Clean TeQ Sunrise Definitive Feasibility Study completed

Results confirm the Clean TeQ Sunrise Project’s global importance as a sustainable, long-life, low-cost source of high purity cobalt and nickel sulphates for the battery revolution

Outstanding technical and economic outcomes will underpin product offtake agreements, project financing and development

MELBOURNE, Australia, June 25, 2018 (GLOBE NEWSWIRE) -- Mr. Robert Friedland and Mr. Jiang Zhaobai, Co-Chairmen of Clean TeQ Holdings Ltd. (Clean TeQ or Company) (CLQ:ASX) (CLQ:TSX) (CTEQF:OTCQX), and Mr. Sam Riggall, Chief Executive Officer, are pleased to announce the results of the Definitive Feasibility Study (DFS or Study) for the Clean TeQ Sunrise Project (Clean TeQ Sunrise or Project).

The Definitive Feasibility Study confirms Clean TeQ Sunrise’s proven status as a globally significant cobalt, nickel and scandium resource which, once developed, will become a major supplier of critical raw materials to the lithium-ion battery market. Lithium-ion batteries represent an important enabler of the clean energy revolution, helping alleviate the profound environmental issues caused by the unconstrained burning of fossil fuels by the global transport sector. Being part of the solution is a core objective for Clean TeQ and a strategic driver to develop Clean TeQ Sunrise.

Study Highlights include:

• The Definitive Feasibility Study models the first 25 years of production, with sufficient ore reserves to extend beyond 40 years.

• Strong cash flow supports a post-tax Net Present Value¹ (NPV) of US$1.392 billion (A$1.856 billion²) and post-tax Internal Rate of Return (IRR) of 19.1%.
  
  
• The DFS assumes long-term metal prices of:
  
  • Nickel: US$7/lb + US$1/lb sulphate premium (current nickel price³: US$6.73/lb)
  • Cobalt: US$30/lb (current cobalt price³: US$36.63/lb)

• High relative cobalt production results in extremely low average C1⁴ operating costs of negative US$1.46/lb Ni after credits⁵ and US$4.68/lb Ni before credits⁵.

• Average production post ramp-up of:
  • 21,780 tpa nickel and 4,640 tpa cobalt (Year 2 – 6)
  • 19,620 tpa nickel and 4,420 tpa cobalt (Year 2 – 11)
  • 18,520 tpa nickel and 3,450 tpa cobalt (Year 2 – 25)

• Average scandium oxide production capacity of 80 tonnes per year, which can readily be expanded to 160 tonnes per year, with the DFS conservatively capping sales at 10 tonnes per year for the life of mine. The potential exists to revolutionize the scandium market with a massive, low-cost source of supply in a stable Australian jurisdiction. Clean TeQ has existing agreements with companies including Airbus Group and Chinalco, to develop new light-weight aluminum scandium alloys for the aerospace and automotive sectors.

• Pre-production capital cost estimate of US$1.33 billion (A$1.77 billion) (excluding US$165m estimated contingency) reflects a significant increase in refining capacity, relative to the 2016 Pre-Feasibility Study (PFS), to provide the opportunity to increase production volumes. The estimate also includes conservative assessment of indirect costs through construction.

• Clean TeQ Sunrise is set to deliver significant economic and social benefits over many decades…including safe and well-paid employment, infrastructure upgrades, royalties, taxes and local community contributions.

• Steady-state operations workforce of approximately 300 people to generate strong employment opportunities in the state of New South Wales, Australia.

• The Project delivery model is to be determined during Q3 2018 with a final investment decision targeted for early 2019 and construction expected to commence shortly thereafter.

• Completion of Definitive Feasibility Study provides the platform to enable the acceleration of product offtake agreements and project financing.

• Value optimization work continues to assess significant opportunities to reduce capex in areas of pre-assembly, modularisation, procurement and value-added engineering.

• Market demand for battery minerals remains extremely strong. YTD2018 global passenger plug-in EV sales were 418k units (up 66% year on year). Electric vehicle lithium ion battery sales in January – April 2018 were 12.3GWh (up 60% year on year)⁶.

Completion of the Definitive Feasibility Study allows the Company to progress the next phase of development milestones, including finalisation of offtake agreements, completion of project financing and commencement of construction subject to the final investment decision, targeted for early 2019.

The Project is forecast to deliver over US$14 billion in revenue and average annual EBITDA⁷ of US$344 million over the first 25 years of operations. Average C1 cash costs of negative US$1.46/lb of nickel (net of by-product credits⁸) positions the Project to generate high margins and powerful cash flows over many decades.

Compared to the Pre-Feasibility Study completed and announced for the Project in 2016 and the subsequent NI 43-101 Technical Report completed in October 2017, the total capital cost estimate for the Project has increased due to a number of improvements and enlargement of the Project’s scope, designed to deliver substantially increased revenue, EBITDA and return on capital. These improvements to the Project, as outlined below, have been developed to allow the Company to respond to strong demand from major automobile producers and battery manufacturers looking for stable and secure sources of high purity battery raw materials.

Figure 1: http://www.globenewswire.com/NewsRoom/AttachmentNg/3b2148e8-aa99-45e4-92e9-ebe22c57adf9.

Improvements since the 2016 Pre-Feasibility Study include upsizing the refinery capacity, increasing surge capacities and revising the mine plan to significantly bring forward future cobalt metal production. Importantly, while the capital cost estimate is higher than previous studies, the DFS demonstrates the Project’s outstanding economics based on an improved revenue profile from increased metal production combined with current long-term commodity price forecasts.

The Definitive Feasibility Study capital cost estimate assumes the Project is delivered by Clean TeQ in conjunction with SNC-Lavalin and McDermott International⁹ (collectively the Alliance), whereby the three parties will jointly manage the execution of the Project, including engineering, procurement and construction. As previously announced, the Company is also evaluating a competing Engineering-Procurement-Construction (EPC) proposal to deliver the project under a fixed-price contract. The competing proposal is highly credible, having been received from one of China’s largest engineering and construction groups.

Clean TeQ remains in ongoing discussions with both the potential Chinese EPC contractor and the Alliance partners and expects to decide on the final delivery model for the Project during the third quarter of 2018. The decision on the delivery model is not expected to affect the timing of a final investment decision expected in early 2019, nor the commencement of construction.

Commenting on the outcomes of the Definitive Feasibility Study, Clean TeQ’s Co-Chairman, Robert Friedland, said: “Completion of this seminal study is one of the most significant milestones in Clean TeQ’s history. Our entire team are delighted that the results confirm Clean TeQ Sunrise’s position as a globally important source of high purity raw materials to the lithium ion battery market, which are primarily composed of nickel and cobalt sulphate on the critical cathode side of the battery.

“Technological disruption in electrically driven transportation and energy storage is accelerating. Nickel and cobalt sulphate and scandium are expected to be in massive demand as the world rapidly transitions towards a future dependent on renewable energy and the electrification of global transportation systems.

“The prospects of creating extremely substantial value for all of our global stakeholders is apparent from the results of the Definitive Feasibility Study announced today. Our management is truly excited to see the Sunrise Project move into the next stage of development.”

Clean TeQ’s CEO, Sam Riggall, also commented: “Since acquiring the Clean TeQ Sunrise Project, our management team has had a singular vision for how we combine world-leading technology and hydrometallurgical processing capability to develop this Tier-1 Australian mineral resource. The result is a business which is uniquely positioned as a permitted, shovel ready, long-life, low-cost producer of high purity battery materials located in the most stable and favourable of international mining jurisdictions.

“Our first priority is to progress and finalise current offtake discussions for the production which remains uncontracted, and secure advantageous funding for the Project. In our engagement with the market we are seeing no shortage of demand for high quality, battery grade nickel and cobalt sulphates, and we are confident that binding long-term sales contracts will be secured in the coming months. Our banking syndicate, which includes International Commercial Bank of China (ICBC), National Australia Bank, Natixis and Societe Generale, is standing by to commence work in earnest on a debt finance facility. We have a clear strategy in place to complete the financing before making the final decision to proceed with development of the Project in early 2019.

“I would like to thank the entire Clean TeQ team, supported by our various project consultants, who have worked extremely hard to deliver this study. We are now focused on timely delivery and execution.”

Figure 2: http://www.globenewswire.com/NewsRoom/AttachmentNg/bc3ddfd4-cbd7-46d5-b2f5-3365ad5bb047.

A detailed overview of the DFS outcomes commences on the following page.

A conference call to discuss the DFS will be held for analysts, investors and media at 10.30am AEST today, 25 June 2018. Dial in details are below.
All callers to use universal access code: 2179249

For more information, please contact:

About Clean TeQ Holdings Limited (ASX:CLQ) (TSX:CLQ) – Based in Melbourne, Australia, Clean TeQ is a global leader in metals recovery and industrial water treatment through the application of its proprietary Clean-iX® continuous ion exchange technology. For more information about Clean TeQ please visit the Company’s website www.cleanteq.com.

CLEAN TEQ SUNRISE DEFINITIVE FEASIBILITY STUDY

SECTION 1 – SUMMARY OF OUTCOMES

The DFS financial model is based on a 2.5 Mtpa ore throughput rate and initial mine life of 25 years. On this basis, Clean TeQ Sunrise will deliver in excess of US$14 billion in life of mine (LOM) revenue and approximately US$8.6 billion in LOM EBITDA. Average C1 cash costs after cobalt and other by-product credits are negative US$1.46/lb Ni, positioning the Project in the lowest quartile on the nickel cost curve.

An operational overview of the Project can be found in Appendix 1.

Dollar amounts are US$ unless otherwise indicated.

*Permitted autoclave throughput rate following 24-month commissioning and ramp up period.
** 25 years is the initial Life of Mine that has been modelled for the DFS. Sufficient reserves exist to support a 40+ year life of mine.
***Includes $165 million contingency on capital costs.
****Post tax, 8% discount, 100% equity, real terms.

*Prices based on bank/broker commodity price forecasts for metal content. Premium based on industry research.

SECTION 2 – PRODUCTION PROFILE

The Project will become a globally significant producer of nickel sulphate and cobalt sulphate for the lithium-ion battery market. The DFS assumes a two-year commissioning and ramp up to nameplate capacity. Average production rates for the first 10 years of full production (Year 2 – 11) are shown in Table 3 below.

*Scandium hydroxide will be batch refined into scandium oxide on site. Financial model assumes scandium oxide sales of only 10 tonnes per annum with surplus to be stockpiled on site for later processing as the market develops.

*Financial model assumes scandium oxide sales of only 10 tonnes per annum with surplus to be stockpiled on site for later processing as the market develops. Scandium hydroxide will be refined into scandium oxide on site.
**High Pressure Acid Leach (HPAL) to final product.

*Assumed commodity prices - nickel sulphate - US$8/lb; cobalt sulphate - US$30/lb; scandium oxide - US$1,500/kg; ammonium sulphate - US$90/tonne
**Assumes sales of 10tpa
Note: Figures may not sum due to rounding

Cobalt and Nickel Production

The Project will produce nickel and cobalt in sulphate form, namely nickel sulphate hexahydrate (NiSO₄·6H₂O) and cobalt sulphate heptahydrate (CoSO₄·7H₂O) – the form in which the lithium ion battery industry requires these metal units to produce battery cathode precursor (Figure 3).

Figure 3: http://www.globenewswire.com/NewsRoom/AttachmentNg/82a67a4f-0375-485a-8ea8-d473718d1d15.

For the 10 years following the first year of ramp-up, the Project will produce an average of 19,620 tpa of nickel in sulphate form, and 4,420 tpa of cobalt in sulphate form. In years when higher grade material is being mined and processed, production can be flexed to almost 25,000 tpa nickel and almost 7,000 tpa cobalt (but not simultaneously).

Figure 4: http://www.globenewswire.com/NewsRoom/AttachmentNg/8b46b9da-d162-4287-9382-6a1ddadeba67.

Scandium Production

The Project will also have the capacity to produce an average of up to approximately 93.5 tpa of scandium oxide (stockpiled as scandium hydroxide intermediate product) over the first 25 years, with the financial model assuming only 10 tpa to be refined to high purity scandium oxide form and sold to end users. This conservative estimate of sales volumes reflects the relative immaturity of the scandium market and the need for end users to see long-term reliable supply before high volume commitments can be made. The unsold scandium hydroxide intermediate will be warehoused on site, and batch processed to order as the market grows.

A scandium upside case is outlined in Section 4 to demonstrate the impact to NPV in the event scandium oxide sales develop beyond the DFS forecast.

A dedicated scandium refinery with 80 tpa high purity scandium oxide refining capacity is included in the DFS capital cost estimate.

Ammonium Sulphate Production

Clean TeQ Sunrise will also produce approximately 80,000 tpa of ammonium sulphate from Year 2. This will be sold primarily to the agricultural fertilizer market in the eastern states of Australia. The sales price for ammonium sulphate assumed for the DFS is US$90/tonne (FOB).

SECTION 3 – FINANCIAL EVALUATION

The valuation of the Project was conducted using a discounted cash flow (DCF) methodology over an initial 25-year mine life. The model assumed a real 8% discount rate, 100% equity financed and a 30% corporate tax rate reducing to 25% over the duration of the Project, in line with proposed Enterprise Tax Plan No. 2 2017¹⁰. Commodity prices were assumed to be a flat US$8/lb for nickel (inclusive of a US$1.00/lb sulphate premium) and US$30/lb for cobalt for the life of mine.

Based on this analysis, the Project returns a NPV₈ (post-tax) of US$1.392 billion and a post-tax Internal Rate of Return (IRR) of 19.1%.

Average annual EBITDA over the life of mine is estimated to be US$344 million, peaking at ~US$550 million in years when the operation is running at maximum production rates. Figure 5 below shows the revenue and EBITDA profile over the 25-year modeled life of mine.

Figure 5: http://www.globenewswire.com/NewsRoom/AttachmentNg/85c7b3e7-0a40-4364-bc26-e38dd027ce3f.

With an estimated construction duration of 24 months and a 24 month ramp up, the Project is expected to become cash flow positive in 2022 and generate cumulative free cash flows of circa US$5 billion over the 25-year modelled initial life of mine. Figure 6 displays the cumulative and net free cash flow generation for the Project.

Figure 6: http://www.globenewswire.com/NewsRoom/AttachmentNg/f91c8173-2641-4b1e-b10d-a048c27ef565.

Capital Cost Estimate

The DFS pre-production capital cost estimate for the Project is US$1.33 billion (A$1.77 billion) (exclusive of US$165m of contingency) and has been estimated at a P50 (+/- 15%) level of accuracy. The formal construction period is expected to be 24 months, assuming that early works to establish site power, water and the accommodation camp have been completed by the commencement of construction. The capital estimate includes all mine and process plant utilities and infrastructure, power tie-line, water pipeline, rail siding, road upgrades and commitments to local governments, as well as contractor and owner’s costs. Sustaining capital is included in the forecast cash flows as required in future years but is not included in the up-front capital estimate.

Compared to the Pre-feasibility Study (PFS) completed for the Project in 2016 and the subsequent NI 43-101 Technical Report completed in October 2017, the total capital cost estimate for the Project has increased due to a number of changes of scope designed to deliver substantially increased revenue, EBITDA and return on capital as well as including a range of measures to de-risk the development and operation of the Project. These scope changes include an increase to the size of the refinery to enable increased metal production, increasing surge capacities and revising the mine plan to bring forward cobalt metal production.

Operating Costs

Clean TeQ Sunrise is unique among laterite projects due to its high cobalt content relative to nickel and its low acid-consuming elements such as calcium, magnesium and aluminium. The result is a Project that is expected to deliver lowest quartile C1 cash costs averaging negative US$1.46/lb Ni once by-product credits from cobalt, scandium and ammonium sulphate are factored in (see Figure 7).

Figure 7 demonstrates the significant effect cobalt credits have on C1 operating costs. The cobalt credits payable at the assumed cobalt price of US$30/lb result in an average US$5.60 credit for every pound of nickel produced.

Figure 7: http://www.globenewswire.com/NewsRoom/AttachmentNg/98db8870-0683-466f-95f8-5bb6baa4cdb6.

Table 7 summarises the estimated average C1 operating costs following the initial commissioning and ramp up period.

Figure 8: http://www.globenewswire.com/NewsRoom/AttachmentNg/5f6a3533-f2a8-4d5b-86e2-5ca64a18a3ad.

The DFS has assumed an operating work force of approximately 300 full-time equivalent staff and contractors (excluding mining contractor personnel), with a construction workforce peaking at approximately 1,300. Mining costs were estimated assuming contractor mining rates.

Processing inputs, primarily reagents such as sulfur and limestone, as well as other consumables were based on supplier quotes.

Sulphur is assumed to be sourced from Canada, which will be shipped from Vancouver to Newcastle, where it will be railed to the rail siding before trucking to site.

High quality limestone supply will be sourced from a local supplier and trucked to site.

Australian Commonwealth, state and local government charges and levies are included in the cost estimate, including the 4% NSW state revenue royalty (less allowable deductions) and a 2.5% gross revenue royalty payable to Ivanhoe Mines.

SECTION 4 – SENSITIVITY ANALYSIS

Base Case Sensitivity Analysis

As part of the DFS, sensitivity analysis was conducted to determine the effect of key variables on the base case post-tax NPV₈ of US$1.39 billion. The results of this analysis are shown in Table 8 and Table 9, below.

Figure 9: http://www.globenewswire.com/NewsRoom/AttachmentNg/38e9f196-7920-4c3e-9f6b-4a3a085d939c.

Spot Price Sensitivity Analysis

The Company has used commodity prices in line with consensus forecasts for the base case evaluation. Table 10 demonstrates the Project’s economics at spot nickel and cobalt prices as at 12 June 2018.

Scandium Upside Sensitivity Analysis

In recognition of the potential for scandium demand to accelerate once a reliable supply has been established, the DFS also modelled the impact of scandium sales increasing to a steady run rate of 80 tpa by Year 7. This compares to LOM annual sales of 10 tpa assumed in the base case. The assumed long-term price in this scenario is US$750/kg to reflect the expected change to supply/demand dynamics from incentive pricing used to motivate faster adoption of scandium-containing alloys by customers.

As displayed in Figure 10, the impact the increase in sales has on scandium revenue is substantial.

In the scandium upside case, Project NPV rises by approximately US$220 million to US$1.61 billion.

Figure 10: http://www.globenewswire.com/NewsRoom/AttachmentNg/f45e80e3-aa55-4679-ad60-687c939c20a7.

Work continues with many of our partners – Universal Alloy Corporation, Chinalco, and Airbus Group – to develop new aluminium scandium alloys for the aerospace and automotive sectors. Development work to date has been promising with a number of newly developed products now undergoing production testing.

SECTION 5 – RESOURCE & RESERVES

The DFS for Clean TeQ’s Sunrise Nickel-Cobalt-Scandium Project is based on the Mineral Resource Estimate as released to the ASX on 9 October 2017 and the 2018 Ore Reserve Estimate detailed below in this release. Both estimates have been prepared in accordance with the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (‘the JORC Code’), 2012 Edition.

Clean TeQ published a 2017 Mineral Resource Estimate (effective 9 October 2017) of 39.9 Mt Measured at 0.75% nickel and 0.15% cobalt, 47.0 Mt Indicated at 0.55% nickel and 0.12% cobalt and 14.2 Mt Inferred at 0.24% nickel and 0.11% cobalt using a 0.06% cobalt cut-off applied as well as a Mineral Resource Estimate using a 0% cobalt cut-off.

The 2017 Mineral Resource Estimate is tabulated below at 0% and 0.06% cobalt grade cut-offs.

The Mineral Resource and Ore Reserve for this DFS has increased significantly from the 2016 PFS, which is primarily the result of the following key factors:

• An overall geological review of the Sunrise Deposit Project Area by Clean TeQ resulted in the decision to model the cobalt, nickel, scandium (and platinum) mineralisation together as a single polymetallic deposit;

• The polymetallic nature of the deposit allowed for the appropriate removal of individual cut-off grades and allowed for inclusion of blocks that had previously been excluded from the Resource. Additionally, this approach provides the ability to apply ‘block support’ (i.e. the blending of higher and lower-value blocks) to blocks that may otherwise be classified as waste during Ore Reserve estimation;

• Refinements to the geological interpretation, including the use, in closely-spaced areas of drilling, of smaller blocks, which has allowed for more selective rejection of low grade and waste material;

• The application of refinements to the geological and resource modelling, including the use of techniques such as ‘unfolding’, ‘indicator kriging’ and ‘sub-domaining’ of high-grade cobalt and scandium zones within the Deposit;

• Improved control of deleterious elements (such as aluminium, silicon, manganese and magnesium) within the main lateritic mineralisation zones (i.e. the Goethite and Silicified Goethite Zones);

• Mining and processing of higher-grades and higher-revenue ore blocks during the initial years of operations, with processing of lower-grade ore beyond the DFS financial modelling of 25 years, providing a mine life in excess of 40 years;

• Comprehensive suite of metallurgical testwork and pilot plant operation, supporting processing and metallurgy recoveries used in the DFS.

An Ore Reserve Estimate (effective 22 June 2018) has also now been completed for the Sunrise Deposit based on the Measured and Indicated Mineral Resources (at a 0% Co cut-off) tabled above. The Mineral Resources reported are inclusive of the Ore Reserves for the Project.

As shown in Table 12 below, total current Ore Reserves for the Sunrise Deposit are 147.4 Mt at 0.56% nickel, 0.09% cobalt and 53 ppm scandium.

Figure 11: http://www.globenewswire.com/NewsRoom/AttachmentNg/f065ed0c-1cd4-44bb-bcde-6e10339e5f6a.

Importantly, grade variability across the resource allows significant optimization of the mine plan, especially for cobalt. This allows higher production rates in the early years of the mine by targeting higher grade zones of ore. The variability in cobalt grade across the resource also provides Clean TeQ with the opportunity to significantly increase cobalt production above the rates detailed herein if optimal pricing parameters prevail in the early years of the mine life. This is the reason why certain parts of the process plant have been increased in size since the PFS, to provide the Company with the opportunity to flex production rates in response to prevailing commodity prices in the early years of the mine.

SECTION 6 – COMMUNITY AND SOCIAL BENEFITS

Over the estimated mine life of more than 40 years, Clean TeQ Sunrise is expected to deliver substantial social and financial benefits to local, regional and national stakeholders. These include employment opportunities, taxes, royalties, council rates, upgrades to local infrastructure, community enhancement contributions and other local community initiatives.

Figure 12: http://www.globenewswire.com/NewsRoom/AttachmentNg/43d0c72a-d963-4a6a-8b14-92fe146b1d91.

Clean TeQ Sunrise is expected to create hundreds of direct and indirect jobs in regional NSW through the construction and operations phase. The peak construction workforce is expected to be 1,000 people with a steady-state operations workforce of 300 people (plus mining and logistics contractors and ancillary services). During steady-state operations, the majority of these workers are expected to reside in local communities. Employee salaries and wages are estimated at approximately A$1.9 billion over the life of mine, including mining contractor wages but excluding logistics contractors and ancillary services.

Other benefits to local communities include contributions to compensate communities for local project impacts (principally road upgrades and maintenance), community enhancement contributions, council rates and additional ongoing local community development initiatives. Telecommunications will also be greatly enhanced around the Project area, to the benefit of local residents. Additional benefits are also expected for local businesses as suppliers of goods and services to Clean TeQ Sunrise.

The New South Wales and Federal Governments are also forecast to benefit significantly from the Project in the form of state royalties and payroll tax, expected to be ~A$630 million, and corporate tax of ~A$2.2 billion over the initial 25-year mine life modelled by the DFS.

SECTION 7 – NEXT STEPS & SCHEDULE

The outstanding outcomes generated by the DFS confirm the strong technical and economic viability of the Project. Next steps are to progress the Project towards FID by the Board in early 2019 with the commencement of construction expected shortly thereafter.

To achieve FID within the above timeframe, there are several key workstreams which need to be completed.

Selection of Project Delivery Model

Clean TeQ has two proposed delivery models for Project execution; the Integrated Alliance model with SNC-Lavalin and McDermott and an EPC (Engineer-Procure-Construct) model using a Chinese contractor. Discussions are ongoing with the parties to ensure both proposals are thoroughly assessed with respect to delivered cost, risk and capability. The preferred model will be selected during Q3 2018 and any material impacts to the outcomes of the DFS will be reported.

Product Offtake

Clean TeQ has been actively marketing to end users and intermediaries in the battery supply chain over the past 18 months. These discussions have progressed well and, with the DFS now complete, the Company expects to sign further binding offtake agreements in coming months.

Project Financing

The Company appointed four leading banks as Mandated Lead Arrangers (MLAs) in late 2017, who have made indicative best efforts undertaking to support the Project with a total of US$500 million of project debt finance. It is anticipated that the Project’s cash flow will support additional gearing, with additional debt funding to be sought as part of a syndication process to be led by the MLA banks. The MLA group, which includes National Australia Bank, Natixis, Societe Generale and ICBC, is engaging an independent technical expert to review the outcomes of the DFS with a view to progressing the indicative offer of support to a binding term sheet prior to FID. Having completed the DFS, this work can now commence.

In addition, the Company is assessing other opportunities to raise the remaining equity required to build the Project, including involving a potential offtake counterparty, streaming/royalty transactions or other strategic investor at Project level.

Early Works

As previously disclosed, Clean TeQ has commenced some of the early works activities to prepare the Project for formal construction post-FID. These works include connecting the site to power and water, installation of the construction accommodation facility and early site works. Planning and works are well underway, with activity set to increase during the second half of 2018.

Detailed Front-End-Engineering & Design

While a substantial volume of work has been completed as part of the DFS, there is a substantial body of work required to produce the final designs and detailed engineering to enable construction to commence as early as possible post FID. This work is underway and will continue through to the end of 2018.

The current indicative Project schedule is as follows:

– ENDS –

¹ Net Present Value calculated using 8% discount rate.

² AUD/USD 1/0.75 exchange rate of applied for life of mine.

³ London Metal Exchange price as at 20 June 2018.

⁴ C1 Cash Cost includes mining, processing, site overheads (including administration), haulage and port charges.

⁵ Credits from cobalt sulphate, scandium oxide and ammonium sulphate.

⁶ Source: Bernstein Research

⁷ EBITDA is a non-IFRS measure but is commonly used in evaluating financial performance. While the common definition of EBITDA is “Earnings Before Interest Expense, Taxes, Depreciation and Amortization”, as used in the DFS, EBITDA means revenue less mining and processing costs, haulage & port charges, marketing & selling expenses and royalty payments. EBITDA, as used in this news release, may not be comparable to EBITDA presented by other companies.

⁸ By products include cobalt, scandium oxide and ammonium sulphate.

⁹ McDermott International merged with CB&I in May 2018.

¹⁰ Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 was introduced to the Australian House of Representatives on 11 May 2017. If passed, it will progressively reduce the lower corporate tax rate to 25% for all corporate entities by 2026-27.

¹¹ Source: Wood Mackenzie. The assumed cobalt price for 2025 for the purposes of this chart is US$19/lb in real 2017 US$

¹² London Metal Exchange price at 20 June 2018.

FORWARD LOOKING STATEMENTS

Certain statements in this news release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws. Such statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements of the Company, the Clean TeQ Sunrise Project, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such statements can be identified by the use of words such as “may”, “would”, “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, “scheduled”, “forecast”, “predict” and other similar terminology, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. These statements reflect the Company’s current expectations regarding future events, performance and results, and speak only as of the date of this new release.

Statements in this news release that constitute forward-looking statements or information include, but are not limited to: statements regarding the selection of a project delivery model during Q3 2018; the negotiation and conclusion of further binding offtake agreements; the settlement of completion of a binding term sheet from the MLA group prior to the FID; the potential investment by a strategic investor and/or additional equity finance; completing of final design and detailed engineering work through the end of 2018; the making of a Final Investment Decision in Q1 2019; commencement and completion of construction between Q1 2019 and Q1 2021; commissioning in Q1 2021; first production and ramp up between Q1 2021 and Q1 2023; and the potential for a scandium market to develop and increase.

In addition, all of the results of the Sunrise Project DFS constitute forward-looking statements and forward-looking information. The forward-looking statements includes metal price assumptions, cash flow forecasts, projected capital and operating costs, metal recoveries, mine life and production rates, and the financial results of the Sunrise Project DFS. These include statements regarding the Sunrise Project IRR; the Project's NPV (as well as all other before and after taxation NPV calculations); life of mine revenue; average annual EBITDA; capital cost; average C1 operating cash costs before and after by-product credits; proposed mining plans and methods, a mine life estimate; project payback period; the expected number of people to be employed at the Project during both construction and operations and the availability and development of water, electricity and other infrastructure for the Sunrise Project.

Readers are cautioned that actual results may vary from those presented.

All such forward-looking information and statements are based on certain assumptions and analyses made by Clean TeQ’s management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believe are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements including, but not limited to, unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities; changes in investor demand; the results of negotiations with project financiers; the failure of parties to contracts to perform as agreed; changes in commodity prices; unexpected failure or inadequacy of infrastructure, or delays in the development of infrastructure, and the failure of exploration programs or other studies to deliver anticipated results or results that would justify and support continued studies, development or operations. Other important factors that could cause actual results to differ from these forward-looking statements also include those described under the heading "Risk Factors" in the Company's most recently filed Annual Information Form available under its profile on SEDAR at www.sedar.com.

Readers are cautioned not to place undue reliance on forward-looking information or statements.

This news release also contains references to estimates of Mineral Resources and Mineral Reserves. The estimation of Mineral Resources and Mineral Reserves is inherently uncertain and involves subjective judgments about many relevant factors. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The accuracy of any such estimates is a function of the quantity and quality of available data, and of the assumptions made and judgments used in engineering and geological interpretation, which may prove to be unreliable and depend, to a certain extent, upon the analysis of drilling results and statistical inferences that may ultimately prove to be inaccurate. Mineral Resource or Mineral Reserve estimates may have to be re-estimated based on, among other things: (i) fluctuations in nickel, cobalt or other mineral prices; (ii) results of drilling; (iii) results of metallurgical testing and other studies; (iv) changes to proposed mining operations, including dilution; (v) the evaluation of mine plans subsequent to the date of any estimates; and (vi) the possible failure to receive required permits, approvals and licences.

Although the forward-looking statements contained in this news release are based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the Company does not assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this news release.

COMPETENT & QUALIFIED PERSONS STATEMENTS

The information in this report that relates to Mineral Resources is based on information compiled by Mr. Lynn Widenbar, a member of the Australasian Institute of Mining and Metallurgy. Mr. Widenbar is a full-time employee of Widenbar and Associates. Mr. Widenbar is a consultant to Clean TeQ and has sufficient experience which is relevant to the style of mineralisation and type of deposit and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Widenbar consents to the inclusion in this report of the matters based on their information in the form and context in which it appears.

The sections in this report that relate to the Clean TeQ Sunrise Ore Reserves are based on information compiled by; Mr. Luke Cox, Mr. Tim Harrison and Mr. Lee White. Mr. Cox is a full-time employee of Clean TeQ. Mr. Harrison is a full-time employee of Clean TeQ and holds shares and options in the company. Mr. White is employed by Kalem Group Pty Ltd and is engaged as an internal consultant to Clean TeQ.

Mr. Cox, Mr. Harrison and Mr. White are all Members of the Australasian Institute of Mining and Metallurgy and each have sufficient experience relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the JORC Code 2012.

The qualified persons who are responsible for the disclosures regarding the DFS in this news release are Mr. Lynn Widenbar, a member of the Australasian Institute of Mining and a member of the Australian Institute of Geoscientists (AIG) (for the Mineral Resource) and Mr. Tim Harrison MAusIMM (CP Met) for the disclosures other than the Mineral Resource. Mr. Harrison and Mr. Widenbar are both Qualified Persons under the terms of NI 43-101. Mr. Widenbar is a full-time employee of Widenbar and Associates and is independent of Clean TeQ. Mr. Harrison is Clean TeQ’s Principal Metallurgist and is not independent of Clean TeQ. Mr. Harrison and Mr. Widenbar (for the Mineral Resource only) supervised the preparation of the DFS and have reviewed and approved the scientific and technical information in this news release, including information relating to the DFS. Mr. Harrison has also verified the technical data disclosed in this news release.

An updated NI 43-101 technical report with respect to the Clean TeQ Sunrise project will be filed on SEDAR and with other applicable authorities within 45 days of this news release.

APPENDIX 1

OVERVIEW OF OPERATIONS

Clean TeQ Sunrise is located near the town of Fifield in central New South Wales, ~370 km west of Sydney, Australia. The project site is well serviced by existing infrastructure inclusive of sealed roads, rail, power, gas, and nearby regional population centres.

Figure 13: http://www.globenewswire.com/NewsRoom/AttachmentNg/4a087f30-c837-4d7c-937c-d7f8b534786c.

Figure 14: http://www.globenewswire.com/NewsRoom/AttachmentNg/93d09c17-a93d-4700-bf95-c0d837f7975c.

Development of Clean TeQ Sunrise will consist of a shallow open cut mine, hydrometallurgical processing plant and associated infrastructure. The DFS has assumed the following;

• Ore throughput rate of 2.5 Mtpa using open pit mining with excavators and trucks, mainly free dig, with average strip ratio of 1.2:1 over life-of-mine
• Ore crushing and preparation plant
• 2 x high-pressure acid leach (HPAL) trains to digest the ore and solubilise cobalt, nickel and scandium
• Sulphuric acid plant
• Partial neutralisation tanks using lime slurry
• Extraction and separation of nickel, cobalt and scandium, using Clean TeQ’s proprietary ion exchange process technology, Clean-iX®
• Product refining and crystallisation
• Tailings treatment, evaporation, and storage facility
• Steam and power generation
• Site buildings and accommodation camp with capacity for approximately 1,300 people during the construction phase and 300 during operations;
• New rail siding
• 40 kms roads upgrade, a 90km 66kV power tie-line and 70 km water supply pipelines

Figure 15: http://www.globenewswire.com/NewsRoom/AttachmentNg/1b203de4-3765-45e9-82c8-f61874ed39dc.

Clean TeQ Sunrise will use the Company’s proprietary Clean-iX® ion exchange technology in the process flowsheet to produce battery grade nickel sulphate, cobalt sulphate and scandium oxide at the mine site. The process flow sheet has been extensively tested at the Company’s pilot plant in Perth, Western Australia, and has demonstrated excellent operability, reliability and cost efficiency, as well as achieving excellent metal recoveries.

Figure 16: http://www.globenewswire.com/NewsRoom/AttachmentNg/1b203de4-3765-45e9-82c8-f61874ed39dc.

Figure 17: http://www.globenewswire.com/NewsRoom/AttachmentNg/7ed773ed-bbf6-4de3-8165-30ff6b927324.

Figure 18: http://www.globenewswire.com/NewsRoom/AttachmentNg/6389fbe5-99a7-4510-b283-1d1043bbb0ba.

INFRASTRUCTURE

While supporting infrastructure at site is excellent, the Project will require an investment in several key areas including roads, rail, water, power and on-site accommodation. Specifically, the DFS has assumed the following:

• Upgrade to ~40 kms of local roads
• A new rail siding will be built near Trundle to accommodate project logistics
• Raw water will be piped from two bore-fields located 65km south of the main site, close to the Lachlan River. It is proposed that river water will be used to supplement the bore water supply when surface water is abundant
• A connection to the electrical supply grid via a 90km tie-line to Parkes will be constructed. This tie-line will comprise a 66kV overhead powerline supported by steel poles and will be routed from the Clean TeQ Sunrise site through Trundle and onto Parkes through a combination of private land and road easements
• An accommodation facility will be located 2.5km from the process plant and will be constructed in stages. After achieving the first stage installation of 300 rooms, it is planned to add 100 rooms per month up to a final camp capacity peaking at up to 1,300 persons. Clean TeQ has purchased all buildings within the first stage of the camp and will retain this facility following commissioning for use as shutdown accommodation during operation.

ENVIRONMENT & PERMITING

Clean TeQ holds relevant exploration and mining leases, a water license, and owns all the freehold land required for project development and infrastructure. Access agreements are currently being negotiated with the government to access a small amount of state/crown land which is within the Project area.

Figure 19: http://www.globenewswire.com/NewsRoom/AttachmentNg/b04403e4-e7b3-4dad-96b2-a3260748f8b9.

An Environmental Impact Statement (EIS) was prepared in 2000 by Black Range Minerals (previous owner of Sunrise/Syerston) and a Development Consent for the Project was granted in 2006. As the Project has evolved under Clean TeQ’s ownership, several modifications to this Development Consent have been applied for and subsequently granted by the NSW Department of Planning and Environment (DPE). Modification 4, which relates to changes to the processing method, mine layout and water supply infrastructure is currently being assessed by the DPE.

Clean TeQ Sunrise is positioned to be a modern and sustainable mining operation, adhering to the highest level of environmental standards. During project development and steady state operations, Clean TeQ is committed to minimizing the impacts of the Project on the environment. Pursuant to our approvals, appropriate environment management procedures, including supporting monitoring programs as required, will be put in place to manage key areas including water resources, biodiversity, noise, air quality, emissions and community infrastructure.

In addition, under the Development Consent for the Project, Clean TeQ will conduct an annual review of the environmental performance and commission a full independent environmental audit of the Project within one year of commencement of the development and every three years thereafter.

Clean TeQ is actively engaged with all major stakeholders, and the project is well understood and supported by local government and relevant Members of Parliament, at both a Federal and State level. No Native Title claims have been registered over the Project area.

Figure 20: http://www.globenewswire.com/NewsRoom/AttachmentNg/d1c0d93f-21f8-4939-8f27-f1ab67b0d88d.

COMMUNITY & STAKEHOLDER ENGAGEMENT

Clean TeQ is committed to engaging with its stakeholders in the communities in which it operates. A comprehensive stakeholder engagement strategy is in place, with a detailed plan to guide and inform consultation.

This engagement includes a Community Consultative Committee which has been established, a locally-based Community Relations team which holds regular community meetings across the region, and established shop front offices in the nearby townships of Condobolin and Trundle.

Figure 21: http://www.globenewswire.com/NewsRoom/AttachmentNg/0c6df36f-b177-489a-a3be-4236c0119cdd.

During the operations phase, the Project is expected to deliver significant economic and social benefits to the local communities in the Shires of Lachlan, Forbes, Parkes and surrounding areas. These include:

• Employment opportunities with an operational workforce of approximately 300 people (plus mining and logistics contractors and ancillary services)
• Local supply opportunities for local businesses
• Upgrades to local infrastructure (principally roads)
• Community enhancement contributions

While the construction workforce of ~1,000 people will be accommodated at site, it is expected that during steady state operations the majority of the workforce are expected to reside in local communities.

Clean TeQ is working together with the community to engage, consult and determine its needs, with a view to establishing relationships based on trust, care and respect.

APPENDIX 2

JORC 2012 – Table 1

Section 1 Sampling Techniques and Data

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)

Section 2 Reporting of Exploration Results

Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)

Section 4 Estimation and Reporting of Ore Reserves

(Criteria listed in section 1, and where relevant in section 2 and 3, also apply to this section.)