Latin Resources : Cloud Nine - R&D Project to Reduce Methane Emissions

For personal use only

LATIN RESOURCES LIMITED

ACN: 131 405 144

Unit 3, 32 Harrogate Street,

West Leederville, WA

6007

P [phone]

E [e-mail]

W www.latinresources.com.au

18 November 2021

CLOUD NINE HALLOYSITE - RESEARCH AND DEVELOPMENT

PROJECT TO REDUCE METHANE EMISSIONS

HIGHLIGHTS

• Latin Resources has reached a binding agreement with world renowned CRC CARE to research and develop emission reduction technologies, utilising the Company's halloysite mineral from the Cloud Nine deposit in WA.
• The three year, $3.2M project, led by Professor Ravi Naidu will commence in January 2022.
• Latin Resources intends on funding the project with existing cash, investments, R&D funding and LRSOC options.
• The project will focus on modifying Latin Resources' halloysite/kaolinite minerals to develop material-based emission reduction technologies, including feed supplements for cattle, spreadable material and halloysite shale for inhibiting and adsorbing methane.
• The agreement affirms the commitment of Latin Resources to its Environmental, Social and Governance (ESG) credentials.

"US president Joe Biden and European Commission president Ursula von der Leyen announced at the

UN COP 26 climate summit in Glasgow that over a hundred countries have pledged to cut total

methane emissions by at least 30pc by 2030 as part of efforts to tackle climate change.

The EU's von der Leyen said methane is the "lowest hanging fruit" in the fight to cut global emissions. The EU will introduce measures to report and verify methane emission levels because "only what gets measured, get done, she said.1"

Latin Resources Limited (ASX: LRS) ("Latin" or "the Company") is pleased to announce it has secured an agreement with CRC CARE Pty Ltd ("CRC CARE") to develop innovative methane reduction technologies to exploit the clay mineral halloysite from the Company's Cloud Nine project in Merredin, WA.

CRC CARE is an independent organisation that works with end users to perform research, develop technologies and provide policy guidance for assessing, cleaning up and preventing contamination of soil, water and air. Previous collaborators include BHP, Rio Tinto and the Australian Department of Defence. CRC CARE scientists have extensive experience in clay research, leading to environmental products with commercial applications.

Under the agreement reached with CRC CARE, complementary to its current activities that include exploration for halloysite at its 100% owned Cloud Nine deposit in WA, Latin will fund two key research projects running in parallel to the extent of $3.2m over a three year period. The $3.2m is the maximum exposure of Latin over the three year period in terms of the funding of the research projects with payments staggered over the three year period linked to a series of agreed milestone deliverables. Latin has the right to cease funding either or both research projects at any time in the absence of the key deliverables.

1www.argusmedia.com/en/news/2269763

Page 1 of 7

For personal use only

The research results and all intellectual property rights associated with and derived from the research results will be owned 100% by Latin.

The research projects to be undertaken by CRC CARE are designed to develop applications that are superior to those of other natural materials including:

• Microbial intervention: use of halloysite in feed supplement formulation to influence methane producing rumen microbes.
• Nutrient and methane adsorption in the cattle industry: real-timecapture and desorption of animal gas emissions for energy conversion as well as capturing nutrients from animal excreta (Figure 1).
• Carbon capture: adsorption at various pressures (industrial uses) and conversion of the captured carbon into fuel or the whole adsorbent into value-added material such as building material or fertiliser (Figure 2).
• Low-costprecise purification of halloysite nanotubes ("HNT"): from variants of halloysite and kaolinite mixtures (pure HNT can generate double the revenue of HNT/kaolinite mixes).

HALLOYSITE FOR METHANE EMISSION REDUCTION IN THE CATTLE INDUSTRY

Rather than expect cattle farmers globally to cull their herds to reduce methane gas emissions, a concept which is unpalatable to the global cattle industry despite growing pressure to do just that, an objective of the research and development is it allows those farmers to achieve the same outcome by feeding their cattle organic feed supplements. It is these feed supplements that Latin is aiming to help produce via the funding of its research project with CRC CARE to develop this exciting and cutting- edge project.

Methane expelled from cattle rumen is a significant unsolved problem in reducing overall Green House Gas emissions. Furthermore, the stockpile of cattle excreta is another source of methane in the cattle farm and feedlots industry. The research project aims to modify the Cloud Nine halloysite/kaolinite minerals to develop material-based emission reduction technologies, including feed supplements for cattle, spreadable material and halloysite shale for inhibiting and adsorbing methane in this growing industry.

The diagrams below show the two projects including nutrient and methane adsorption in Proposed Discovery 1 and carbon capture in Proposed Discovery 2. Each diagram compares the current state and the proposed state by CRC CARE.

Page 2 of 7

For personal use only

Figure 1: Proposed Approach 1

Figure 2: Proposed Approach 2

Page 3 of 7

For personal use only

TOWARDS CLIMATE SUSTAINABILITY

"Cutting back on methane emissions is one of the most effective things we can do to reduce near-term global warming and keep to 1.5°C"2. Ursula von der Leyen, European Commission president.

Australia is endowed with large and diverse clay resources, which include deposits of world-class size and purity. These resources are largely underutilised due to poor market transformations, high transportation costs, and limited industry knowledge of clay properties, process methods and markets.

To develop these resources to their full potential, innovative uses of clays need to be assessed, developed and marketed for individual deposits. One promising area for market growth is environmental management of greenhouse gas (GHG) emissions, water purification, waste treatment and the containment of pollutants.

In the past few years, there has been a growing interest in the use of both natural and modified clays for purifying water and cleaning up wastewater and gross contamination (e.g. oil spills) containing organic and inorganic pollutants. This project focuses on using tubular halloysite to target GHG emissions that have been and will continue to be of significant concern globally given the role they play in climate change.

The Australian Government has set a 'Technology Investment Roadmap' to help meet the nation's emission reduction targets. Australian-owned resources and technologies, adopted through public- private partnerships, are a key feature of the roadmap. In concert with adaptive technologies that emit a relatively low amount of GHG, there is great potential to capture carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) at their point sources.

Materials that can be used for this capture approach are therefore a major focus for innovation. Certain naturally occurring clay minerals, including halloysite nanotubes (HNT), which are low in cost and occur naturally in Australia, show great promise.

In Australia, several geological sources are identified for potential high-grade halloysite, including the Cloud Nine project in Noombenberry, Western Australia. While proven areas of application of halloysite include ceramics and as a fluid cracking catalyst in petroleum, other applications are emerging with great investment potential.

The CRC for Contamination Assessment and Remediation of the Environment (CRC CARE) has been researching halloysite, kaolinite and other related clay applications for more than 15 years. CRC CARE has completed numerous projects on such 'modified clays' and these products have been used to successfully remediate a wide range of environmentally harmful pollutants.

Utilising its proven expertise and facilities, CRC CARE will investigate enhanced use of halloysite for GHG abatement and, using the knowledge generated, develop practical technologies that will enable Latin to mine halloysite for diverse applications and increased value while directly contributing to technology-driven GHG emission reduction targets.

Any product developed as a result of this work has potential to be commercialised by Latin Resources.

LATIN AND ESG

Importantly, the commitment of Latin to funding these key research projects affirms the commitment of Latin to its ESG credentials and to keeping ESG issues atop of its business agenda going forward.

As is well known, the ESG acronym refers to a trio of business measures that are now more and more used by environmentally and socially conscious investors to identify and vet investments. Implementing programs that can help Latin achieve compliance against the ESG measures will enable it to make a vital start on implementing a suitable framework for ESG and a move towards sustainable growth.

2https://www.newscientist.com/article/2295810

Page 4 of 7

For personal use only

The agreement with CRC CARE is a huge business opportunity for Latin that will allow it not only to contribute in a material way to better the global society now and in the future, but to also achieving solid financial returns.

According to Bloomberg, ESG funded assets significantly outperformed the market in the wake of the COVID-19 pandemic. Triggered and prodded by investor and shareholder demand, it is not in dispute that the value of ESG-type assets is growing exponentially.

Fundamental to the task of investors in the current market will be an understanding of science and technology so they can reach an informed assessment of the likely contribution of a company to the ultimate goal of net zero emissions. Latin aims to be one of these companies and the agreement with CRC CARE is an important step on its journey to do so.

AUSTRALIAN HALLOYSITE FOR GREENHOUSE GAS CAPTURE AND UTILISATION

While laboratory-gradeHNT-assisted material has shown promise for GHG adsorption, the net benefit of such technologies depends largely on capturing GHGs and utilisation of the captured gas in another application as part of a circular economy.

Achieving this, while ambitious, is practically feasible with science-backed material technologies. Australian origin halloysite is a material of interest, but extensive research is required to realise its full potential in GHG capture and utilisation. This project aims to modify halloysite for adsorption, desorption, restoration and post-capture alternative use of specific GHG molecules.

LATIN RESOURCES AND CRC CARE SUMMARY OF TERMS AND CONDITIONS

• The Research Results and all Intellectual Property Rights associated with the Research Results will upon their creation be owned solely by Latin.
• Latin may pursue patent protection of any invention resulting from the Research Project in Australia and in other countries under the Patent Co-operation Treaty (1970).
• The filing, maintenance, renewal prosecution and defence of the patents will be conducted and paid for by Latin.
• Latin will retain title to any patent or other Intellectual Property Rights in any invention resulting from the Research Project.
• Latin reserves the right to license its interest in any invention resulting from the Research Project.
• Latin agree that CRC CARE will be entitled to receive a royalty calculated as a percentage of Commercialisation Income received by Latin or any Related Body Corporate of Latin arising from Commercialisation of the Research Results, which percentage shall be 7.5% of all Commercialisation Income earned.
• CRC CARE acknowledges that it is in the process of filing an International Patent Application ("IPA") in relation to technologies being developed by it and agrees to include in this IPA details regarding the proposed methane emission reduction project that are reasonably required so as to support protection of the proposed Intellectual Property in this Research Project.
• Latin can cease funding either or both research projects at any time if the key deliverables are not delivered by the agreed milestone dates.

Page 5 of 7