general meeting - alturamining...1 altura mining limited abn 39 093 391 774 notice of general...

Level 2, 23 Barrack Street Perth WA 6000

PO Box Z5369 St. George’s Terrace WA 6831

T +61 8 9488 5100 F +61 8 9488 5199

[email protected] alturamining.com

Altura Mining Limited ABN 39 093 391 774

ASX ANNOUNCEMENT | 26 August 2020

GENERAL MEETING Altura Mining Limited (ASX: AJM) (“Altura” or the “Company”) invites you to attend a General Meeting of shareholders to be held at the DoubleTree by Hilton Hotel, 100 James Street, Northbridge, Perth, Western Australia on Friday 25 September 2020 commencing at 10.00am WST. Please be advised that in accordance with section 5(1)(f) of the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020 made by the Commonwealth Treasurer on 5 May 2020, the Notice of General Meeting (including the Explanatory Memorandum and the Independent Expert’s Report) will not be printed and dispatched to shareholders. Shareholders will however be able to view online and download the Notice of General Meeting from the Company’s website on its ASX announcements page:

https://alturamining.com/category/asx-announcements/ Those shareholders who receive their company communications in the post will therefore receive a printed copy of this announcement and their personalised proxy form. Conversely, shareholders who receive their communications electronically will, as they have on previous occasions, receive an email from the Company’s share registry, Link Market Services Limited, with links directing them to the Notice of General Meeting and the online voting portal. Altura advises that voting on the resolution to approve the offtake agreements will be conducted by poll and encourages those shareholders who cannot attend the meeting to lodge their proxy forms prior to the meeting. For and on behalf of the Board. Damon Cox Company Secretary

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ALTURA MINING LIMITED ABN 39 093 391 774

Notice of General Meeting, Explanatory Memorandum

and Proxy Form

TIME: 10.00am WST

DATE: Friday, 25 September 2020

PLACE: DoubleTree by Hilton Hotel 100 James Street Northbridge Perth WA 6003

This Notice of General Meeting, Explanatory Memorandum and Proxy Form should be read in their entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting. Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on + 61 8 9488 5100. Independent Expert’s Report Shareholders should carefully consider the attached Independent Expert’s Report prepared by PricewaterhouseCoopers Securities Ltd for the purpose of shareholder approval required under ASX Listing Rule 10.1 for this Resolution. The Independent Expert’s Report comments on the fairness and reasonableness of the entry into the Offtake Agreements. The Independent Expert has determined that the entry into the Offtake Agreements under this Resolution 1 is not fair but reasonable to the Non-Associated Shareholders of the Company.

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Altura Mining Limited ABN 39 093 391 774 NOTICE OF GENERAL MEETING Notice is hereby given that the General Meeting of Shareholders of Altura Mining Limited (Company) will be held at the DoubleTree by Hilton Hotel, 100 James Street, Northbridge, Perth, Western Australia on Friday, 25 September 2020 commencing at 10.00am WST. In accordance with subsection 5(1)(f) of the Corporations (Coronavirus Economic Response) Determination (No. 1) 2020, the Company will not be despatching physical copies of the Notice of Meeting. Instead, Shareholders can access a copy of the Notice of Meeting at the following link:

https://alturamining.com/category/asx-announcements/

As at the date of this Notice of Meeting, the Company intends to hold a physical in-person Meeting, so long as the number of attendees remains within the limits permitted under the latest public gathering restriction guidelines from the West Australian government. If it becomes necessary or appropriate to make alternative arrangements for the holding or conducting of the Meeting, the Company will make further information available via the Company’s ASX platform at www.asx.com.au (ASX Code: AJM) and on the Company’s website. Terms and abbreviations used in this Notice of General Meeting, Explanatory Memorandum and Proxy Form are defined in the Glossary. The purpose of the attached Explanatory Memorandum is to provide information to Shareholders to enable each Shareholder to make an informed decision regarding the Resolution set out in this Notice of General Meeting. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisors before voting. The Explanatory Memorandum is to be read in conjunction with this Notice of General Meeting. Capitalised words and expressions in this Notice of General Meeting have the same meaning as in the Explanatory Memorandum and, where not defined in the Explanatory Memorandum, are defined in the attached Glossary.

A final copy of this Notice of General Meeting, Explanatory Memorandum and Proxy Form has been lodged with ASX. Neither ASX, nor any of its officers takes any responsibility for the contents of this document.

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BUSINESS OF THE MEETING

AGENDA

Resolution 1 – Approval of Offtake Agreements To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That for the purposes of Listing Rule 10.1 and for all other purposes, approval is given to the terms of the Offtake Agreements, between the Company’s wholly owned subsidiary Altura Lithium Operations Pty Ltd, and Hunan Yongshan Lithium Co., Limited, a company controlled by Shanshan Forever International Co Limited.”

Voting Exclusion Statement The Company will disregard any votes cast in favour of this Resolution by Hunan Yongshan Lithium Co Ltd and any other person who will obtain a material benefit as a result of the transaction (except a benefit solely by reason of being a holder of ordinary securities in the entity) or any Associate of those persons (including Shanshan Forever International Co Limited). However, this does not apply to a vote cast in favour of this Resolution by:

(a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with the directions given to the proxy or attorney to vote on the Resolution in that way; or

(b) the Chair acting as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with a direction given to the Chair to vote on the Resolution as the Chair decides; or

(c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met: (i) the beneficiary provides written confirmation to the holder that the beneficiary is

not excluded from voting, and is not an Associate of a person excluded from voting, on the Resolution; and

(ii) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

Independent Expert’s Report:

Shareholders should carefully consider the attached Independent Expert’s Report prepared by PricewaterhouseCoopers Securities Ltd for the purpose of shareholder approval required under ASX Listing Rule 10.1 for this Resolution. The Independent Expert’s Report comments on the fairness and reasonableness of the entry into the Offtake Agreements. The Independent Expert has determined that the entry into the Offtake Agreements under this Resolution 1 is not fair but reasonable to the Non-Associated Shareholders of the Company.

By Order of the Board

DAMON COX Company Secretary 21 August 2020

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NOTES

QUESTIONS Shareholders may submit questions in advance of the Meeting by email to the Company Secretary at [email protected]. Responses will be provided at the Meeting in respect of all valid questions received prior to 5.00pm (WST) on Wednesday, 23 September 2020. Shareholders will also have the opportunity to submit questions during the Meeting. RIGHT TO VOTE The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders as at 7.00pm EST Wednesday, 23 September 2020. VOTING AT THE GENERAL MEETING All resolutions at the Meeting will be decided by poll, based on votes submitted by proxy and at the Meeting by Shareholders who have indicated that they intend to vote at the Meeting in accordance with the instructions set out below. VOTING BY A CORPORATION A Shareholder that is a corporation may appoint an individual to act as its representative and vote in person at the meeting. The appointment must comply with the requirements of section 250D of the Corporations Act. The representative should bring to the Meeting evidence of his or her appointment, including any authority under which it is signed unless previously given to the Company's Share Registry. VOTING BY PROXY Proxy forms should be returned to the Company’s Share Registry, Link Market Services Limited, in accordance with the instructions on the enclosed proxy form by 10.00am WST on Wednesday, 23 September 2020. Proxy forms received later than the time specified above will be invalid. The following methods of delivery for proxies are specified:

By post: Altura Mining Limited c/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia

Online: www.linkmarketservices.com.au Select ‘Investor Login’ and enter Altura Mining Limited or the ASX code (AJM) in the Issuer name field, your Security Reference Number (SRN) or Holder Identification Number (HIN) (which is shown on the front of your proxy form), postcode and security code which is shown on the screen and click ‘Login’. Select the ‘Voting’ tab and then follow the prompts. You will be taken to have signed your Proxy Form if you lodge it in accordance with the instructions given on the website.

http://www.linkmarketservices.com.au/

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By facsimile: (+612) 9287 0309 (from overseas)

(02) 9287 0309 (from Australia)

By delivery: Link Market Services Limited

1A Homebush Bay Drive Rhodes NSW 2138

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EXPLANATORY MEMORANDUM

This Explanatory Memorandum has been prepared for the information of Shareholders of Altura Mining Limited (Company) in connection with the business to be conducted at the General Meeting to be held at the DoubleTree by Hilton Hotel, 100 James Street, Northbridge, Perth, Western Australia on Friday, 25 September 2020 commencing at 10.00am (WST). The purpose of this Explanatory Memorandum is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolution in the Notice of Meeting.

1. RESOLUTION 1 – APPROVAL OF OFFTAKE AGREEMENTS 1.1 Background

The Company, through its wholly owned subsidiary Altura Lithium, has entered into the Offtake Agreements with Hunan, a wholly owned subsidiary of Shanshan, whereby Altura Lithium has agreed to sell, and Hunan has agreed to purchase spodumene concentrate (Product) produced by Altura Lithium at the Altura Lithium Project (Project). The Offtake Agreements comprises :

(a) a short-term offtake agreement dated 18 June 2020 (Short Term Offtake Agreement); and

(b) a long-term offtake agreement dated 18 June 2020 (Long Term Offtake Agreement),

The Offtake Agreements operate such that the Short Term Offtake Agreement will remain in place for one year, where, following that, the Long Term Offtake Agreement will replace the Short Term Offtake Agreement and will remain in place for five years (unless terminated otherwise in the manner detailed at section 1.5(b)(v)). Although separate agreements, the Short Term and the Long Term Offtake Agreements are inter-conditional and were negotiated at the same time. The Company considers them to be part of the one commercial arrangement between the parties. Shareholders are being asked to approve Resolution 1 to allow the Company to enter into both of the Offtake Agreements. As is detailed at section 1.2 of this Notice of Meeting, Shareholder approval of the Offtake Agreements is required as the Offtake Agreements involve the proposed disposal of spodumene concentrate, to a related party of the Company (Hunan being a wholly owned subsidiary of Shanshan, a substantial holder in the Company).

1.2 Reasons for requiring Shareholder approval ASX Listing Rule 10.1 provides that an entity must not acquire a substantial asset from, or dispose of a substantial asset to, or agree to dispose of a substantial asset to, any of the following persons without the approval of holders of the entity’s ordinary securities: (a) a related party; (b) a child entity;

(c) a person who is, or was at any time in the 6 months before the transaction or agreement, a substantial (10%+)holder in the Company (Substantial 10%+ holder);

(d) an associate of a person referred to in (a)-(c) above; or (e) a person whose relationship with the Company or a person referred to in (a) – (d)

above is such that, in ASX’s opinion, the issue or agreement should be approved by Shareholders.

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A person will be a Substantial 10%+ holder if the person and their associates have a Relevant Interest, or had a Relevant Interest at any time in the 6 months before the transaction, in at least 10% of the total votes attached to the voting securities in the Company. Hunan is an entity to which Listing Rule 10.1 applies as it is, and was at the time of entry into the Offtake Agreements, an associate of Shanshan, a Substantial 10%+ holder. As at the date of this Notice of Meeting, Shanshan currently have a Relevant Interest in 15.1% of the total votes attaching to the Company’s Shares. Under the Listing Rules, the term “dispose” includes disposing or agreeing to dispose directly or through another person by any means. The proposed sale of spodumene concentrate to Hunan involves a disposal of the Company’s assets for the purposes of Listing Rule 10.1. Under Listing Rule 10.2, an asset is substantial if its value, or the consideration for it is, or in ASX’s opinion is, 5% or more of the equity interests of the company as set out in the latest accounts given to ASX under the ASX Listing Rules. A listed company’s equity interests are the sum of paid up capital, reserves, and accumulated profits or losses, disregarding redeemable preference share capital and outside equity interests, as show in the listed company’s consolidated financial statements. Based on the Company’s annual financial report for the half-year ended 31 December 2019 lodged with ASX on 6 March 2020, the Company’s net assets were A$99.756 million. As a result, an asset is “substantial” if it is valued at A$4.9 million or more. Per ASX Guidance Note 24, ASX will generally treat the total purchase price payable under an offtake agreement (including any option to renew) when determining whether or not it meets the substantial asset definition. As noted in subparagraph 52(d) of the Independent Expert’s Report (annexed to this Notice of Meeting) the value of the spodumene concentrate to be sold under the Offtake Agreements, over the combined terms of both the Short Term and Long Term Offtake Agreements, is more than 5% of the Company’s equity interests. Accordingly, the sale of the spodumene concentrate pursuant to the Offtake Agreements is the disposal of a substantial asset for the purposes of the ASX Listing Rules and the entry into the agreements underpinning the Offtake Agreements is an agreement to dispose of such a substantial asset. Therefore Shareholder approval is being sought under Resolution 1 for the purposes of ASX Listing Rule 10.1 in order to permit the Company to enter into the Offtake Agreements. If Resolution 1 is passed, the Company will be able to proceed with the sale of spodumene concentrate under the Offtake Agreements.

If Resolution 1 is not passed, the Company will not be permitted to proceed with the sale of spodumene concentrate under the Offtake Agreements unless Shareholder approval or a waiver from Listing Rule 10.1 is obtained at a future date. In these circumstances, the Company will need to try to seek alternative offtake partners. There is no guarantee such partners will be forthcoming and if so on what terms. Shareholders should note that if further offtake partners can be found, the terms agreed with those partners may be less favourable to the Company than the terms under the Offtake Agreements.

1.3 Advantages and disadvantages of the Offtake Agreements The Non-Interested Directors assessment of the key advantages of the Offtake Agreements are as follows: (a) The Offtake Agreements strengthen the Company’s partnership with

Shanshan

The Offtake Agreements build on the Company’s existing relationship with Shanshan, its second largest shareholder and one of the world’s largest suppliers of lithium ion battery materials.

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Further developing this relationship has the potential to provide strategic benefits and synergies to both Altura and Shanshan, particularly as Shanshan has recently commenced construction of a lithium chemical plant in China that has been specifically designed for Product from the Project.

(b) The Offtake Agreements secure future Product sales and provide liquidity

Hunan has committed to purchase at least 25% of the Company’s Product under Stage 1 of its Project between 2022 and 2025 under the Long Term Offtake Agreement, with options to purchase additional Product. Securing long term customers in the lithium market can be difficult. The offtake arrangement with Shanshan provides certainty of demand and will help underwrite the Company’s financial performance and position into the future. The Offtake Agreements also provide the Company with liquidity, improving its ability to meet its debt obligations, including its debt covenant in relation to Product commitments. This will assist the Company in preserving relationships with existing financiers and support the sustainability of the Company’s operations. Further, the Long Term Offtake Agreement, if approved, will secure sales for the Company to 31 December 2025, which is one year later than the Company’s existing offtake agreements. This will allow the Company to stagger expiry of its existing offtake agreement and assist the Company with its long term planning, including in relation to Stage 2 expansion of the Project if market conditions permit.

(c) The Offtake Agreements diversity the Company’s customer base The addition of Hunan as an offtake partner will increase the number of Altura’s offtake partners from four to five. This will reduce the counterparty risk to the Company posed by any individual offtake partner, particularly as the interest of the Company and Shanshan, being a key shareholder in the Company, are aligned. A diversified customer base with common interests is valuable to Altura given the current depressed nature of the lithium market and the Company’s history of reallocating contracted tonnages from offtake partners.

(d) It is possible that the Company may realise higher prices under the Offtake Agreements compared to prevailing market prices in the future The most favourable price clause in relation to the Confirmed Annual Quantity requires the Company and Hunan to negotiate in good faith in relation to the purchase price for the Confirmed Annual Quantity if the prices charged to other customers of Altura Lithium are less than, or Huanan’s production costs are more than, the cost-plus price. This may result in the Company and Hunan agreeing to a price below the cost-plus price but above the prevailing market price. The cost-plus price for the Confirmed Annual Quantity under the Long Term Offtake Agreement is currently higher than the market price for the Product.

The Non-Interested Directors assessment of the key disadvantages of the Offtake Agreements are as follows: (a) The Company may realise lower prices under the Offtake Agreements

compared to prevailing market prices In the event that the lithium market improves and the market price for the Product appreciates to such a level that it is above the cost-plus price (for the Confirmed Annual Quantity) or fixed price (for the Purchase Option), the Company may realise lower prices through selling to Hunan under the Long Term Offtake Agreement compared to other customers. However, the market price for the Product is currently lower than the cost-plus price and Purchase Option price and long-term forecasts do not indicate that a material

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appreciation in the market price is expected over the term of the Long Term Offtake Agreement.

(b) The Offtake Agreements reduce the amount of Product that could be sold to other offtake parties The Company, by committing to sell at least 25% of its Product under Stage 1 of its Project across the relevant years, reduces the amount of Product available to any existing or new customers. This potentially limits the Company’s ability to further diversity its customer base and take advantage of any appreciation in the spodumene price. However, in the event that there is additional demand, the Stage 2 expansion could be undertaken and the amount of Product produced by the Project increased.

A complete copy of the Independent Expert’s Report is annexed to this Notice of Meeting.

1.4 Technical Information required by Listing Rule 10.5 Due to the nature of the Offtake Agreements, the technical information required by Listing Rule 10.5 is the substantially the same for both the Short Term Offtake Agreement and the Long Term Offtake Agreement. Where the information differs, this has been noted below. (a) Name of the person to whom the Company is disposing of the substantial

asset

Hunan Yongshan Lithium Co., Limited (Hunan). (b) Relationship with the Company

Hunan is an associate of a Substantial 10%+ holder, as Hunan is controlled by Shanshan, who have a Relevant Interest in 15.11% of the Shares in the Company.

(c) Details of the asset The asset is spodumene concentrate produced by Altura Lithium from the Altura Lithium Project located on mining leases M45/1230 and M45/1231.

(d) Consideration Under the Offtake Agreements, the Company has agreed to supply spodumene concentrate for the period to December 2025 predominately under a “cost plus” contractual arrangement.

The Company estimates that the consideration to be received under the Offtake Agreements would likely be US$173 million (A$248 million) which equates to an average price of US$610 per dmt for all spodumene product supplied under the Offtake Agreements. The consideration estimate is based on the following assumptions:

(i) minimum supply of 284,445 tonnes of spodumene product to December 2025;

(ii) USD:AUD exchange rate constant at 0.7000; (iii) the Short Term Offtake Agreement in 2020 suppling 44,445 dmt of 6%

spodumene concentrate product in line with 2020 market prices; (iv) the Long Term Offtake Agreement to 2025 supplying 240,000 dmt of 6%

spodumene concentrate with pricing being based on the Company’s C1 costs as reported in the June Quarter Operations report, plus the Company’s current finance, royalty, freight and overhead costs; and

(v) the consideration is not higher than Hunan’s production costs and not less favourable than extended to other customers for comparable quantities and product over the preceding 3 months.

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The Company notes however that the overall consideration to be received under the Offtake Agreements is a function of a number of variables that are currently unable to be quantified including: (i) actual tonnage of product supplied up until December 2025 (which could

be up to 654,445 tonnes);

(ii) actual specification of product supplied until December 2025; (iii) the Company’s actual costs of production for each shipment until

December 2025;

(iv) actual financing costs at time of each shipment; (v) actual royalties payable on the product supplied; and

(vi) the prevailing USD and AUD exchange rate at the time of each shipment. Furthermore, and notwithstanding the above, in the event:

(i) that the prevailing market price for spodumene product is below the price as determined using the above inputs or Hunan’s costs of production are above the price as determined above, then the parties are required to negotiate in good faith regarding the price to be charged; and

(ii) of supply of any additional product (being any product above the minimum levels), then the price for such additional product is to be equal to the prevailing market price or the price offered to other parties in the prior 3 months.

Shareholders should note that the pricing mechanism under the Offtake Agreements has been negotiated between the parties on an arm’s length commercial basis with only Non-Interested Directors participating in Company discussions and meetings of the Board.

(e) Use of funds Funds received under the Offtake Agreements will be used for general working capital for the Company, including the costs of production for the spodumene concentrate supplied under the Offtake Agreements.

(f) Timetable

The Offtake Agreements were entered into on 18 June 2020. The Short Term Offtake Agreement is for 2020. The Long Term Offtake Agreement is for the period 1 January 2021 to 31 December 2025.

(g) Summary of material terms of the Offtake Agreements

A summary of the material terms of the Offtake Agreements is included in section 1.5 of this Notice of Meeting.

(h) Voting Exclusion Statement A Voting Exclusion Statement has been provided for Resolution 1 in the Business of the Meeting section of this Notice of Meeting.

(i) Independent Expert’s Report The Company appointed the Independent Expert to prepare the Independent Expert’s Report, the purpose of which was to state whether or not, in their opinion, the entry into the Offtake Agreements is fair and reasonable to Non-Associated Shareholders of Altura.

In analysing the above, the Independent Expert has:

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(i) assessed whether the pricing for the spodumene concentrate under the Offtake Agreements reflects fair market value;

(ii) considered whether the advantages of the entry into the Offtake Agreements collectively, outweigh the disadvantages;

(iii) considered other factors which do not represent advantages or disadvantages of the Offtake Agreements, but should be considered by Non-Associated Shareholders in contemplating their decision of whether to support the Offtake Agreements; and

(iv) considered the absence of a superior proposal that is more favourable to Non-Associated Shareholders in relation to the Offtake Agreements.

For the purposes of the valuation of the benefits, the Independent Expert is required to set out the principal assumptions behind the valuation.

The Independent Expert has provided an opinion that it believes the entry into the Offtake Agreements is not fair but reasonable to Non-Associated Shareholders of the Company.

Please refer to Section 1.6 for a summary of the Independent Expert’s conclusion.

1.5 Summary of material terms of the Offtake Agreements Unless otherwise defined in this Notice of Meeting, all capitalised terms below have the meaning given to that term in their respective agreement. (a) Short Term Offtake Agreement

(i) Product Spodumene concentrate produced from the Project with a typical lithium oxide content of 6% which meets the other Product Specifications under the Short Term Offtake Agreement.

(ii) Quantity

Approximately 44,445 dmt of the Product. (iii) Term

Targeted to end in December 2020, which will complete the aggregate loading of 44,445 dmt.

(iv) Pricing The actual pricing to be received by Altura is dependent on the specification of the cargo. If any of the “Key Specifications” (being Li2O, mica and Fe2O3) are breached, then the parties have to negotiate the price of the cargo in good faith. If the Li2O content is eventually determined to be within the Key Specifications, but outside of certain tolerances, then the agreed price payable is to be adjusted. If the Fe2O3 is greater than an agreed limit, then a penalty will apply, with Hunan having the right to reject a cargo if the Fe2O3 content is above a prescribed level.

(v) Payment By irrevocable letter of credit, in a sequence that is standard to offtake payment terms under lithium sale agreements.

(vi) Other terms Other standard terms for lithium sale agreements are included such as: (A) weight, measuring, sampling and analysis; (B) retention of title;

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(C) force majeure; and (D) conditions for final payments. In the event Shareholders do not approve the Short Term Offtake Agreement, then the Company will not be able to supply the Product under the agreement and Hunan will be entitled to terminate the agreement on 60 days’ notice, unless, in the interim period, Shareholders approve the agreement or ASX form the view that shareholder approval is not required.

(b) Long Term Offtake Agreement

(i) Condition Precedent The Long Term Offtake Agreement is conditional on Shareholder approval being received under Listing Rule 10.1 before 31 August 2020 (or a later date agreed between the parties) and the Short Term Offtake Agreement remaining in effect to 31 December 2020.

(ii) Product Spodumene concentrate produced from the Project with a typical lithium oxide content of 6% which meets the other Product Specifications under the Long Term Offtake Agreement.

(iii) Quantity

(A) Confirmed Annual Quantity and Annual Offtake Quantity Each year during the term of the Long Term Offtake Agreement Altura Lithium must sell and Hunan must purchase the Confirmed Annual Quantity, which;

• for the first contract year will have no minimum; and

• for the second and subsequent contract years, a minimum of 60,000 dmt of Product (Confirmed Annual Quantity) plus Additional Product (defined below).

Hunan may nominate a Related Body Corporate as the purchaser of a particular shipment of Product.

(B) Additional Product Where Product is produced in respect of a contract year in excess of the Confirmed Annual Quantity and is not the subject of a third-party contract, the parties may discuss in good faith and Hunan may elect to purchase additional Product (Additional Product). Any agreed Additional Product for a given contract year must be agreed at least 60 days prior to the commencement of the relevant contract year. The maximum possible Additional Product commitment that Altura Lithium may make available is:

• 30,000 dmt for the first contract year; and

• 60,000 dmt for the second and subsequent contract years.

(C) Purchase Option Hunan has the option to ask the Company to sell up to an additional maximum 100,000 dmt of Product (Purchase Option). The Company shall use reasonable endeavours to satisfy this request but is not bound to supply.

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(iv) Quantity Shortfall mechanism If Altura Lithium fails to deliver or Hunan fails to purchase the Confirmed Annual Quantity during a contract year from 2022 onwards and the shortfall in delivered Product is equal to or greater than 5,000 dmt then; (A) where the fault is that of Altura Lithium’s, it must pay 10% of

the shortfall value; and (B) where the fault is that of Hunan’s, it agrees to purchase the

Product and pay 10% of the shortfall value.

(v) Term Subject to any extension, the Term of the Long Term Offtake Agreement is to the earlier of: (A) 31 December 2025; (B) the date the Project ceases producing Product; (C) the date the Long Term Offtake Agreement is terminated; and (D) the date the Parties agree in writing will be the end date.

(vi) Pricing The price for the Confirmed Annual Quantity will be calculated on a cost plus basis determined quarterly and based on the Company’s costs of production, royalties payable, finance and freight costs. In addition to this a corporate overhead charge is applicable. Costs for freight and corporate overheads are fixed, subject to further agreement between the parties. All other costs are variable and are based on the Company’s actual incurred costs. In the event that the price as determined is either less favourable than the price charged to other customers of the Company who acquire comparable quantities and specification of product from the Company or higher than Hunan’s production cost (taking into account matters including the average mid-point for lithium carbonate for the previous month, value added tax and the RMB/USD exchange rate), then the parties are to negotiate in good faith the purchase price for the Confirmed Annual Quantity. The price for the Additional Product will be the lower of market price (determined by taking into account indices for spodumene, prices published by other companies listed on recognised securities exchanges with respect to comparable product from Australian projects, the price of comparable lithium product from other Australian projects and Hunan’s production costs (as referenced above) or the lowest price the Company has received from other buyers in the preceding three months that the Additional Product was produced. The price to be paid is subject to Li2O content being within agreed limits and Fe2O3 limits being below agreed levels, otherwise adjustments will apply. Under the Purchase Option, there is a fixed price for the product per dmt and although the Company is under an obligation to use reasonable endeavours to satisfy the request for further product, the Company is not bound to supply that product to Hunan.

(vii) Payment

By irrevocable letter of credit, in a sequence that is standard to offtake payment terms under lithium sale agreements.

(viii) Take or Pay

(A) Shipment

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If Hunan fails to provide a Letter of Credit in respect of a Shipment, then Altura Lithium may: • invoice Hunan for the full value of the Shipment and any

other costs incurred by Altura Lithium as a result of that failure (including interest accrued between due date and payment date); or

• seek to sell the Product to a third party.

(B) Lifting Schedule If Hunan fails to provide Altura Lithium with confirmation of the Lifting Schedule, then Altura Lithium may invoice Hunan for the full value of the Confirmed Annual Quantity and any other costs incurred by Altura Lithium as a result of that failure (including interest accrued between due date and payment date).

(ix) Other terms

Other standard terms for lithium sale agreements are included such as: (A) Lifting Schedule; (B) weight, sampling and analysis; and (C) force majeure, Further, standard contractual terms are included such as: (A) assignment; (D) confidentiality; (E) warranties; and (F) limitation of liability

(x) Termination Either Party may terminate the Long Term Offtake Agreement if standard insolvency circumstances persist after written notice has been given to the other party.

(xi) Change of Control A party is entitled to terminate the Long Term Offtake Agreement where a change of control event occurs and where the terminating party has not provided written consent.

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1.6 Summary of the Independent Expert’s conclusion The Independent Expert has concluded that:

(a) the Offtake Agreements are not fair on the basis that: (i) while the pricing of the Product under the Short Term Offtake Agreement

is at fair market value, the pricing of the Product under the Long Term Offtake Agreement is at less than fair market value; and

(ii) the minimum contracted quantity under the Long Term Offtake Agreement is significantly more than that under the Short Term Agreement and therefore more weighting should be given to the Long Term Offtake Agreement;

(b) the Offtake Agreements are reasonable on the basis that: (i) the advantages of the entry into the Offtake Agreements collectively,

outweigh the disadvantages; and (ii) as at the date of the Independent Expert’s Report, no superior proposal

has emerged that is more favourable to Non-Associated Shareholders compared to the Offtake Agreements; and

(c) there are a number of other factors which arise as a result of the Offtake Agreements that should be considered by Non-Associated Shareholders, being: (i) the Non-Interested Directors unanimously recommend that Non-

Associated Shareholders vote in favour of the Offtake Agreements; (ii) in the event that the Non-Associated Shareholders do not vote in favour

of the Offtake Agreements, the Company may be required to negotiate with other potential customers in relation to securing offtake arrangements. There is no certainty that the Company will be able to secure offtake arrangements with other potential customers on either the same terms or more favourable terms than those agreed with Hunan, if at all; and

(iii) the Company is currently loss making after taking into account interest payments and is expected to remain loss making if current market conditions persist, regardless of whether or not the Offtake Agreements are approved.

1.7 Board recommendation The Non-Interested Directors unanimously recommend that Shareholders vote in favour of the Resolution. Mr Dai does not provide a recommendation as he is appointed to the Board by Shanshan. Hunan is a wholly owned subsidiary of Shanshan.

16

GLOSSARY

Altura Lithium means Altura Lithium Operations Pty Ltd (ACN 095 384 491). ASIC means the Australian Securities and Investments Commission.

Associate has the meaning given to that term in the Listing Rules. ASX means ASX Limited (ABN 98 008 624 691).

A$ and dollars means Australian dollars, unless otherwise stated.

Board means the board of directors of the Company. Chairman means Chairman of the General Meeting.

Company or Altura means Altura Mining Limited (ACN 093 391 774). Corporations Act means the Corporations Act 2001 (Cth).

dmt means dry metric tonnes.

Directors mean the directors of the Company. EST means Australian Eastern Standard Time.

Explanatory Memorandum means the explanatory statement accompanying the Notice. General Meeting or Meeting means the general meeting convened by the Notice.

Hunan means Hunan Yongshan Lithium Co., Limited, a wholly owned subsidiary of Shanshan. Independent Expert means PricewaterhouseCoopers Securities Ltd.

Independent Expert’s Report means the report prepared by the Independent Expert, annexed to this Notice of Meeting. Listing Rules means the listing rules of the ASX. Long Term Offtake Agreement means the offtake agreement between Altura Lithium and Hunan, dated 18 June 2020.

Non-Associated Shareholders means all Shareholders other than Hunan or its Associates (including Shanshan). Non-Interested Directors means all of the Board other than Mr Xiaoyu Dai who is appointed to the Board by Shanshan. Hunan is a wholly owned subsidiary of Shanshan. Notice or Notice of General Meeting or Notice of Meeting means this notice of general meeting including the Explanatory Statement and the Proxy Form. Offtake Agreements means the Short Term Offtake Agreement and the Long Term Offtake Agreement.

Parties means Altura Lithium and Hunan. Project means the Company’s Lithium Project on mining leases M45/1230 and M45/1231.

Proxy Form means the proxy form accompanying the Notice. Relevant Interest has the same meaning as in the Corporations Act.

Resolution means the resolution set out in the Notice of General Meeting.

Shanshan means Shanshan Forever International Co Limited. Share means a fully paid ordinary share in the capital of the Company. Share Registry means Link Market Services Limited, 1A Homebush Bay Drive, Rhodes, New South Wales 2138, Australia.

Shareholder means a holder of a Share.

17

Short Term Offtake Agreement means the short-term agreement between Altura Lithium and Hunan, dated 18 June 2020. WST means Australian Western Standard Time.

18

ANNEXURE - INDEPENDENT EXPERT’S REPORT

www.pwc.com.au

Altura Mining

Limited

Independent Expert Report

Proposed offtake agreements with

Hunan Yongshan Lithium Co Ltd

21 August 2020

Altura Mining Limited - Independent Expert Report - Proposed Offtake Agreements with Hunan Yongshan Lithium Co Ltd PricewaterhouseCoopers Securities

The Directors

Altura Mining Limited

Level 2, 23 Barrack Street

PERTH WA 6000

21 August 2020

Dear Directors

Independent Expert Report in respect of Altura Mining Ltd’s proposed offtake agreements

with Hunan Yongshan Lithium Co Ltd

Introduction

1. Altura Mining Limited (“Altura”) is a mining company listed on the Australian Securities Exchange

(“ASX”), which operates in the global hard rock lithium or spodumene market.

2. Altura, through its wholly owned subsidiary Altura Lithium Operations Pty Ltd (“Altura Lithium”), owns

a lithium project located at Pilgangoora in Western Australia (“Altura Lithium Project”). The Altura

Lithium Project produces a 6% lithium oxide (“Li2O”) spodumene concentrate (“Product”).

3. On 19 June 2020, Altura announced to the market that it had entered into offtake agreements with

Hunan Yongshan Lithium Co Ltd (“Hunan”), a subsidiary of Ningbo Shanshan Co Ltd (“Shanshan”),

whereby Altura Lithium has agreed to sell, and Hunan has agreed to buy, Product produced by Altura

Lithium from the Altura Lithium Project. The proposed offtake agreements comprise:

a) a short-term offtake agreement for the remainder of the 2020 calendar year, which is dated 18

June 2020 (“Short-Term Offtake Agreement”)

b) a long-term offtake agreement for the 2021 to 2025 calendar years, which is dated 18 June

2020 (“Long-Term Offtake Agreement”)

(together, “Proposed Offtake Agreements”)

4. Shanshan owns 15.1% of the fully paid ordinary shares outstanding in Altura and the sale of Product

under the Proposed Offtake Agreements constitutes the disposal of a ‘substantial asset’ of Altura.

Accordingly, under ASX Listing Rule 10.1, Altura requires the approval of shareholders, other than

Hunan or its associates (including Shanshan) (“Non-Associated Shareholders”), to give effect to the

Proposed Offtake Agreements.

5. Under the Short-Term Offtake Agreement, Altura Lithium will sell, and Hunan will buy, 44,445 dry

metric tonnes (“dmt”) of Product in 2020 at a fixed price per dmt, subject to standard adjustments for

product quality.

6. Under the Long-Term Offtake Agreement, which is conditional on the Short-Term Offtake Agreement

remaining in effect as at 31 December 2020:

a) Altura Lithium will sell, and Hunan will buy, a minimum of 60,000 dmt of Product

(“Confirmed Annual Quantity”) each calendar year between 2022 and 2025 (“Contract Year”)

on a ‘take or pay’ basis. The price of the Confirmed Annual Quantity is to be determined on a

cost-plus basis subject to a most favourable price clause in favour of Hunan.

2


b) Where Product produced by the Altura Lithium Project in any Contract Year is above the

Confirmed Annual Quantity and not subject to another third-party contract, Altura Lithium

and Hunan shall discuss in good faith the additional Product which Hunan may elect (but is

not obliged) to purchase (“Additional Product”). The maximum Additional Product that Altura

Lithium may make available in any year is 30,000 dmt for 2021 and 60,000 dmt for 2022 to

2025. The price of any Additional Product shall be a market-based price subject to a most

favourable price clause in favour of Hunan.

c) Hunan has the option to purchase up to an additional 100,000 dmt of Product (being Product

in excess of the Confirmed Annual Quantity and Additional Product, if any), subject to a

maximum of 30,000 dmt in any Contract Year, at a fixed price per dmt, subject to standard

adjustments for product quality (“Purchase Option”). Altura Lithium shall use reasonable

endeavours to satisfy the request for Product requested under the Purchase Option but is not

bound to supply.

7. Altura has not publicly disclosed the specific pricing terms in the Proposed Offtake Agreements as they are commercial in confidence and disclosure would be prejudicial to Altura Lithium’s negotiations with other potential offtake partners. However, Altura has disclosed its estimate of the total consideration

under the Proposed Offtake Agreements to be USD 173 million (AUD 248 million), based on:

a) 284,445 dmt, comprising the agreed quantity under the Short-Term Offtake Agreement and the Confirmed Annual Quantity under the Long-Term Offtake Agreement

b) the fixed price under the Short-Term Offtake Agreement

c) the notional cost-plus price for the Confirmed Annual Quantity that would have applied in the June 2020 quarter assuming the most favourable price clauses did not apply.

8. The directors of Altura, excluding Mr Xiaoyu Dai, being a nominee director of Shanshan (“Non-

Interested Directors”), have unanimously recommended shareholders approve the Proposed Offtake Agreements.

Purpose of report

9. PricewaterhouseCoopers Securities Ltd (“PwCS”) has been engaged to prepare this Independent Expert

Report setting out whether, in our opinion, the Proposed Offtake Agreements are fair and reasonable to

the Non-Associated Shareholders and to state the reasons for that opinion for the purpose of ASX

Listing Rule 10.1.

10. ASX Listing Rule 10.1 provides that a listed company must not acquire a substantial asset from, or

dispose of a substantial asset to, a person who (amongst other things) is a substantial (10%+) holder in

the listed company. Altura is required to obtain shareholder approval under ASX Listing Rule 10.1 in

order to complete the Proposed Offtake Agreements on the basis that:

a) Shanshan is a ‘substantial (10%+) holder’ as it holds more than a 10.0% interest in Altura’s

fully paid ordinary shares outstanding

b) the total amount of Product to be sold to Hunan under the Proposed Offtake Agreements is a

‘substantial asset’ of Altura as its value is more than 5% of the equity interests of Altura.

11. It is also a condition precedent of the Long-Term Offtake Agreement that shareholder approval be

obtained.

3


12. In accordance with ASX Listing Rule 10.5.10, this Independent Expert Report is to be included in the

Explanatory Memorandum, which will accompany and form part of the Notice of the General Meeting,

to be held on 25 September 2020, and has been prepared for the exclusive purpose of assisting the Non-

Associated Shareholders in their consideration of the Proposed Offtake Agreements.

13. Neither PricewaterhouseCoopers (“PwC”), PwCS nor any member or employee thereof, undertakes

responsibility to any person, other than the Non-Associated Shareholders and Altura, in respect of this

Independent Expert Report, including any errors or omissions however caused.

14. In preparing this Independent Expert Report, we have had regard to the Corporations Act 2001 (Cth)

(“Corporations Act”), Australian Securities and Investment Commission (“ASIC”) Regulatory Guide 76

Related party transactions (“RG 76”), ASIC Regulatory Guide 111 Content of expert reports (“RG 111”)

and ASIC Regulatory Guide 112 Independence of experts (“RG 112”).

Summary of opinion

We have concluded that the Proposed Offtake Agreements are Not Fair but Reasonable to the

Non-Associated Shareholders.

15. In forming our opinion, we have considered whether the Proposed Offtake Agreements are fair and

reasonable in accordance with the principles set out in RG 111. The reasons for our opinion are set out

below and should be read in conjunction with our detailed report which sets out our scope and findings.

The Proposed Offtake Agreements are Not Fair

16. To determine the fairness of the Proposed Offtake Agreements, we have assessed whether the pricing for

the Product under the Proposed Offtake Agreements reflects fair market value as at 30 June 2020

(“Valuation Date”), having regard to the nature of the Product and the terms of the Proposed Offtake

Agreements.

17. We consider that the pricing of the Product under the Short-Term Offtake Agreement, being a fixed

price per dmt, is equal to its fair market value as at the Valuation Date as the fixed price is consistent

with the market price for the Product as at that date.

18. We consider that the pricing of the Product under the Long-Term Offtake Agreement is at a price which

is less than its fair market value as at the Valuation Date, having regard to the following:

a) The cost-plus price for the Confirmed Annual Quantity is currently above the prevailing market

price for the Product. Accordingly, at current spot prices and forecast prices, Altura will likely

receive the prevailing market price, which would be less than the cost-plus price due to the

most favourable price clause.

b) If the lithium price increases beyond that which is currently forecast, such that it is above the

cost-plus price, Altura will receive the cost-plus price for the Confirmed Annual Quantity.

Accordingly, the pricing for the Confirmed Annual Quantity limits the potential upside to

Altura from a significant increase in market prices without limiting the potential downside

from further decreases in market prices. Altura’s exposure to this is magnified by it being a low-

cost operation targeting further cost reductions in the future.

c) The Purchase Option, which gives Hunan the right to purchase up to 100,000 dmt of additional

Product over the duration of the Long-Term Offtake Agreement at a fixed price per dmt, is a

call option which has some nominal value to Hunan (at the expense of Altura, which is the

4


option writer). Altura receives no consideration for this under the Long-Term Offtake

Agreement.

d) The most favourable price terms in relation to the Confirmed Annual Quantity and Additional

Product are not present in Altura’s existing third-party Proposed Offtake Agreements.

19. In consideration of the above, in our view, the Proposed Offtake Agreements are not fair on the basis

that:

a) while the pricing of the Product under the Short-Term Offtake Agreement is at fair market

value, the pricing of the Product under the Long-Term Offtake Agreement is at less than fair

market value

b) the minimum contracted quantity under the Long-Term Offtake Agreement (ie 240,000 dmt,

being four years of the Confirmed Annual Quantity) is significantly more than that under the

Short-Term Offtake Agreement (ie 44,445 dmt) and therefore more weighting should be given

to the Long-Term Offtake Agreement.

The Proposed Offtake Agreements are Reasonable

20. For the purpose of assessing whether or not the Proposed Offtake Agreements are reasonable to Non-

Associated Shareholders, we have also considered the following likely advantages, disadvantages and

other factors associated with the Proposed Offtake Agreements.

Advantages

The Proposed Offtake Agreements strengthen Altura’s partnership with Shanshan

21. The Proposed Offtake Agreements build on Altura’s existing relationship with Shanshan, its second

largest shareholder and one of the world’s largest suppliers of lithium ion battery materials.

22. Further developing this relationship has the potential to provide strategic benefits and synergies to both

Altura and Shanshan, particularly as Shanshan has recently commenced construction of a lithium

chemical plant in China that has been specifically designed for Product from the Altura Lithium Project.

The Proposed Offtake Agreements secure future Product sales and provide liquidity

23. Hunan has committed to purchase at least 25.0% of the Altura Lithium Project’s Stage 1 Product

between 2022 and 2025 under the Long-Term Offtake Agreement, with options to purchase additional

Product.

24. Securing long-term customers in the lithium market can be difficult. The offtake arrangement with

Shanshan provides certainty of demand and will help underwrite Altura’s financial performance and

position into the future.

25. The Proposed Offtake Agreements also provide Altura with liquidity, improving its ability to meet its

debt obligations, including its debt covenant in relation to Product commitments. This will assist Altura

preserve relationships with existing financiers and support the sustainability of Altura’s operations.

26. Further, the Long-Term Offtake Agreement, if approved, will secure sales for Altura to 31 December

2025, which is one year later than Altura’s existing offtake agreements. This will allow Altura to stagger

expiry of its existing offtake agreements and assist Altura with its long-term planning, including in

relation to a Stage 2 expansion of the Altura Lithium Project if market conditions permit.

5


The Proposed Offtake Agreements diversify Altura’s customer base

27. The addition of Hunan as an offtake partner will increase the number of Altura’s offtake partners from

four to five. This will reduce the counterparty risk to Altura posed by any individual offtake partner,

particularly as the interests of Altura and Shanshan, being a key shareholder in Altura, are aligned.

28. A diversified customer base with common interests is valuable to Altura given the current depressed

nature of the lithium market and Altura’s history of reallocating contracted tonnages from offtake

partners.

It is possible that Altura may realise higher prices under the Proposed Offtake Agreements compared

to prevailing market prices in the future

29. The most favourable price clause in relation to the Confirmed Annual Quantity requires Altura and

Hunan to negotiate in good faith in relation to the purchase price for the Confirmed Annual Quantity if

the prices charged to other customers of Altura Lithium are less than, or Hunan’s production costs are

more than, the cost-plus price. This may result in Altura and Hunan agreeing to a price below the cost-

plus price but above the prevailing market price.

30. The cost-plus price for the Confirmed Annual Quantity under the Long-Term Offtake Agreement is

currently higher than the market price for the Product.

Disadvantages

Altura may realise lower prices under the Proposed Offtake Agreements compared to prevailing

market prices in the future

31. In the event that the lithium market improves and the market price for the Product appreciates to such a

level that it is above the cost-plus price (for the Confirmed Annual Quantity) or fixed price (for the

Purchase Option), Altura may realise lower prices through selling to Hunan under the Long-Term

Offtake Agreement compared to other customers.

32. However, the market price for the Product is currently lower than the cost-plus price and Purchase

Option price and long-term forecasts do not indicate that a material appreciation in the market price is

expected over the term of the Long-Term Offtake Agreement.

The Proposed Offtake Agreements reduce the amount of Product that could be sold to other offtake

parties

33. Altura, by committing to sell at least 25% of the Altura Lithium Project’s Stage 1 Product across the

relevant years to Hunan, reduces the amount of Product available to any existing or new customers. This

potentially limits Altura’s ability to further diversify its customer base and take advantage of any

appreciation in the spodumene price.

34. However, in the event that there is additional demand, the Stage 2 expansion could be undertaken and

therefore the amount of Product produced by the Altura Lithium Project increased.

Other considerations

35. The Non-Interested Directors unanimously recommend that Non-Associated Shareholders vote in

favour of the Proposed Offtake Agreements.

36. In the event that the Non-Associated Shareholders do not vote in favour of the Proposed Offtake

Agreements, Altura may be required to negotiate with other potential customers in relation to securing

6


offtake arrangements. There is no certainty that Altura will be able to secure offtake arrangements with

other potential customers on either the same terms or more favourable terms than those agreed with

Hunan, if at all.

37. Altura is currently loss making after taking into account interest payments and is expected to remain

loss making if current market conditions persist, regardless of whether or not the Proposed Offtake

Agreements are approved.

Overall conclusion

38. After consideration of the above factors, in our opinion, the advantages of the Proposed Offtake

Agreements outweigh the disadvantages.

39. As at the date of this Independent Expert Report, no superior proposal has emerged that is more

favourable to Non-Associated Shareholders compared to the Proposed Offtake Agreements.

40. Therefore, in the absence of a superior proposal, we consider that the Proposed Offtake Agreements are

reasonable to the Non-Associated Shareholders.

Other matters

41. In preparing this Independent Expert Report, we have considered the relevant regulatory guides issued

by ASIC, with particular reference to RG 111, RG 112 and Australian Professional and Ethical Standard

(“APES”) 225 Valuation Services.

42. The decision to accept or not to vote in favour of the Proposed Offtake Agreements is a matter for

individual shareholders, based on each shareholder’s view as to value and their expectations about

future market conditions.

43. This Independent Expert Report has been prepared solely for the benefit of the directors of Altura and

Non-Associated Shareholders. Neither PwCS nor its employees, officers or agents undertake

responsibility to any person, other than the directors of Altura and the Non-Associated Shareholders, in

respect of this Independent Expert Report, including any errors or omissions, howsoever caused.

44. Altura has indemnified PwCS, PwC and PwC’s employees, officers and agents against any claim, liability,

loss or expense, cost or damage, including legal costs on a solicitor client basis, arising out of reliance on

any information or documentation provided by Altura or its advisors, which is false and misleading or

omits any material particulars or arising from a failure to supply relevant documentation or

information.

45. Our assessment was completed using available information as at the Valuation Date. We have reviewed

publicly available information subsequent to the Valuation Date up to the date of this Independent

Expert Report and do not consider this to alter our opinions presented above.

46. A draft of this Independent Expert Report (excluding our consideration of the merits of the Proposed

Offtake Agreements) was provided to the directors of Altura for factual checking on 3 July 2020 and a

final draft was provided on 21 August 2020 for the purpose of ASX’s review.

*****

7


The above letter must be read in conjunction with the remainder of this Independent Expert Report.

Yours faithfully

Richard Stewart

Authorised Representative, PricewaterhouseCoopers Securities Ltd

Campbell Jaski

Fellow, Australasian Institute of Mining and Metallurgy (Chartered Professional)

Affiliate, Chartered Accountants Australia & New Zealand (Accredited Business Valuation Specialist)

8


1 Purpose of report

1.1. Scope of Independent Expert Report

47. PwCS has been engaged to prepare this Independent Expert Report setting out whether, in our opinion,

the Proposed Offtake Agreements are fair and reasonable to Non-Associated Shareholders and to state

the reasons for that opinion for the purpose of Listing Rule 10.1.

48. Altura is required to obtain Shareholder approval under ASX Listing Rule 10.1 in order to complete the

Proposed Offtake Agreements. It is also a condition precedent of the Long-Term Offtake Agreement that

shareholder approval be obtained.

49. ASX Listing Rule 10 deals with transactions between an entity (or any of its subsidiaries) and persons in

a position to influence the entity.

50. ASX Listing Rule 10.1 provides that an entity (or any of its subsidiaries) must not acquire a substantial

asset from, or dispose of a substantial asset to, any of the following persons without the approval of

holders of the entity's ordinary securities. These persons include:

a) a related party

b) a subsidiary

c) a substantial (10%+) holder, if the person and the person's associates have a relevant interest,

or had a relevant interest at any time in the 6 months before the transaction, in at least 10% of

the total votes attached to the voting securities

d) an associate of a person referred to in (a), (b) or (c) above

e) a person whose relation to the entity is such that, in ASX's opinion, the transaction should be

approved by security holders.

51. ASX Listing Rule 10.2 states that an asset is substantial if its value or the value of the consideration is, or

in ASX’s opinion is, 5% or more of the equity interests of the entity as set out in the latest financial

statement provided to ASX.

52. Having regard to the above, Altura is required to seek approval of shareholders under Listing Rule 10.1

for the Proposed Offtake Agreements on the basis that:

a) if a person and the person’s associates have a relevant interest in at least 10% of the total votes

attached to the voting securities, then they will be a substantial (10%+) holder

b) Shanshan currently holds a relevant interest in 15.1% of the total votes attached to the voting

securities in the issued share capital of Altura. As Hunan is a wholly owned subsidiary of

Shanshan, it is a substantial (10%+) holder in Altura

c) if the value of an asset is 5% of more of the equity interests of the entity, then the asset is a

substantial asset of the entity

d) Altura has estimated the total consideration under the Proposed Offtake Agreements to be USD

173 million (AUD 248 million). The market capitalisation of Altura was AUD 167 million on the

last trading day prior to the announcement of the Proposed Offtake Agreements. Accordingly,

9


the value of the Product to be sold to Hunan under the Proposed Offtake Agreements is more

than 5.0% of the equity interests in Altura and therefore a substantial asset of Altura.

1.2. Basis of assessment

53. We have prepared this Independent Expert Report for the purpose of stating, in our opinion, whether or

not the Proposed Offtake Agreements are considered fair and reasonable to the Non-Associated

Shareholders, and to set out our reasons for that opinion.

54. This Independent Expert Report has been prepared having regard to the Corporations Act, Chapter 10 of

the ASX Listing Rules, RG 76 and RG 111.

1.2.1. Chapter 10 of the Listing Rules

55. Neither the Listing Rules, nor the Corporations Act 2001 provides a definition of fair and reasonable for

the purposes of Listing Rule 10, however, Listing Rule 10 can encompass a wide range of transactions.

Accordingly, fair and reasonable must be capable of broad interpretation to meet the particular

circumstances of each transaction. This involves judgement on the part of the expert as to the

appropriate basis of evaluation to adopt given the particular circumstances of the transaction.

56. As Chapter 10 of the Listing Rules provides minimal guidance on how related party transactions should

be assessed, we have also had regard to RG 76, as discussed below.

1.2.2. RG 76

57. According to RG 76, a related party transaction is any transaction through which a public company

provides a financial benefit to a related party. As noted in paragraph RG 76.1, related party transactions

involve conflicts of interest because related parties are often in a position to influence the decision of

whether the benefit is provided to them, and the terms of its provision.

58. RG 76 refers to RG 111 and RG 112 for guidance on how the Independent Expert should assess related

party transactions.

1.2.3. RG 111

59. RG 111 discusses the separate concepts of ‘fair’ and ‘reasonable’ to be applied by an independent expert.

60. As required by RG 111.56, we have made a separate assessment of whether or not the Proposed Offtake

Agreements are ‘fair’ and ‘reasonable’.

61. In evaluating the fairness of the Proposed Offtake Agreements, we have had regard to RG 111’s specific

guidance in relation to the fairness of related party transactions under ASX Listing Rule 10.1.

62. RG 111 states that a proposed related party transaction is ‘fair’ if the value of the financial benefit to be

provided by the entity to the related party is equal to or less than the value of the consideration being

provided to the entity. Further RG 111, states that this comparison should be made bases:

a) assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and

willing, but not anxious, seller acting at arm’s length

b) for control transactions, on the basis referred to in RG 111.11.

10


63. RG 111.11 requires that the assessment of fairness of a control transaction assumes 100% ownership of

the target, irrespective of whether the consideration is made by way of scrip or cash, and therefore

reflects ASIC’s underlying philosophy that the premium for control of a company, subject to a takeover,

be shared by all members of that company.

64. In assessing fairness, we have relied on the following definition of fair market value:

the price which would reasonably be negotiated by an informed, willing but not anxious purchaser

and an informed, willing but not anxious seller, acting at arm’s length and within a reasonable

timeframe.

65. In evaluating the reasonableness of the Proposed Offtake Agreements, we have considered whether the

advantages afforded to the Non-Associated Shareholders in approving the Proposed Offtake Agreements

outweigh the disadvantages, the likelihood of an alternate proposal on better terms being received by

Altura and the likely position of Non-Associated Shareholders if the Proposed Offtake Agreements are

rejected.

11


2 Altura company overview

2.1. Operational summary

66. Altura is an ASX listed mining company operating in the global hard rock lithium or spodumene market.

67. Altura, through its wholly owned subsidiary Altura Lithium, owns the Altura Lithium Project, which is

located at Pilgangoora, approximately 130 kilometres south by road of Port Hedland in the Pilbara

region of Western Australia. The figure below shows the location of the Altura Lithium Project.

Altura Lithium Project’s site map

Source: Altura 2019 Annual Report, page 9

68. The Altura Lithium Project produces a 6% Li2O spodumene concentrate from ores which are mined

from surrounding areas and processed at the onsite plant.

69. Mining at the Altura Lithium Project first commenced in May 2017 using open pit methods, with

existing Stage 1 plant ore throughput capacity of 1.5 million tonnes (“t”) per annum and nameplate

concentrate production capacity of 220,000 wet metric tonnes (“wmt”) per annum.

70. Post May 2017, the Altura Lithium Project has achieved a number of key milestones, including:

a) first production of spodumene concentrate in late July 2018

b) formal opening of the Altura Lithium Project on 5 September 2018

c) first shipment of spodumene concentrate in early October 2018

d) commercial production declared in March 2019.

12


71. Altura completed a definitive feasibility study for a Stage 2 expansion of the Altura Lithium Project

which would double nameplate production concentrate to 440,000 dmt. A final investment decision in

relation to Stage 2 expansion has been postponed pending an improvement in market conditions.

72. The figure below shows Altura’s quarterly concentrate production since declaration of commercial

production in March 2019.

Altura Lithium Project’s quarterly concentrate production (wmt)

Source: Altura ASX announcement dated 9 March 2020 titled “Corporate Presentation”, page 8; Altura ASX announcement

dated 29 June 2020 titled “Sales and Shipping Update”

73. Subsequent to commercial production being declared in March 2019, concentrate production grew

quarter on quarter throughout 2019, with record production recorded in December 2019 quarter of

47,181 wmt. Concentrate production was down to 42,282 wmt in the March 2020 quarter due to cyclone

activity and marginally lower recoveries, however it rebounded to 46,316 wmt in the June 2020 quarter.

74. The Mineral Resource and Ore Reserve estimated for the Altura Lithium Project as at 30 June 2019 is

summarised in the table below. In addition to Li2O, the Mineral Resource and Ore Reserve for the Altura

Lithium Project contains iron oxide (“Fe2O3”). Based on the estimated Mineral Resource and Ore

Reserve, the current expected project life is greater than 25 years.

Mineral Resource estimate for the Altura Lithium Project as at 30 June 2019

Source: Altura Annual Report 2019

Ore Reserve estimate for the Altura Lithium Project as at 30 June 2019

Source: Altura Annual Report 2019

29,627

42,402 45,484

47,181

42,282 46,316

-

10,000

20,000

30,000

40,000

50,000

60,000

Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20

JORC Category Cut-off Li2O%

Million tonnes

Li2O% Fe2O3% Li2O (t)

Measured 0.30 7.4 1.23 1.38 91,000

Indicated 0.30 34.2 1.03 1.29 353,000

Inferred 0.30 4.1 0.95 1.41 39,000

Total 0.30 45.7 1.06 1.32 483,000

JORC Category Cut-off Li2O%

Million tonnes

Li2O% Fe2O3% Li2O (t)

Proved 0.30 7.2 1.22 1.40 87,000

Probable 0.30 30.5 1.05 1.29 320,000

Total 0.30 37.6 1.08 1.31 407,000

13


75. In addition to the Altura Lithium Project, Altura also has an interest in the Tabalong coal project in

South Kalimantan, Indonesia. Altura is pursuing various options in relation to divestment of their

interest in the Tabalong coal project.

2.2. Offtake arrangements

76. Altura currently has offtake arrangements in place with third parties which cover 100% of its Stage 1

production capacity at the Altura Lithium Project. The table below summarises the terms of the Altura’s

existing offtake agreements.

Altura’s existing offtake agreements

Source: Altura ASX announcement dated 9 March 2020 titled “Corporate Presentation”, page 12

Note: Ganfeng Lithium also has an option to increase supply via access to 50% of spodumene concentrate produced from any

Stage 2 expansion

77. With reference to the above table, pricing under Altura’s existing offtake agreements is at a market-

based price, subject to maximum and minimum price collars. However, given the significant

deterioration in spodumene prices in recent years, Altura has been required to sell its Product at market

competitive pricing to maintain supplying the contracted tonnage under the offtake arrangements.

78. Altura and other spodumene suppliers have faced challenges with customers accepting contracted

tonnages in line with agreed schedules.

79. In 2019, Altura reallocated tonnage contracted to its initial largest investor and offtake partner, Shaanxi

J&R Optimum Energy (“Shaanxi”), to other offtake customers due to Shaanxi’s solvency issues and

restructuring. Altura initially reallocated 50,000 dmt of Shaanxi’s 100,000 dmt contracted tonnage

before reallocating the balance.

80. Further, in 2019, Altura’s reallocated 35,000 dmt in contracted tonnage from one of its current offtake

partners, Lionergy, to other offtake partners.

2.3. Financial summary

2.3.1. Financial performance

81. The table below summarises the financial performance of Altura for the years ended 30 June 2018 and

2019 and the six months to 31 December 2019.

82. Altura reported operating profit of $7.4 million in FY19, up from $0.4 million in FY18, reflecting the

commencement of concentrate production at the Altura Lithium Project in FY19. Operating profit was

down in FY20 H1 at $1.9 million ($3.8 million on an annualised basis) reflecting the recent

deterioration in spodumene prices. Taking into account interest payments, Altura has consistently been

loss-making.

Offtake partner Contracted annual

tonnage (dmt) Pricing (USD/dmt) Term expiry

Ganfeng Lithium 70,000 550 < Price < 950 December 2021

Lionergy 65,000 550 < Price < 950 June 2022

Ruifu Lithium 35,000 550 < Price < 950 June 2024

Guangdong Weihua 50,000 585 < Price < 695 in first year

550 < Price < 950 in subsequent years December 2024

Total 220,000

14


Summary of Altura’s financial performance

Source: Altura Annual Report 2019 and Half Year Financial Report for the six months to 31 December 2019

83. The figure below shows Altura’s quarterly C1 cash cost per wmt since the June 2019 quarter.

Altura Lithium Project’s quarterly C1 operating cash costs (USD/wmt)

Source: Altura ASX announcement dated 30 April 2020 titled “March 2020 Quarterly Activities and Cashflow Report”

84. Altura is the second lowest cost spodumene producer in Australia and has an ongoing focus on reducing

cash costs through operational optimisation. Altura’s C1 cash cost per wmt has consistently trended

downwards since the June 2019 quarter, the first full quarter since commercial production was

achieved. Altura is targeting a C1 cash cost of below USD 300/wmt by increasing concentrate production

to in excess of nameplate production capacity.

2.3.2. Financial position

85. The table below summarises the financial position of Altura as at 30 June 2018, 30 June 2019 and 31

December 2019.

392

365 354

345

200

250

300

350

400

450

Jun-19 Sep-19 Dec-19 Mar-20

AUDk FY18 FY19 FY20 H1

Revenue 1,165 39,399 55,879

Cost of sales (772) (31,961) (53,960)

Operating profit / (loss) 393 7,438 1,919

Other income 510 172 5

Administration (3,780) (3,344) (1,576)

Employee benefits (3,690) (5,725) (2,179)

Other expenses (188) (188) (96)

Profit on sale of subsidiary - - 1,202

Net foreign exchange profit / (loss) (6,366) (6,466) (1,174)

Profit / (loss) before financing (13,121) (8,113) (1,899)

Interest expense - (10,566) (16,100)

Amortisation of transaction costs - (7,605) (11,247)

Profit / (loss) before income tax (13,121) (26,284) (29,246)

Tax (expense) / benefit 408 (287) (21)

Profit / (loss) after income tax (12,713) (26,571) (29,267)

15


Summary of Altura’s financial position

Source: Altura Annual Report 2019 and Half Year Financial Report for the six months to 31 December 2019

2.4. Capital structure

2.4.1. Debt holders

86. Altura’s borrowing relates to secured loan notes initially issued to Magy LLC, Pala Investments Limited

and related entities of CarVal Investors LLC on 27 July 2017 (“Loan Notes”), as subsequently amended

and traded.

87. The Loan Notes were initially issued for a three-year term expiring in August 2020. The interest rate on

the Loan Notes was 14.0% for the first 18 months and 15.0% thereafter. On 6 March 2020, Altura

announced to the ASX that it had secured a milestone finance package which included an extension of

the maturity date of the Loan Notes by three years to August 2023.

88. Under the terms of the Loan Notes, Altura is required to comply with:

a) a net debt to defined EBITDA ratio financial covenant

b) a committed production covenant, whereby Altura’s failure to have 100% of Stage 1 production

contracted under offtake or other supply agreements is a “project related review event” for the

Loan Notes.

2.4.2. Equity holders

89. As at the Valuation Date, Altura had 2,986,243,275 fully paid ordinary shares outstanding.

AUDk 30 Jun 2018 30 Jun 2019 31 Dec 2019

Cash and cash equivalents 28,761 9,494 2,398

Trade and other receivables 2,242 2,149 5,559

Inventories 1 20,720 31,433

Other currents assets 10,002 11,209 10,248

Total current assets 41,006 43,572 49,638

Property, plant and equipment 222,256 288,680 286,257

Exploration and evaluation 1,595 3,265 3,380

Other non-current assets 4,018 1,286 2,858

Total non-current assets 227,869 293,231 292,495

Total assets 268,875 336,803 342,133

Trade and other payables 22,713 40,778 34,568

Borrowings - 179,612 190,113

Other current liabilities 3,004 3,574 4,147

Total current liabilities 25,717 223,964 228,828

Borrowings 145,887 - -

Rehabilitation provision 3,918 11,994 11,994

Other non-current liabilities - - 1,555

Total non-current liabilities 149,805 11,994 13,549

Total liabilities 175,522 235,958 242,377

Net assets 93,353 100,845 99,756

16


90. The table below summarises the shareholdings of the top 5 shareholders of Altura.

Top 5 shareholders of Altura

Source: Altura management

91. The top 5 shareholders collectively hold approximately 50.0% of total shares outstanding, with Allan

Buckler and Shanshan being the largest two shareholders holding 15.4% and 15.1% of total shares

outstanding respectively.

92. Further, as at the Valuation Date, Altura had 243,010,119 options and warrants outstanding (which, on a

fully diluted basis, equate to 7.5% of the total shares outstanding in Altura).

2.5. Recent share price and trading history

93. The figure below summarises Altura’s share price and daily trading volumes for the 12 months to 26

June 2020, five days after the date Altura announced the Proposed Offtake Agreements to the ASX.

Altura share price and daily trading volume history

Source: S&P Capital IQ

94. Altura’s share price closed at $0.056 on 18 June 2020, the last trading day prior to the announcement of

the Proposed Offtake Agreements.

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

0.20

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20

Sh

ar

e p

ric

e (

AU

D)

Da

ily

vo

lum

e (

m)

Shareholder No of shares held % of total shares

Allan Buckler 459,738,505 15.4%

Shanshan 451,361,249 15.1%

MT Smith 313,239,925 10.5%

Merrill Lynch (Australia) Nominees Pty Ltd 178,797,390 6.0%

Farjoy Pty Ltd 89,207,149 3.0%

Total – top 5 shareholders 1,492,344,218 50.0%

Other shareholders 1,493,899,057 50.0%

Total 2,986,243,275 100.0%

17


95. Subsequent to the announcement of the Proposed Offtake Agreements, Altura’s share price closed at:

a) $0.066 on 19 June 2020 (the day of the announcement), an increase of 17.9%

b) $0.065 on 22 June 2020 (one day after the announcement), an increase of 16.1%

c) $0.063 on 23 June 2020 (two days after the announcement), an increase of 12.5%

d) $0.059 on 26 June 2020 (five days after the announcement), an increase of 5.4%.

18


3 Proposed Offtake Agreements overview

3.1. Summary of Proposed Offtake Agreements

96. On 19 June 2020, Altura announced to the ASX that Altura Lithium entered into the Proposed Offtake

Agreements with Hunan, a subsidiary of Shanshan, the second largest shareholder in Altura holding

15.1% of total shares outstanding.

97. Shanshan is one of the world’s largest suppliers of lithium ion battery materials and made its initial

investment in Altura in June 2019 when it acquired Shaanxi J&R Optimum Energy’s 11.8% interest in

Altura. Shanshan has recently commenced construction of a lithium chemical plant in China that has

been specifically designed for Product from the Altura Lithium Project.

98. Under the Proposed Offtake Agreements, Altura Lithium has agreed to sell, and Hunan has agreed to

buy, Product produced by Altura Lithium from the Altura Lithium Project.

99. It is intended that the Product under the Proposed Offtake Agreements will be provided via a reduction

in Product currently contracted to Altura’s existing offtake partners.

100. The Proposed Offtake Agreements comprise:

a) the Short-Term Offtake Agreement for the remainder of 2020

b) the Long-Term Offtake Agreement for 2021 to 2025.

3.2. Short-Term Offtake Agreement

101. Under the Short-Term Offtake Agreement, Altura Lithium will sell, and Hunan will buy, 44,445 dmt of

Product in 2020 at a fixed price per dmt, subject to a standard adjustment for product quality if the Li2O

or Fe2O3 content of the Product differs to that specified in the Short-Term Offtake Agreement. The

Product is to be delivered on a Cost, Insurance and Freight (“CIF”) basis.

102. Altura has not publicly disclosed the fixed price per dmt in the Short-Term Offtake Agreement as it is

commercial in confidence and disclosure would be prejudicial to Altura Lithium’s negotiations with

other potential offtake partners.

103. Payment under the Short-Term Offtake Agreement is by way of an irrevocable letter of credit, in a

sequence that is consistent with standard offtake payment terms.

3.3. Long-Term Offtake Agreement

104. The Long-Term Offtake Agreement commences subject to the satisfaction of conditions precent (which

includes, inter alia, shareholder approval and that the Short-Term Offtake Agreement remains in effect

as at 31 December 2020) and ends on the earlier of:

a) 31 December 2025

b) the date the Altura Lithium Project ceases producing Product

c) the date the Long-Term Offtake Agreement is terminated (such as due to a change of control or

insolvency event)

19


d) the date that Altura Lithium and Hunan agree in writing will be the end date.

105. Under the Long-Term Offtake Agreement:

a) Altura Lithium will sell, and Hunan will buy the Confirmed Annual Quantity

b) Hunan may elect:

i. to purchase Additional Product

ii. exercise the Purchase Option.

106. The quantity and pricing of the Product to be sold under each of the above categories is set out below.

The pricing is subject to a standard adjustment for product quality if the Li2O or Fe2O3 content of the

Product differs to that specified in the Long-Term Offtake Agreement. The Product will be delivered on a

CIF basis.

107. Altura has not publicly disclosed the specific pricing terms in the Long-Term Offtake Agreement as they

are commercial in confidence and disclosure would be prejudicial to Altura Lithium’s negotiations with

other potential offtake partners.

108. Payment under the Long-Term Offtake Agreement is by way of an irrevocable letter of credit, in a

sequence that is consistent with standard offtake payment terms.

109. Product under the Long-Term Offtake Agreement is to be sold on a ‘take or pay’ basis where:

a) if Hunan fails to provide a letter of credit in respect of a shipment, Altura Lithium may:

i. invoice Hunan for the full value of the shipment and any other costs incurred by Altura

Lithium as a result of that failure (including interest accrued between the due date and

payment date)

ii. seek to sell the shipment to a third party.

b) if Hunan fails to provide Altura Lithium with confirmation of the lifting schedule (ie the

schedule setting out the dates and times of the shipments) for a Contract Year, Altura Lithium

may invoice Hunan for the full value of the Confirmed Annual Quantity and any other costs

incurred by Altura Lithium as a result of that failure (including interest accrued between the

due date and payment date).

3.3.1. Confirmed Annual Quantity

110. Under the Long-Term Offtake Agreement, Altura Lithium will sell, and Hunan will buy, at least the

Confirmed Annual Quantity of 60,000 dmt of Product each Contract Year between 2022 and 2025.

There is no minimum quantity of Product for 2021.

111. The price of the Confirmed Annual Quantity is to be calculated on a cost-plus basis determined quarterly

with reference to Altura Lithium’s costs of production, royalties payable, finance, freight costs and

corporate overhead. The freight costs and corporate overheads are fixed, subject to further agreement

between Altura Lithium and Hunan. All other costs are variable and based on Altura Lithium’s actual

incurred costs.

112. The cost-plus price determined above is subject to a most favourable price clause in favour of Hunan.

That is, in the event that the cost-plus price determined above is either:

20


a) less favourable to the price charged to other customers of Altura Lithium that purchase

comparable quantities and specification of Product to Hunan in the preceding three-month

period

b) Hunan’s production costs (taking into account matters including the average mid-point price

for lithium carbonate in the previous month, value added tax and the RMB/USD exchange

rate)

then, Altura Lithium and Hunan are to negotiate in good faith in relation to the purchase price for the

Confirmed Annual Quantity.

113. If Altura Lithium fails to deliver, or Hunan fails to purchase, the Confirmed Annual Quantity during a

Contract Year from 2022 onwards and the shortfall in delivered Product (“Quantity Shortfall”) is equal

to or greater than 5,000 dmt, the party at fault must pay 10% of the Quantity Shortfall to the other party.

3.3.2. Additional Product

114. Where Product produced by the Altura Lithium Project in any Contract Year is above the Confirmed

Annual Quantity and not subject to another third-party contract, Altura Lithium and Hunan shall

discuss in good faith the Additional Product which Hunan may elect (but is not obliged) to purchase

from Altura Lithium. The maximum Additional Product that Altura Lithium may make available in any

Contract Year is 30,000 dmt for 2021 and 60,000 dmt for 2022 to 2025.

115. The price of the Additional Product shall be the lower of:

a) the market price (determined by taking into account indices for spodumene, prices published

by other companies listed on recognised securities exchanges with respect to comparable

product from Australian operations, the price of comparable lithium product from other

Australian projects and Hunan’s production costs)

b) the lowest price received by Altura Lithium from other customers that purchased comparable

quantities and specification of Product in the preceding three-month period.

3.3.3. Purchase Option

116. Hunan has the Purchase Option to request up to 100,000 dmt of Product (being Product in excess of the

Confirmed Annual Quantity and Additional Product, if any) over the duration of the Long-Term Offtake

Agreement (subject to a maximum of 30,000 dmt in any Contract Year) at a fixed price per dmt. Altura

Lithium shall use reasonable endeavours to satisfy the request for Product requested under the Purchase

Option but is not bound to supply.

21


4 Lithium industry overview

4.1. Uses and sources

117. Lithium is an alkali metal that has historically been used in the production of ceramics, glass, greases,

steel and aluminium smelting, as well as in air-treatment and polymer production.

118. More recently, the benefits of lithium ion batteries’ higher charge-to-weight and power-to-weight ratios

have resulted in lithium increasingly being in battery components for electric vehicles (“EV”), grid

storage and portable electronic equipment such as laptops and smart phones.

119. The figure below provides a high-level illustration of the upstream value chain for lithium.

Lithium supply chain

Source: PwCS

120. Lithium does not occur naturally in its pure form and must be extracted from lithium mineral deposits.

Most economic lithium mineral deposits occur in:

a) brine deposits

b) hard rock deposits, namely spodumene ore.

121. Extracted lithium from brine or hard rock deposits is generally refined into either lithium carbonate or

lithium hydroxide. Both lithium carbonate and lithium hydroxide have various chemical and industrial

uses, however lithium hydroxide is increasingly preferred over lithium carbonate for battery

applications as it is less energy intensive and cheaper to process in battery production.

122. Given the different deposit sources and refined products, lithium reserve and production levels are often

in terms of Lithium Carbonate Equivalent (“LCE”).

123. Lithium carbonate with purity of 99.0% LCE is required for standard industrial applications while

battery grade lithium carbonate requires 99.5% LCE purity. The standard purity for lithium hydroxide is

55.0% LCE with battery grade and superior grade purity being 99.0% and 99.3% LCE respectively.

4.1.1. Brine deposits

124. Brine deposits occur when lakes, geothermal waters or petroleum brines are enriched with lithium. The

Li2O content of brines generally ranges between 680 and 1570 parts per million.

22


125. Chile and Argentina host the world’s greatest concentration of economic lithium brine deposits, with

some lower grade brine deposits also found in China and the United States.

126. Lithium is extracted from brine deposits via an evaporation process before being further refined into

lithium carbonate. It is not at present economically viable to refine lithium brine directly to lithium

hydroxide, however lithium carbonate from lithium brine can be further refined into lithium hydroxide.

The extra processing step incurs an additional cost for lithium brine producers relative to lithium hard

rock producers.

127. Lithium carbonate production from brine resources is generally integrated at the mine site as shipping

concentrated brine for processing elsewhere is not economic.

4.1.2. Hard rock deposits

128. Lithium is also contained in hard rock deposits. The largest concentrations of lithium-containing

minerals are found in granitic pegmatites.

129. Spodumene is the most economically significant hard rock lithium mineral. The Li2O content of

spodumene typically ranges between 0.9% and 1.6%.

130. Australia (in particular, Western Australia) has the largest occurrences of spodumene deposits in the

world. Spodumene deposits also exist in the United States, Mexico, Congo and Morocco.

131. Lithium is extracted from spodumene deposits by processing spodumene ore into spodumene

concentrate with Li2O of between 5.0% and 7.0%. The spodumene concentrate then requires a relatively

simple beneficiation process to refine the concentrate directly into lithium hydroxide. This effectively

removes a step in the refining process compared to brines.

132. While spodumene concentrate is produced at the mine site, to date, most of the refining of spodumene

concentrate into lithium hydroxide has been undertaken by third parties in China, with very little

integrated chemical production at the mine site.

133. More recently, there has been a move towards increased integrated chemical production, particularly

from hard rock producers in Australia, as miners seek to capture more of the available margin for their

material. However, Mineral Resources/Albermarle’s Greenbushes mine is currently the only Australian

spodumene mine with a lithium hydroxide conversion plant in the pipeline, with a commission

scheduled to begin in 2021.

4.2. Supply and demand

134. The figure below summarises forecast global and Australian lithium production and consumption.

23


Global and Australian lithium production and consumption (LCE kt)

Source: Australian Government, Department of Industry Science, Energy and Resources, Resources and Energy Quarterly,

March 2020

135. Globally, there is currently an oversupply in lithium as global production is forecast to be 439kt of LCE

in 2020, compared to global consumption of 343kt of LCE.

136. The demand for lithium ion batteries, particularly as a result of the ‘EV revolution’, saw l ithium prices

significantly increase and reach record highs between 2016 and 2018. However, production at various

greenfield lithium projects, which were commenced during this time, is ramping-up and is expected to

result in global oversupply in the short-to-medium term.

137. In the long-term, global demand for lithium for battery technology is forecast to grow strongly at a

compound annual growth rate (“CAGR”) of 17.2%, resulting in global consumption of 753kt in 2025.

Government polices such as China’s stated EV target of 25% of all new automobile sales by 2025 and the

United Kingdom’s acceleration of its ban for internal combustion engines from 2040 to 2035 is expected

to support lithium demand. Production growth is expected to respond to the increased demand during

this time, with global production forecast to grow at a CAGR of 9.6% to 858kt of LCE in 2025.

138. Australia is the world’s largest producer of lithium and is forecast to produce 191kt of LCE in 2020,

decreasing to 141kt of LCE in 2021 due to price-related production curtailments before rebounding and

increasing to 393kt of LCE in 2025 (a CAGR of 8.3%) as the demand for lithium, particularly lithium

hydroxide, rises.

139. Note that there is significant uncertainty around Australian lithium production forecasts as Wesfarmers

has suspended a final investment decision in relation to the Mt Holland project while both Bald Hill and

Wodgina lithium mines have been placed under care and maintenance. Production has also been scaled

back at Mt Cattlin and Pilbara Minerals’ adjacent mine at Pilgangoora.

4.3. Pricing

140. Historically, the operation of the lithium market and therefore pricing has been relatively opaque

compared to other commodity markets, although there have been moved towards increased

transparency in recent years.

141. Prices vary by lithium product variant. The key lithium products traded are:

a) lithium hydroxide

-

200

400

600

800

1000

2019A 2020F 2021F 2022F 2023F 2024F 2025F

World production Australian production World Consumption

24


b) lithium carbonate

c) spodumene concentrate.

142. Lithium hydroxide commands a price premium to lithium carbonate given its efficacy in battery

technology while both prices of lithium hydroxide and lithium carbonate are significantly higher than

the price of spodumene concentrate, reflecting the higher contained lithium content and more refined

state as the primary feedstock to lithium battery production.

143. The figure below shows the historical performance of the Lithium Price Index (“LPI”) between January

2009 and May 2020, priced on a monthly basis. The LPI was established in January 2009 and is a

weighted index of lithium carbonate and lithium hydroxide prices (USD denominated) across all major

lithium markets (Asia, Europe, North America, South America).

Lithium price index (Base = 100 as at January 2009)

Source: Bloomberg

144. The figure below shows the recent price performance of Asian Metals spodumene concentrate CIF China

minimum Li2O 5% grade between January 2018 (the date the index was established) and May 2020.

Asian Metals spodumene concentrate CIF China minimum Li2O 5% grade (USD/t)

Source: Bloomberg

0

50

100

150

200

250

300

350

Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19

0

200

400

600

800

1000

25


145. As discussed above, lithium prices (including spodumene concentrate prices) significantly increased and

reached record highs between 2016 and 2018 as a result of surging demand for lithium ion batteries.

Lithium prices have declined since 2018 as new greenfield projects have transitioned into production

stage, resulting in a current global oversupply in the lithium market.

146. The table below summarises the Australian Government’s most recent price forecasts for lithium

hydroxide and spodumene. The forecasts were published in March 2020 and, since then, lithium prices

have deteriorated further.

Lithium price forecasts

Source: Australian Government, Department of Industry Science, Energy and Resources, Resources and Energy Quarterly,

March 2020

147. Going forward, lithium prices are forecast to remain depressed in the short-to-medium term relative to recent levels due to the global oversupply of lithium as well as demand-side concerns regarding COVID-

19 and the flow-on impact on consumption outside of China. In the long-term, lithium prices are

expected to increase in line with demand for EV and other products heavily reliant on lithium ion

batteries.

USD/t nominal 2020 2021 2022 2023 2024 2025

Lithium hydroxide 7,700 8,855 9,625 10,290 11,130 11,620

Spodumene 469 462 510 519 527 536

26


5 Fairness and reasonableness assessment

5.1. Summary of opinion

148. We have concluded that the Proposed Offtake Agreements are not fair but reasonable to the Non-

Associated Shareholders.

149. In forming our opinion, we have considered whether the Proposed Offtake Agreements are fair and

reasonable in accordance with the principles set out in RG 111. The reasons for our opinion are set out

below.

5.2. Fairness assessment

150. To determine the fairness of the Proposed Offtake Agreements, we have assessed whether the pricing for

the Product under the Proposed Offtake Agreements reflects fair market value as at the Valuation Date,

having regard to the nature of the Product and the terms of the Proposed Offtake Agreements.

5.2.1. Short-Term Offtake Agreement

151. We consider that the pricing of the Product under the Short-Term Offtake Agreement, being a fixed

price per dmt, is equal to fair market value as at the Valuation Date as the fixed price per dmt is

consistent with the market price for the Product as at that date, having regard to:

a) the spot price for spodumene concentrate CIF China with minimum Li2O grade of 5% as

published by Asian Metals on the Valuation Date

b) the most recent prices charged by Altura for Product sold to third party customers, based on a

confidential review of Altura’s invoice and shipment data.

5.2.2. Long-Term Offtake Agreement

152. We consider that the pricing of the Product under the Long-Term Offtake Agreement is less than fair

market value as at the Valuation Date, having regard to the following:

a) The cost-plus price for the Confirmed Annual Quantity is currently above the prevailing market

price for the Product. Accordingly, at current spot prices and forecast prices, Altura will likely

receive the prevailing market price, which would be less than the cost-plus price due to the

most favourable price clause.

b) If the lithium price increases beyond that which is currently forecast, such that it is above the

cost-plus price, Altura will receive the cost-plus price for the Confirmed Annual Quantity.

Accordingly, the pricing for the Confirmed Annual Quantity limits the potential upside to

Altura from a significant increase in market prices without limiting the potential downside

from further decreases in market prices. Altura’s exposure to this is magnified by it being a low-

cost operation targeting further cost reductions in the future.

c) The Purchase Option, which gives Hunan the right to purchase up to 100,000 dmt of additional

Product over the duration of the Long-Term Offtake Agreement at a fixed price per dmt, is a

call option which has some nominal value to Hunan (at the expense of Altura, which is the

option writer). Altura receives no consideration for this under the Long-Term Offtake

Agreement.

27


d) The most favourable price terms in relation to the Confirmed Annual Quantity and Additional

Product are not present in Altura’s existing third-party Proposed Offtake Agreements.

5.2.3. Overall fairness conclusion

153. In consideration of the above, in our view the Proposed Offtake Agreements are not fair on the basis

that:

a) while the pricing of the Product under the Short-Term Offtake Agreement is at fair market

value, the pricing of the Product under the Long-Term Offtake Agreement is at less than fair

market value

b) the minimum contracted quantity under the Long-Term Offtake Agreement (ie 240,000 dmt,

being four years of the Confirmed Annual Quantity) is significantly more than that under the

Short-Term Offtake Agreement (ie 44,445 dmt) and therefore more weighting should be given

to the Long-Term Offtake Agreement.

5.3. Reasonableness assessment

154. For the purpose of assessing whether or not the Proposed Offtake Agreements are reasonable, we have

also considered the likely advantages, disadvantages and other factors associated with the Proposed

Offtake Agreements.

5.3.1. Advantages

The Proposed Offtake Agreements strengthen Altura’s partnership with Shanshan

155. The Proposed Offtake Agreements build on Altura’s existing relationship with Shanshan, its second

largest shareholder and one of the world’s largest suppliers of lithium ion battery materials.

156. Further developing this relationship has the potential to provide strategic benefits and synergies to both

Altura and Shanshan, particularly as Shanshan has recently commenced construction of a lithium

chemical plant in China that has been specifically designed for Product from the Altura Lithium Project.

The Proposed Offtake Agreements secure future Product sales and provide liquidity

157. Hunan has committed to purchase at least 25.0% of the Altura Lithium Project’s Stage 1 Product

between 2022 and 2025 under the Long-Term Offtake Agreement, with options to purchase additional

Product.

158. Securing long-term customers in the lithium market can be difficult. The offtake arrangement with

Shanshan provides certainty of demand and will help underwrite Altura’s financial performance and

position into the future.

159. The Proposed Offtake Agreements also provide Altura with liquidity, improving its ability to meet its

debt obligations, including its debt covenant in relation to Product commitments. This will assist Altura

preserve relationships with existing financiers and support the sustainability of Altura’s operations.

160. Further, the Long-Term Offtake Agreement, if approved, will secure sales for Altura to 31 December

2025, which is one year later than Altura’s existing offtake agreements. This will allow Altura to stagger

expiry of its existing offtake agreements and assist Altura with its long-term planning, including in

relation to a Stage 2 expansion of the Altura Lithium Project if market conditions permit.

28


The Proposed Offtake Agreements diversify Altura’s customer base

161. The addition of Hunan as an offtake partner will increase the number of Altura’s offtake partners from

four to five. This will reduce the counterparty risk to Altura posed by any individual offtake partner,

particularly as the interests of Altura and Shanshan, being a key shareholder in Altura, are aligned.

162. A diversified customer base with common interests is valuable to Altura given the current depressed

nature of the lithium market and Altura’s history of reallocating contracted tonnages from offtake

partners.

It is possible that Altura may realise higher prices under the Proposed Offtake

Agreements compared to prevailing market prices in the future

163. The most favourable price clause in relation to the Confirmed Annual Quantity requires Altura and

Hunan to negotiate in good faith in relation to the purchase price for the Confirmed Annual Quantity if

the prices charged to other customers of Altura Lithium are less than, or Hunan’s production costs are

more than, the cost-plus price. This may result in Altura and Hunan agreeing to a price below the cost-

plus price but above the prevailing market price.

164. The cost-plus price for the Confirmed Annual Quantity under the Long-Term Offtake Agreement is

currently higher than the market price for the Product.

5.3.2. Disadvantages

Altura may realise lower prices under the Proposed Offtake Agreements compared to

prevailing market prices in the future

165. In the event that the lithium market improves and the market price for the Product appreciates to such a

level that it is above the cost-plus price (for the Confirmed Annual Quantity) or fixed price (for the

Purchase Option), Altura may realise lower prices through selling to Hunan under the Long-Term

Offtake Agreement compared to other customers.

166. However, the market price for the Product is currently lower than the cost-plus price and Purchase

Option price and long-term forecasts do not indicate that a material appreciation in the market price is

expected over the term of the Long-Term Offtake Agreement.

The Proposed Offtake Agreements reduce the amount of Product that could be sold to

other offtake parties

167. Altura, by committing to sell at least 25% of the Altura Lithium Project’s Stage 1 Product across the

relevant years to Hunan, reduces the amount of Product available to any existing or new customers. This

potentially limits Altura’s ability to further diversify its customer base and take advantage of any

appreciation in the spodumene price.

168. However, in the event that there is additional demand, the Stage 2 expansion could be undertaken and

the amount of Product produced by the Altura Lithium Project increased.

5.3.3. Other considerations

169. There are also a number of other factors which arise as a result of the Proposed Offtake Agreements

which we have considered. Whilst we believe these do not represent advantages or disadvantages, they

should be considered by the Non-Associated Shareholders in contemplating their decision as to whether

to support the Proposed Offtake Agreements:

29


a) The Non-Interested Directors unanimously recommend that Non-Associated Shareholders vote

in favour of the Proposed Offtake Agreements.

b) In the event that the Non-Associated Shareholders do not vote in favour of the Proposed

Offtake Agreements, Altura may be required to negotiate with other potential customers in

relation to securing offtake arrangements. There is no certainty that Altura will be able to

secure offtake arrangements with other potential customers on either the same terms or more

favourable terms than those agreed with Hunan, if at all.

c) Altura is currently loss making after taking into account interest payments and is expected to

remain loss making if current market conditions persist, regardless of whether or not the

Proposed Offtake Agreements are approved.

5.3.4. Overall reasonableness conclusion

170. After consideration of the above factors, in our opinion, the advantages of the Proposed Offtake

Agreements outweigh the disadvantages.

171. As at the date of this Independent Expert Report, no superior proposal has emerged that is more

favourable to Non-Associated Shareholders compared to the Proposed Offtake Agreements.

172. Therefore, in the absence of a superior proposal, we consider that the Proposed Offtake Agreements are

reasonable to the Non-Associated Shareholders.

30


6 Appendices

31


Appendix A. - Statement of qualifications and declarations

A.1. Qualifications

PwCS is beneficially owned by the partners of PwC, a large international entity of chartered accountants and

business advisors. PwCS holds an Australian Financial Services Licence under the Corporations Act.

The individuals responsible for the preparation of this Independent Expert Report are Richard Stewart and

Campbell Jaski.

Mr Richard Stewart OAM is a Senior Fellow of the Financial Services Institute of Australasia, Chartered

Accountants in Australia and New Zealand (CAANZ) and the Society of Certified Practising Accountants in

Australia. He is also an Adjunct Professor in Business Valuation at the University of Technology, Sydney and is

Business Valuations Specialist Accredited, CAANZ. He holds a Bachelor of Economics and a Masters of

Business Administration. He has 34 years’ experience with PwC and extensive experience in preparing

valuations and Independent Expert Reports as well as providing merger and acquisition advice. He is also a

partner of PwC, and is an authorised representative of PwCS.

Mr Campbell Jaski is a partner in the Corporate Value Advisory practice of PricewaterhouseCoopers Australia.

He holds a Bachelor of Science (Honours) and Masters of Business Administration (Rupert Murdoch Fellow)

and is an Affiliate of Chartered Accountants Australia and New Zealand, an accredited Business Valuation

Specialist and a Fellow of the Financial Services Institute of Australasia. Campbell is a Fellow of the

Australasian Institute of Mining and Metallurgy and a Chartered Professional in Geology and Management.

Campbell has over 25 years’ experience in mining, finance and management and specialise in the financial

analysis and valuation of businesses, shares, major projects, markets and financial instruments. Campbell’s

experience covers public and private company valuations both in Australia and overseas and the preparation of

Independent Expert Reports.

A.2. Declarations

Prior to accepting this engagement, we considered our independence with respect to Altura by reference to

ASIC Regulatory Guide 112 Independence of Experts. In our opinion, we are independent of Altura and the

outcome of the Proposed Offtake Agreements.

Neither PwCS nor PwC has any interest in the outcome of the Proposed Offtake Agreements. PwCS will receive

a fee of approximately $70,000, exclusive of GST, in relation to the preparation of this Independent Expert

Report. The fee payable to us is payable regardless of the outcome of the Proposed Offtake Agreements. None of

PwCS, PwC, Mr Stewart and Mr Jaski hold securities in Altura and have not held any such beneficial interest in

the previous two years.

A draft of this Independent Expert Report (excluding our consideration of the merits of the Proposed Offtake

Agreements) was provided to the directors of Altura for factual checking on 3 July 2020 and a final draft was

provided on 21 August 2020 for the purpose of the ASX’s review.

A.3. Purpose of Independent Expert Report

This Independent Expert Report has been prepared at the request of the directors of Altura and should not be

used for any other purpose. In particular, it is not intended that this Independent Expert Report should serve

any purpose other than an expression of our opinion on whether the Proposed Offtake Agreements are in the

best interests of the Non-Associated Shareholders. This Independent Expert Report has been prepared solely

for the benefit of the directors and existing shareholders of Altura. Neither the whole nor any part of this

Independent Expert Report nor any reference to it may be included in or attached to any document, circular,

resolution, letter or statement without our prior written consent to the form and context in which it appears.

32


A.4. Special note regarding forward-looking statements and forecast financialinformation

Certain statements in this Independent Expert Report may constitute forward-looking statements. Such

forward-looking statements involve known and unknown risks, uncertainties and other factors which may

cause the actual results, performance and achievements of Altura to be materially different from any future

results, performance or achievements expressed or implied by such forward-looking statements. Such factors

include, among other things, the following:

• General economic conditions;

• The future movements in interest rates and taxes;

• The impact of terrorism and other related acts on broader economic conditions;

• Changes in laws, regulations or governmental policies or the interpretation of those laws or regulations; and

• Other factors referenced in this Independent Expert Report.

A.5. Indemnity

In preparing this Independent Expert Report, Altura has indemnified PwCS, PwC and its employees, officers

and agents against any claim, liability, loss or expense, cost or damage, including legal costs on a solicitor client

basis, arising out of reliance on any information or documentation provided by Altura which is false and

misleading or omits any material particulars or arising from a failure to supply relevant documentation or

information.

In addition, Altura has agreed that if it makes any claim against PwC or PwCS for loss as a result of a breach of

our contract, and that loss is contributed to by its own actions, then liability for its loss will be apportioned

having regard to the respective responsibility for the loss, and the amount Altura may recover from PwCS will

be reduced by the extent of its contribution to that loss.

A.6. Consent

PwCS has consented in writing to this Independent Expert Report in the form and context in which it appears

being included in the Explanatory Memorandum, which will be issued by the directors of Altura and which will

be distributed to the Non-Associated Shareholders.

Neither PwCS nor PricewaterhouseCoopers has authorised or caused the issue of all or any part of the

Explanatory Memorandum other than this Independent Expert Report. Neither the whole nor any part of this

Independent Expert Report nor any reference to it may be included in or with or attached to any other

document, circular, resolution, letter or statement without the prior consent of PwCS to the form in which it

appears.

A.7. APES 225 “Valuation Services”

This Independent Expert Report has been prepared in accordance with APES 225 “Valuation Services”.

33


Appendix B. - Sources of information

In preparing this Independent Expert Report, we have had access to and relied upon major sources of

information, including:

• ASX announcements for Altura, including:

o Annual report for the year ended 31 June 2019

o Half year financial report for the six months to 31 December 2019

o Quarterly activities and cash flow report for the period ended 31 March 2020

o ASX announcement dated 9 March 2020 titled “Corporate Presentation”

o ASX announcement dated 29 June 2020 titled “Sales and Shipping Update”

• discussions with Management and the advisers to Altura

• other information provided by management of Altura

• information obtained from Bloomberg and S&P Capital IQ

• Resources and Energy Quarterly for the March 2020 quarter published by the Australian GovernmentDepartment of Industry, Science, Energy and Resources

• other publicly available information including information from websites.

We have not performed an audit, review or any other verification of the information presented to us.

Accordingly, we express no opinion on the reliability of the information supplied to us.

In forming our opinion, PwCS has assumed that:

• matters such as compliance with laws and regulations and contracts in place are in good standing and will remain so and that there are no material legal proceedings, other than as publicly disclosed

• the information set out sent by Altura to its shareholders is complete, accurate and fairly presented in all

material aspects

• the publicly available information relied on by PwCS in its analysis was accurate and not misleading.

In addition, PwCS assumes no responsibility and offers no legal opinion or interpretation on any issue in

respect of legal issues relating to assets, properties, or business interests or issues regarding compliance with

applicable laws, regulations and policies.

34


Appendix C. - Glossary

Term Definition

$ or AUD Australian Dollar

Additional Product Excess Product produced above the Confirmed Annual Quantity which Hunan may elect

to purchase under the Long-Term Offtake Agreement

Altura Altura Mining Limited

Altura Lithium Altura Lithium Operations Pty Ltd

Altura Lithium Project Lithium project owned by Altura located at Pilgangoora, Western Australia

APES Australian Professional and Ethical Standard

ASIC Australian Securities and Investment Commission

ASX Australian Securities Exchange

CAGR Compound annual growth rate

CIF Cost, Insurance and Freight

Confirmed Annual

Quantity

Minimum 60,000 dmt of Product each year between 2022 and 2025 agreed to be sold by

Altura Lithium and purchased by Hunan under the Long-Term Offtake Agreement

Contract Year Each calendar year between 2022 and 2025

Corporations Act Corporations Act 2001 (Cth)

dmt Dry metric tonnes

EV Electric vehicles

Fe2o3 Iron oxide

FSG Financial Services Guide

Hunan Hunan Yongshan Lithium Co Ltd

Independent Expert

Report

This report

k Thousand

LCE Lithium Carbonate Equivalent

Li20 Lithium oxide

Loan Notes Secured loan notes initially issued to Magy LLC, Pala Investments Limited and CarVal

Investors LLC on 27 July 2017 as subsequently amended and traded

Long-Term Offtake

Agreement

Long-term offtake agreement for the 2021 to 2025 calendar year dated 18 June 2020

LPI Lithium Price Index

Non-Associated

Shareholders

Shareholders in Altura other than Hunan or its associates (including Shanshan)

Non-Interested

Directors

The directors of Altura excluding Mr Xiaoyu Dai

Product Spodumene concentrate

35


Proposed Offtake

Agreements

Short-Term Offtake Agreement and Long-Term Offtake Agreement

Purchase Option Hunan’s option to ask Altura Lithium to sell to it Product of up to 100,000 dmt of Product

over the duration of the Long-Term Offtake Agreement (subject to a maximum of 30,000

dmt in any Contract Year)

PwC PricewaterhouseCoopers

PwCS PricewaterhouseCoopers Securities Ltd

Quantity Shortfall Amount of the Confirmed Annual Quantity which Altura fails to deliver or Hunan fails to

purchase

RG 111 ASIC Regulatory Guide 111 Content of expert reports

RG 112 ASIC Regulatory Guide 112 Independence of experts

RG 76 ASIC Regulatory Guide 76 Related party transactions

Shaanxi Shaanxi J&R Optimum Energy

Shanshan Ningbo Shanshan Co Ltd

Short-Term Offtake

Agreement

Short-term offtake agreement for the remainder of the 2020 calendar year dated 18 June

2020

t Tonnes

USD United States Dollar

Valuation Date 30 June 2020

wmt Wet metric tonnes

36


Appendix D. - Financial Services Guide

D.1. PricewaterhouseCoopers Securities Ltd

This Financial Services Guide (“FSG”) is dated 20 March 2015.

D.2. About us

PwCS (ABN 54 003 311 617, Australian Financial Services Licence No 244572) has been engaged by Altura to

provide a report in the form of an Independent Expert Report.

D.3. This financial services guide

This FSG is designed to assist retail clients in their use of any general financial product advice contained in the

Independent Expert Report. This FSG contains information about PwCS generally, the financial services we are

licensed to provide, the remuneration PwCS may receive in connection with the preparation of the Independent

Expert Report, and how complaints against us will be dealt with.

D.4. Financial services we are licensed to provide

Our Australian Financial Services Licence allows us to provide a broad range of services, including providing

financial product advice in relation to various financial products such as securities, interests in managed

investment schemes, derivatives, superannuation products, foreign exchange contracts, insurance products, life

products, managed investment schemes, government debentures, stocks or bonds and deposit products.

D.5. General financial product advice

The Independent Expert Report contains only general financial product advice. It was prepared without taking

into account your personal objectives, financial situation or needs.

You should consider your own objectives, financial situation and needs when assessing the suitability of the

Independent Expert Report to your situation. You may wish to obtain personal financial product advice from

the holder of an Australian Financial Services Licence to assist you in this assessment.

D.6. Fees, commissions and other benefits we may receive

PwCS charges fees to produce reports, including this Independent Expert Report. These fees are negotiated and

agreed with the entity who engages PwCS to provide a report. Fees are charged on an hourly basis or as a fixed

amount depending on the terms of the agreement with the person who engages us. In the preparation of this

Independent Expert Report, our fees are charged on a fixed basis and are approximately $70,000, excluding

GST.

Directors, authorised representatives or employees of PwCS, PricewaterhouseCoopers (PwC), or other

associated entities, may receive partnership distributions, salary or wages from PwC.

D.7. Associations with issuers of financial products

PwCS and its authorised representatives, partners, employees and associates may from time to time have

relationships with the issuers of financial products. For example, PwC may be the auditor of, or PwCS may

provide financial advisory services to, the issuer of a financial product in the ordinary course of its business.

D.8. Complaints

If you have a complaint, please raise it with us first, using the contact details listed below. We will endeavour to

satisfactorily resolve your complaint in a timely manner. In addition, a copy of our internal complaints handling

37


procedure is available upon request. If we are not able to resolve your complaint to your satisfaction within 45

days of your written notification, you are entitled to have your matter referred to the Financial Ombudsman

Service (FOS), and external complaints resolution service. FOS can be contacted by calling 1300 780 808. You

will not be charged for using the FOS service.

D.9. Compensation arrangements

PwCS has professional indemnity insurance in place that satisfies the compensation arrangement requirements

under section 912B of the Corporations Act. This insurance will cover claims in relation to the conduct of

representatives and employees who no longer provide services to PwCS (but who did at the time of the relevant

conduct).

D.10. Contact details

PwCS can be contacted by sending a letter to the following address:

Mr Richard Stewart

Authorised Representative

PricewaterhouseCoopers Securities Ltd

GPO Box 2650

SYDNEY NSW 1171e

38

AJM PRX2002A

*AJM PRX2002A*

I/We being a member(s) of Altura Mining Limited and entitled to attend and vote hereby appoint:PROXY FORM

STEP

1 or failing the person or body corporate named, or if no person or body corporate is named, the Chairman of the Meeting, as my/our proxy to act on my/our behalf (including to vote in accordance with the following directions or, if no directions have been given and to the extent permitted by the law, as the proxy sees fit) at the General Meeting of the Company to be held at 10.00am (WST) on Friday, 25 September 2020 at the DoubleTree by Hilton Hotel, 100 James Street, Northbridge, Perth WA 6003 (the Meeting) and at any postponement or adjournment of the Meeting.The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

the Chairman of the Meeting (mark box)

OR if you are NOT appointing the Chairman of the Meeting as your proxy, please write the name of the person or body corporate you are appointing as your proxy

APPOINT A PROXY

STEP

3

This form should be signed by the shareholder. If a joint holding, either shareholder may sign. If signed by the shareholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).

Shareholder 1 (Individual) Joint Shareholder 2 (Individual) Joint Shareholder 3 (Individual)

Sole Director and Sole Company Secretary Director/Company Secretary (Delete one) Director

SIGNATURE OF SHAREHOLDERS – THIS MUST BE COMPLETED

STEP

2

Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the Meeting.Please read the voting instructions overleaf before marking any boxes with an T

* If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

1 Approval of Offtake Agreements

Resolution

VOTING DIRECTIONS

For Against Abstain*

LODGE YOUR VOTE

ONLINEwww.linkmarketservices.com.au

BY MAILAltura Mining LimitedC/- Link Market Services LimitedLocked Bag A14Sydney South NSW 1235 Australia

BY FAX+61 2 9287 0309

BY HANDLink Market Services Limited 1A Homebush Bay Drive, Rhodes NSW 2138

ALL ENQUIRIES TO Telephone: +61 1300 554 474

ABN 39 093 391 774

*X99999999999*X99999999999

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YOUR NAME AND ADDRESSThis is your name and address as it appears on the Company’s share register. If this information is incorrect, please make the correction on the form. Shareholders sponsored by a broker should advise their broker of any changes. Please note: you cannot change ownership of your shares using this form.

APPOINTMENT OF PROXYIf you wish to appoint the Chairman of the Meeting as your proxy, mark the box in Step 1. If you wish to appoint someone other than the Chairman of the Meeting as your proxy, please write the name of that individual or body corporate in Step 1. A proxy need not be a shareholder of the Company.

DEFAULT TO CHAIRMAN OF THE MEETINGAny directed proxies that are not voted on a poll at the Meeting will default to the Chairman of the Meeting, who is required to vote those proxies as directed. Any undirected proxies that default to the Chairman of the Meeting will be voted according to the instructions set out in this Proxy Form.

VOTES ON ITEMS OF BUSINESS – PROXY APPOINTMENTYou may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your shares will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the items of business, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

APPOINTMENT OF A SECOND PROXYYou are entitled to appoint up to two persons as proxies to attend the Meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the Company’s share registry or you may copy this form and return them both together.

To appoint a second proxy you must:

(a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of shares applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded; and

(b) return both forms together.

SIGNING INSTRUCTIONSYou must sign this form as follows in the spaces provided:

Individual: where the holding is in one name, the holder must sign.

Joint Holding: where the holding is in more than one name, either shareholder may sign.

Power of Attorney: to sign under Power of Attorney, you must lodge the Power of Attorney with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

CORPORATE REPRESENTATIVESIf a representative of the corporation is to attend the Meeting the appropriate “Certificate of Appointment of Corporate Representative” must be produced prior to admission in accordance with the Notice of Meeting. A form of the certificate may be obtained from the Company’s share registry or online at www.linkmarketservices.com.au.

IF YOU WOULD LIKE TO ATTEND AND VOTE AT THE GENERAL MEETING, PLEASE BRING THIS FORM WITH YOU. THIS WILL ASSIST IN REGISTERING YOUR ATTENDANCE.

HOW TO COMPLETE THIS SHAREHOLDER PROXY FORM

LODGEMENT OF A PROXY FORMThis Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 10.00am (WST) on Wednesday, 23 September 2020, being not later than 48 hours before the commencement of the Meeting. Any Proxy Form received after that time will not be valid for the scheduled Meeting.

Proxy Forms may be lodged:


Login to the Link website using the holding details as shown on the Proxy Form. Select ‘Voting’ and follow the prompts to lodge your vote. To use the online lodgement facility, shareholders will need their “Holder Identifier” - Securityholder Reference Number (SRN) or Holder Identification Number (HIN).

BY MOBILE DEVICEOur voting website is designed specifically for voting online. You can now lodge your proxy by scanning the QR code adjacent or enter the vot ing l ink www.linkmarketservices.com.au into your mobile device. Log in using the Holder Identifier and postcode for your shareholding.

QR Code

To scan the code you will need a QR code reader application which can be downloaded for free on your mobile device.

BY MAIL

Altura Mining LimitedC/- Link Market Services LimitedLocked Bag A14Sydney South NSW 1235Australia

BY FAX +61 2 9287 0309

BY HANDdelivering it to Link Market Services Limited* 1A Homebush Bay DriveRhodes NSW 2138

* During business hours (Monday to Friday, 9:00am–5:00pm)

COMMUNICATION PREFERENCEWe encourage you to receive all your shareholder communication via email. This communication method allows us to keep you informed without delay, is environmentally friendly and reduces print and mail costs.


Login to the Link website using the holding details as shown on the Proxy Form. Select ‘Communications’ and click the first button to receive all communications electronically and enter your email address. To use the online facility, securityholders will need their “Holder Identifier” (Securityholder Reference Number (SRN) or Holder Identification Number (HIN) as shown on the front of the Proxy Form).

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