Speciality Metals International : Quarterly Activities and Cash Flow Report Sept 2020

ABN: 77 115 009 106 (ASX: SEI)

30 October 2020

Company Announcements Office

ASX Limited

Exchange Centre

20 Bridge Street

SYDNEY NSW 2000

Quarterly Activities and Cash Flow Report for September 2020

In compliance with ASX Listing Rule 5.3 Speciality Metals International Limited (ASX:SEI) is pleased to provide its Quarterly Activities and Cash Flow Reports for the period ended 30 September 2020.

Authorised by Resolution of the Board:
	Further Enquiries:
Suzanne Irwin	Peter Taylor
Company Secretary	Investor Relations
Speciality Metals International Limited	0412 036 231
	[e-mail]

About the Company

Speciality Metals International Limited is an ASX-listed company transforming its world-class tungsten assets at Mt Carbine in North Queensland; leveraging advanced technology, historical stockpiles and unexploited resource with the aim of being the pre-eminent tungsten producer in Australia. The Company also holds gold exploration licences in New South Wales. The Company aims to create shareholder value through the exploration and development of its current portfolio whilst continuing to evaluate corporate and exploration opportunities within the new economy and critical minerals sector.

ABN: 77 115 009 106 (ASX: Company)

Speciality Metals International Limited

Quarterly Activities Report

Quarter ended 30 September 2020

HIGHLIGHTS

• Excellent early results from XRT Sorter pilot plant with concentrate grade of up to 1.89% WO3 and throughput rates of up to 80tph achieved, supporting the Company's plans to commercialise historical waste rock stockpiles and become Australia's emerging low-cost and sustainable tungsten producer.
• Mt Carbine mine waste transformation initiative received $220,000 government grant approval via METS Ignited.
• First 20,000 tonnes of quarry products from Mt Carbine delivered to Bama under the $4 million contract, with the ramp up of quarry operation continuing (including additional crushing capacity) to build inventory stockpiles and increase market responsiveness to support upcoming infrastructure projects in Far North Queensland.
• King-veininterpretation at Mt Carbine confirming 1.2km extension, supported by re-logging and re-assaying of historic drill core.

MT CARBINE OPERATIONS

XRT Sorter Pilot Plant

Speciality Metals International Limited (Company) announced excellent early results from its XRT Sorter Pilot Plant test program as part of the ongoing METS Ignited Australia Ltd (METS) program in the consortium led by CRONIMET Australia Pty Ltd (CRONIMET). For further details, see the Company's 7 September 2020 announcement (here) and additional information in the Corporate section below.

Test work conducted in early September 2020 indicated a more significant upgrade for sorting the 10- 25mm size fraction when compared to the 25-50mm fraction which is believed to be due to the liberation of the tungsten-bearing particles and increased associated waste in the 25-50mm fraction.

Assays of the individual feedstock samples and the XRT Sorter concentrate were completed by independent laboratory, Australian Laboratory Services Pty Ltd (ALS) in Brisbane. Test work was completed on the Optical Ore Sorter Rejects (+/-5.5-million tonnes, used purely for quarry feedstock to date) and the Low-Grade (mineralised waste) Stockpile (+/-12-million tonnes).

Historical test work at Mt Carbine published by the Company (as ICON Resources Ltd) on 23 March 2011 using an XRT Sorter from Applied Sorting Technologies had an upgrade ratio of 7.7:1 on the Low-Grade (mineralised waste) Stockpile and 3.6:1 on the Optical Ore Sorter Rejects Stockpile. These tests were conducted several years ago on a larger size range of material and with a different XRT sorter technology which is the likely reason for the significantly higher upgrade ratios now being achieved.

REGISTERED OFFICE: Office 06-110, Level 6 25 King Street, Bowen Hills Queensland 4006

PRINCIPAL PLACE OF BUSINESS: 6888 Mulligan Highway, Mt Carbine Qld 4871

POSTAL ADDRESS: PO Box 1496, Mareeba Qld 4880

T: [phone] F: [phone] W: specialitymetalsintl.com.au

The Company has planned further test work on the crushing and screening of the particle size range of materials to optimise liberation and sorter concentrate grade while reducing mass for further downstream processing. Mt Carbine Retreatment Management Pty Ltd (being the manager of the unincorporated joint venture with CRONIMET for the Retreatment Plant), has appointed additional on-site staff to operate the XRT Sorter plant and conduct bulk test work as material becomes available for processing to allow test work to continue without disrupting ongoing production activities for the quarry and retreatment operation.

As reported in July 2020, sample materials from around the site were used to customise and optimise the sorting algorithms. In addition to this, the interface with the Company's quarrying operations at site was considered in the development of a production schedule designed to ensure the quarry would receive approx. 80% (by weight) from the XRT Sorter waste material for the

quarry's commercial production.

During initial batch production cycles, the XRT Sorter pilot plant performed at its design capacity of up to 80 tonnes per hour of feed material.

Figure 1 - XRT Sorter Pilot Plant

Retreatment Plant

In July 2020, Company announced that the retreatment operation had achieved a stable production profile with a significant reduction in unplanned maintenance stops. Since April 2020, plant production and availability has been continuously increasing, with the long-term availability target set at 80-85%. During the month of August 2020, the operations achieved a 73% overall running time and processed a head feed of 20,965 tonnes of tailings material through the plant. Taking into account the actual running time, an improvement of the average throughput of 30 tonnes per hour (in quarter ending June 2020) compared to 38 tonnes per hour (in quarter ending September 2020) had been achieved.

As the Retreatment Plant operations have continued to scale up, certain bottlenecks were identified limiting further increases in throughput capacity for the operations, as well as to reduce wearing of certain equipment and to improve liberation of the feed material (i.e. considering future feedstock coming from the XRT Sorter operation). The operations team installed a large impact crusher as its primary crusher and a hammer mill as the secondary crusher for the operations. These two crushers along with the relevant modifications to the processing plant were installed in September 2020 leading to a 14 days' loss of production for a long-term production gain.

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Figure 2 - Concentrate Production (*XRT Sorter output as concentrate equivalent)

During the reporting period, CRONIMET Asia accepted delivery of approximately 40 tonnes of concentrate, while continuing to distribute samples to customers in Asia, Europe, US and South America in order to determine the best offtake application. The feedback received so far from various Ammonium Paratungstate (APT) producers and a ferrotungsten producer were positive.

Quarry Operations

In September 2020, the Company announced its subsidiary, Mt Carbine Quarrying Operations Pty Ltd had started delivering quarry products to Bama Civil Pty Ltd (Bama) under the $4 million contract announced on 1 July 2020. BAMA is using the material for a major road construction project, being the Queensland Government's Peninsula Development Road in Far North Queensland.

Figure 3 - Quarry Screening Plant

The Company will make additional deliveries over the remainder of the year with the majority of the revenue to be recognised in the December 2020 quarter. By the time of release of this quarterly report the Company had delivered approximately 30% of the contracted tonnage for the Bama contract and having receivables against Bama of approximately $1.1 million (including GST) due within the coming days. The quarry has been able to produce significant stockpiles ahead of Bama beginning the product drawdowns. This positively positions the quarry to continue to satisfy the Bama contract and in parallel, meet the demands of other local clients.

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