recycling solution. We believe the technology we will hold sub- licences to will help stakeholders in our licenced jurisdictions meet their circular economy ambitions and legal obligations to recycle. We are now focused on increasing Hannans business development activities and forming long-term mutually beneficial relationships with the European lithium battery supply chain participants."

1. Plus the United Kingdom.
2. Plus the United Kingdom and Norway.
3. No agreement have been reached for feedstock supply.
4. Refer ASX release dated 9 September 2021.
5. Which in time will require recycling.

www.hannans.com	@Hannans_Ltd	Hannans_Ltd	[e-mail]	[phone]
Level 12, 197 St Georges Terrace, Perth, Western Australia		ASX: HNR	ABN: 52 099 862 129

HANNANS | ASX Announcement

1 February 2022

Figure 1: Licence and Right to Fund Jurisdictions

Transaction Background

The background to the Greenhouse Agreement is that Greenhouse holds a non-exclusive license in the UK and Ireland, and an exclusive license in Italy and the Balkans, for a base lithium battery recycling technology6. Greenhouse has agreed to grant Hannans a sub-license to commercialise the base technology in the UK and Ireland. Responsibility for the carriage of business in the UK and Ireland will now rest with Hannans. In addition, Greenhouse has granted Hannans the sole and exclusive right (but not the obligation) to fund all LiB recycling projects potentially developed by Greenhouse in Italy and the Balkans in the future. The consideration for funding each project will be equity in the project, to be negotiated on a case-by-case basis at arms-length. The agreement with Greenhouse remains subject to the satisfaction of the conditions precedent set out in further detail below.

UK, Ireland, Italy, and the Balkans

There are currently seven LiB factories planned for construction in the UK, Italy, and the Balkans.7 These territories are forecast to have more than 30,000t8 of end-of-life batteries available for recycling by 2030. Greenhouse has been actively seeking to establish relationships with potential suppliers of battery feedstock in these countries and will pass to Hannans the benefit of these relationships, discussions, and initiatives.

By way of example, Greenhouse recently executed a memorandum of understanding (MoU) with a wholly owned subsidiary of leading south-eastern European steel scrap recycler and green steel

1. Owned by a wholly owned subsidiary of Neometals Ltd.
2. Refer Figure 1 on page 2 for locations and publicly available information on company web sites.
3. Hannans internal research based on publicly available information.

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HANNANS | ASX Announcement

1 February 2022

producer Metalfer9. The MoU contemplates a 50:50 joint venture to recycle‐ ‐ all forms of lithium-ion batteries including but not limited to electric vehicle batteries arising from end of life vehicles and battery packs, giga factory production waste and scrap batteries through to consumer and commercial battery recycling. If Greenhouse and Metalfer make a positive investment decision to develop a recycling facility, Hannans has the sole and exclusive right (but not an obligation) to fund Greenhouse's portion of the costs in consideration for an equity stake in the project at normal commercial rates, on arm's length terms.

Consideration and Timing

Upon satisfaction of the conditions precedent, including Hannans shareholder approval and ASX approvals, Hannans will issue 539,583,879 fully paid ordinary shares to Greenhouse10. A meeting of Hannans shareholders will be called late March / early April 2022 (General Meeting) to consider the requisite approvals relating to the transaction, including approval for the purposes of ASX Listing Rule 11.1.2 for the change in Hannans' activities because of the transaction.

LiB Recycling Technology

Neometals Ltd (ASX:NMT) is licensor of the base technology which is being commercialised globally by Primobius GmbH. The base technology the subject of the Greenhouse Agreement is the same technology that Hannans will commercialise in the Nordic region.11 Neometals is Hannans largest shareholder with 32.43%.12

Capital Raising and Consolidation of Capital

As part of the re-compliance transaction, the Company is required to undertake a consolidation of capital on a 1.2:1 basis (Consolidation). The Company will seek shareholder approval for the Consolidation at the General Meeting.

Hannans proposes undertaking a $2.5 million capital raising (with oversubscriptions available for an additional $1 million) at a price of 3.5 cents per share to fund its expansion plans and to meet ASX conditions for re- complying with Chapters 1 and 2 of the Listing Rules.

The capital raising will be completed by way of a general offer to the public, with existing Hannans shareholders given a priority right to subscribe for new shares under the offer.

• There is no cap on the priority right and the offer may therefore be fully subscribed by existing Hannans shareholders (up to the maximum subscription of $3.5m).
• If funds more than the maximum amount to be raised are received solely from Hannans shareholders on the register on the priority offer record date, the scale back process will be:
• 1. Applicants who were notregistered Hannans shareholders on the record date will not be allocated any shares under the offer;
  2. Applicants who wereregistered Hannans shareholders on the record date will each receive a minimum allocation of $2,000 (being the minimum individual subscription amount under the offer).
  3. Following (b), to the extent the offer is still oversubscribed by Hannans shareholders, Hannans shareholders will be scaled back pro-rata to their existing Hannans shareholding as at the record date. In addition, if a Hannans shareholder applied for less shares than their pro-rata entitlement, they would receive the value of the Hannans shares they applied for.

1. Clickherefor media released by Greenhouse.
2. On a post-Consolidation basis. Refer to page 7 for full transaction details. This represents approximately 19.9% of Hannans consolidated capital base prior to the capital raise referred to above.
3. Refer ASX release dated 9 September 2021.
4. Prior to the issue of shares to Greenhouse. This interest will decrease to approximately 25.97% after issue

of shares to Greenhouse.

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HANNANS | ASX Announcement

1 February 2022

The offer will not be underwritten. Full details of the capital raising will be set out in a prospectus to be lodged with ASX in late February / early March 2022.

Figure 2: Source: https://www.eea.europa.eu/data-and-maps/figures/new-electric-vehicles-by-country

				Total motor vehicles in use in	New car registrations EV Mix
			Population	EU (plus Norway & UK)13	January - July 2021
	Jurisdiction		(M)	(M)	(%)
	Sweden, Norway,	27	5.6 + 3.4 + 3.1 + 3.2 = 15.3	40 + 83 + 28 + 28
	Denmark & Finland
	United Kingdom	72	40.4 + 2.6 = 43.0	15
	& Ireland
	Italy	60	44.8	8
	Balkans	60	20.414	Negligible
	Total	219	123.5
	Rest of EU27 (plus UK)	228
	Rest of EU			198.1
	(plus Norway & UK)

Table 1: Summary of market exposure

1. https://www.acea.auto/files/report-vehicles-in-use-europe-january-2021-1.pdf
2. This excludes vehicles in Albania, Bulgaria, Bosnia and Herzegovina and Serbia.

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HANNANS | ASX Announcement

1 February 2022

The following table summarises the sub-licenses and right to fund territories stemming from Hannans agreements with Critical and Greenhouse.

Jurisdiction	Summary
Sweden, Norway,	Critical has granted Hannans a sub-license to commercialise the technology (subject to
Denmark & Finland	entry into a formal sub-licence agreement). Hannans will manage and fund all tasks and
	activities through to a final investment decision (FID) with respect to the construction of
	each plant for the processing or recycling of feedstock batteries using the Technology.
	A plant may comprise a shredding and beneficiation plant (Stage 1) or a refining plant
	(Stage 2) (each, a Plant). If Hannans makes a positive FID and enters a binding
	engineering, procurement, and construction agreement for a Plant, Critical Metals can
	either (1) co-contribute to all future construction costs of the new Plant (capital and
	operating costs), in which case, each party would have a 50% equity interest in the Plant,
	or (2) its equity interest in the Plant will be diluted pro-rata to its relative funding
	contribution. Critical will pass to Hannans its market intelligence and relationships in
	these regions and will not compete with Hannans.
United Kingdom	Greenhouse Investments Ltd holds a non-exclusive license to commercialise the
& Ireland	technology. Greenhouse has agreed to grant Hannans a sub-license to commercialise
	the technology (subject to the satisfaction of certain conditions precedent). Greenhouse
	will pass to Hannans its market intelligence and relationships in these regions and will
	not compete with Hannans.

Italy & Balkans

(comprising Albania,

Bulgaria, Bosnia and

Herzegovina, Croatia,

Greece, Romania, Serbia,

Slovakia and Slovenia

Greenhouse holds an exclusive license to commercialise the technology. Greenhouse has granted Hannans the sole and exclusive right (but not the obligation) to fund all LiB recycling projects potentially developed by Greenhouse in Italy and the Balkans in the future. The consideration for funding each project will be equity in the project, to be negotiated on a case-by-case basis at arms-length.

Background

The Greenhouse Agreement is with private company Greenhouse Investments Ltd (Greenhouse). Greenhouse holds a non-exclusive licence for the United Kingdom and Ireland, and an exclusive license in Italy and the Balkans to commercialise a patented, proprietary technology to safely recover battery metals from off- specification and end-of-lifelithium-ion batteries (Technology). The Technology is owned by ACN 630 589 507 Pty Ltd, a wholly owned subsidiary of Neometals Ltd.

The Greenhouse Agreement contemplates Greenhouse issuing an exclusive sub-licence to Hannans to commercialise the Technology in the UK and Ireland and further, provide Hannans the exclusive right to fund commercialisation of Greenhouse's future LiB recycling facilities in Italy and the Balkans in consideration for project equity.

If Hannans shareholders approve the proposed transaction, Greenhouse will be issued 19.9% of Hannans' consolidated capital base (pre capital raising). The Greenhouse Transaction is subject to:

1. execution of a sub-licence agreement;
2. ASX and regulatory approvals; and
3. receipt of Hannans shareholder approval for the purposes of ASX Listing Rule 11.1.2.

Full details of the proposed resolutions will be set out in a notice of meeting proposed to be lodged with ASX in late February / early March 2022.

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