Global Geoscience Ltd.: Outstanding Results from Rhyolite Ridge Pre-Feasibility

Highlights

Long Life Project at Bottom of the Cost Curve

• Low-cost lithium producer at US$1,796/tonne of lithium carbonate (with boric acid credit)
• Production from 2021 with >30 year mine life with opportunity to extend and expand
• Producing 20,200 tonnes lithium carbonate and 173,000 tonnes boric acid per year

Low Risk Project

• Diversified earnings from lithium and boron co-products
• Conventional processing using proven technology
• Nevada - first-rate mining jurisdiction
• Conservative start-up approach
• Low operating costs and dual revenue mitigates against cyclical product prices
• Optionality and scalability

Strong Project Economics

• LOM after-tax cashflow of US$6.6 billion
• After-tax NPV (7% real) of US$1.8 billion with IRR of 27.7%
• Annual steady state revenue of US$450 million
• Annual steady sate EBITDA of US$297 million
• Initial capital expenditure of US$426 million including indirect costs and contingency plus $173 million for a lump sum turnkey sulphuric acid plant
• Rapid payback of capital: 4 years

Funding Optionality

• With PFS completed and funding in place through to FID, Company is well positioned to advance discussions with potential market (lithium and boron) and funding partners
• Optionality to fund the sulphuric acid separately to the rest of the operation
• Optionality around scale and initial capex

USA Advantage

• Strategically located proximal to major US and Asian markets
• Limited alternative supply of both lithium and boron in USA

The PFS results affirm the Project’s scale, globally competitive forecast cash operating costs, robust operating margins, long life and exceptional economic returns – highlighting its capacity to take full advantage of the current and future expected demand for lithium and boron raw materials over the coming decades.

The Project will be a globally significant producer of both lithium and boron and the largest lithium producer in the United States.

The PFS involved a high-level assessment for throughput options ranging from 1.5 to 3.6 Mtpa and initial capital expenditure of US$421 to US$674 million. Processing throughput is effectively determined by the capacity of the sulphuric acid plant. Two cases were selected for detailed assessment and costing as part of the PFS:

1. 3,500 tonne per day (“tpd”) sulfuric acid plant with a nominal processing throughput of 2.7 Mtpa; and
2. 4,500tpd sulphuric acid plant with a nominal processing throughput of 3.6Mtpa.

The 3,500 tpd sulphuric acid plant case was selected as the base case scenario for the PFS.

The Executive Summary from AFW’s PFS report forms Appendix 2 to this announcement. Further sections of the PFS report will be made available during November.

Global Geoscience’s Managing Director, Bernard Rowe commented:

“We are delighted by the outcomes of the PFS that clearly show Rhyolite Ridge will be a structurally low cost and very long-life mine supplying two critical materials necessary for urbanization and energy efficiency.

“The boron co-product will generate sufficient revenue to cover nearly all operating costs and thereby enable Rhyolite Ridge to be the lowest cost producer of lithium in the world.

“With approximately A$75 million cash, we are able to undertake the work required to rapidly progress Rhyolite Ridge into production. With the in-depth knowledge provided by the PFS, the Company is well positioned to commence serious discussions with a diverse range of potential market and finance partners.

“Preparations are well underway for the Rhyolite Ridge Definitive Feasibility Study (“DFS”) and we expect to be appointing the engineering firm to lead the DFS in the coming weeks.

“Rhyolite Ridge is ideally positioned to become a major, low-cost and long-term supplier of both lithium and boron products to major markets within the USA and Asia.

The PFS is based on an open pit mining operation with the ore being processed by vat acid leaching, evaporation and crystallization to produce boric acid and lithium carbonate. The overall operation is enabled by an on-site 3,500 tpd sulfuric acid plant that will produce acid for leaching, steam for the evaporation and crystallization circuit, and will generate approximately 47 MW of power.

The PFS envisages processing lithium-boron (Searlesite) mineralisation and stockpiling the lithium only (clay) mineralisation. The 79 Mt processed over the life of mine (“LOM”) is entirely sourced from the current Indicated Mineral Resource.

The production targets in this announcement are based entirely on the Indicated Mineral Resource summarised on page 7. However, in preparation of the production targets and associated cash flows, each of the modifying factors was considered and therefore demonstrated to be economic.

Key Parameters

The table below summarises the key project parameters over the life-of-mine (“LOM”).

Note: The financial analysis used lithium carbonate sale prices ranging from US$12,693/tonne to US$16,862/tonne (CIF China) and a constant boric acid sale price of US$700/tonne (CIF Asia).

The Project’s operating costs (net of boric acid credit) forecast to average US$1,796/tonne of lithium carbonate, which would make Rhyolite Ridge the world’s lowest cost producer of lithium.

Operating costs are forecast to average US$48/tonne of ore processed over the LOM in the PFS.

The table below compares project revenue and operating costs shown per tonne of ore processed. Revenue is split between lithium carbonate and boric acid. The left column shows the revenue split using the prices used in the PFS while the centre column shows the revenue split using $10,000/t lithium carbonate and $700/t boric acid price. There is a sizeable margin between revenue and operating cost, even at very conservative prices. Also of note is that boric acid revenue approximates total site operating costs.

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/16214a22-2946-4c32-860f-d83e5a46cabb

The charts below set out lithium carbonate and boric acid production and grades on annual basis over the LOM. Lithium carbonate production gradually decreases over the LOM as grades decrease during mining of the lower parts of the deposit. Counter to this, boron grades increase and hence boric acid production rates gradually increase over the LOM.

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/d50ff0f8-2091-450f-b39c-d0a37f39337b

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/60798a40-ffca-4a8e-ba71-988667468a64

The Project is forecast to produce 20,200 tpa of lithium carbonate and 173,000 tpa of boric acid. At prices of $10,000/tonne of lithium carbonate and $700/tonne of boric acid used for Project planning, this production equates to 32,300 tonnes of lithium carbonate equivalent (“LCE”).

The capital cost estimate of US$599 million equates to a capital intensity of US$18,600/tpa LCE, which is very competitive. Capital intensity for integrated projects (mine to saleable lithium end-product) typically ranges from $15,000 to $25,000/tpa LCE.

A high-level assessment was carried out assessing capital costs for various throughputs. This assessment demonstrated that the plant is scalable based on the acid plant size. It also demonstrates the plant has significant economies of scale. The initial capital costs ranges from $421 million for an operation processing 1.5Mtpa of ore through to $674 million for 3.6Mtpa. At 3.6Mtpa throughput the operation would produce 44ktpa LCE (lithium carbonate plus boric acid).

Note: LCE based on prices of US$10,000/tonne for lithium carbonate and US$700/tonne for boric acid. Capital expenditure for 1.5 and 2.0 Mtpa cases are indicative only as they were factored using the PFS capital cost numbers. The production from the 2.7 Mtpa case is based on design parameters (same as for the other cases in the table) and thus slightly different than the base case production detailed in this announcement.

Project Schedule

To expedite the Company’s ‘time to market’ strategy, the operation and associated facilities have been constrained to a maximum surface disturbance of 640 acres or 1 square mile. This allows the project to be considered for permitting under an Environmental Approval Plan (“EA”). Subsequently, a mine plan has been prepared for an initial part of the deposit, referred to as the starter quarry. The project life for the EA plan is forecast to be approximately seven years; however, the mine life is likely to exceed 30 years when removing this constraint and with the necessary permitting approvals.

Primary milestones in the PFS to first production are listed in the table below.

Mineral Resources

Detailed information on the updated Mineral Resources for Rhyolite Ridge is contained in a separate announcement released today.

The deposit is large, tabular, and moderately dipping. The defined dimensions are approximately 1,400 m x 2,500 m and are comprised of two ore zones approximately 20 m in thickness.

The total Indicated and Inferred Resource for the South Basin at Rhyolite Ridge is estimated to be (at a 1,050ppm lithium cut-off):

• 475.4 million tonnes at 0.9% lithium carbonate and 2.3% boric acid
• Containing 4.1 million tonnes of lithium carbonate and 10.9 million tonnes of boric acid

The high-grade, lithium-boron portion of the Indicated Resource totals:

• 104.1 million tonnes at 0.9% lithium carbonate and 7.2% boric acid
• Containing 0.95 million tonnes of lithium carbonate and 7.5 million tonnes of boric acid

Mineral Resource Estimate (1,050ppm Lithium and 0.5% Boron Cut-off)
Lithium-Boron (Searlesite) Mineralisation

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/4e03062b-bae5-4414-bf38-80584c7ae425

Note: Totals may differ due to rounding, Mineral Resources reported on a dry in-situ basis.

A detailed mining schedule was developed for a constrained starter pit to keep the overall area of disturbance to less than one square mile in relation to qualifying for the EA permitting process. An Ore Reserve relating to the starter pit is close to being finalised.

A sufficiently detailed mining schedule has not been developed for the remainder of the current Indicated Resource to enable conversion to a Probable Ore Reserve. However, the mining schedule was sufficient to enable modelling tonnages and conservative costing of mining the remainder of the current Indicated Resource for financial analysis in the PFS.

Drilling is currently in progress that is aimed at extending the near-surface, high-lithium portion of the current resource to the south. Planned infill drilling is aimed at upgrading most of the current Mineral Resource to the Measured category.

Mining

Mining will be undertaken utilising conventional drill and blast, open-pit truck and shovel methods with hydraulic excavators. To minimize start-up risk, contract mining will be used for the first two years of production. Owner mining is then planned to be undertaken utilising a mine equipment fleet comprising 21 90-tonne haul trucks, two excavators, two drills and associated support equipment. This fleet provides the capability to move more than 33 million tonnes per annum of material.

The tonnages mined and other physicals are detailed on an annual basis are in Appendix 1 to this announcement. Contract mining is planned to be utilized for the first two years and then owner mining.

Processing

The lithium-boron ore will be trucked on internal haul roads to the processing plant 2 km northwest of the quarry. The lower-value lithium-only clay-rich mineralisation will be stockpiled adjacent to the quarry for possible future processing.

Extensive metallurgical testwork on representative samples has supported the development of the PFS processing flowsheet. Laboratories used include Kappes Cassidy & Associates, Hazen, SGS Lakefield, Suez and Kemetco.

The processing plant consists of four main components:

1. Sulphuric acid plant
2. Crushing and vat leaching
3. Boric acid plant
4. Lithium carbonate plant

The sulphuric acid plant is the heart of the process plant, producing sulphuric acid, steam, and electricity to drive the entire process. By combining sulphur prill and water, sulphuric acid will be produced and piped to the leach vats. Heat recovered from the production of the sulphuric acid is used to generate steam that will be piped to the boric acid and lithium carbonate plants to drive the evaporation and crystallisation steps in the process and heat the vats. Steam will ultimately be passed through a steam turbine generator to generate electricity.

The process plant design is based on maximizing the use of the sulfuric acid plant. The ore throughput through the plant is variable to counter the effect of variable ore specific acid consumption to give a constant absolute acid consumption.

The sulfuric acid plant (3,500 t/d) will provide acid for leaching, steam for evaporation and 47 MW of power, which will meet the operation’s requirements and allow excess power to be sold.

The ore will be crushed to 25 mm using two-stage mineral sizers and a tertiary cone crusher. The crushed ore will be loaded into a series of large concrete vats by conveyor.

Seven vats (32.5 m wide x 32.5 m long and 7.4 m high) will be used to leach the ore. As the ore is being loaded, the vats will be flooded with an acid-water mix. After four days in the vat, virtually all of the lithium and boron will be leached from the rock into the acid solution. The spent ore is unloaded from the vat with a crane and trucked to a dry-stack storage facility.

The pregnant leach solution (“PLS”) will then be piped to the boric acid plant. As a first step, the PLS is cooled and approximately 50% of the boric acid is recovered. This will be followed by an evaporation step to concentrate the PLS followed by a second stage of crystallisation to recover the remaining boric acid and remove other sulphate salts. The remaining boric acid is separated from the sulphate salts by flotation. The combined boric acid will be purified using simple wash, filtration and recrystallisation steps. Boric acid will be packaged into 1 tonne bags or 25 kg bags.

The remaining lithium-rich PLS will then pass to the lithium carbonate plant for further removal of impurities by the addition of lime and sodium carbonate followed by ion exchange. The purified brine will then undergo further evaporation to concentrate the lithium to the point that it can be precipitated through the addition of soda ash.

To minimise start-up risk, the plant will produce technical-grade lithium carbonate for the first three years and then produce battery-grade lithium carbonate.

Overview of the Processing Area

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/006bab4e-d176-4173-a868-0005cb2169b6

Overall recoveries are estimated to be 81.8% for lithium and 83.5%, for boron.

At the average LOM grades, one tonne of lithium carbonate and 8.4 tonnes of boric acid will be produced from 129 tonnes of ore mined.

Operating Cost Estimates

Operating costs are forecast to average US$47.96/tonne processed over the life of mine.

Mining costs average US$2.07/tonne moved over the life of mine.

Processing costs include operating and maintaining the processing facilities, from the ROM stockpile through to concentrate loadout. Also included is the transport of waste salt and ore residue to the dry-stack storage facility.

In Year 3 of operations, the battery-grade plant expansion is planned. This will cause a marginal increase in power consumption and additional consumption of CO₂ from Year 4 onwards.

In Year 4 of operations, the steam turbine generator is planned to be installed, enabling a net export of power to the grid and an associated reduction in power costs from Year 5 onwards. The turbine is forecast to generate approximately 47 MW of power. As the site uses approximately 9.5MW of power, approximately 37.5MW is forecast to be sold into the grid.

Note: Year 4 has an additional US$1.0 million (US$0.37/t) for the battery-grade plant.

Major design inputs into the processing plant are summarised in the table below

Other key input costs are:

• Electricity – purchase for $0.0515/kWh, sell for $0.04342/kWh
• Diesel - $2.37/gallon

Capital Cost Estimate

The table below summarises the total estimated cost to design, construct, and commission the Project.

All operating and capital costs are expressed in Q2 2018 US dollars.

The capital expenditure estimate falls under the AACE Class 4 Estimate classification and is expected to be within ±25% of the estimated final project cost, including contingency.

The sulphuric acid plant is planned to be built on a lump sum, turnkey contract basis.

Sustaining capital is estimated to total US$255.8 M over the LOM and the key components are tabulated below.

Financial Analysis

An economic analysis of the project was completed using both pre-tax and after-tax discounted cash flow analyses. The economic analysis is focused on a 3,500 tpd acid plant mined within the LOM pit. The annual physicals underlying this financial analysis are in Appendix 1 to this announcement.

For technical work such as estimating cut-off grades and mine planning, constant sale prices of US$10,000/tonne for lithium carbonate and US$700/tonne for boric acid were used.

Lithium carbonate sale prices in the financial model are the average of forecasts provided to the Company by Roskill and Benchmark Mineral Intelligence, as detailed in the table below.

The above prices are CIF China for technical-grade lithium carbonate in years 1-3 and then for battery-grade lithium carbonate.

The increasing lithium carbonate prices reflect the likely demand growth for lithium, particularly from 2025 when many market analysts forecast exponential growth for electric vehicle demand.

Boric acid sale prices in the financial model are US$700/tonne (CIF Asia) flat over the life of mine.

The estimated cost of road transport to Los Angeles and sea freight to China are included in the financial model for both lithium carbonate and boric acid, totaling US$156 and US$160 per tonne of product, respectively.

All pricing and costs are in constant Q2 2018 United States dollars.

All cash flows are discounted to the start of project construction, which is assumed to occur over two years from 1 July 2019.

Tax rates assumed in the financial model are:

• Federal corporate tax of 21%
• Nevada net proceeds tax of 5%
• 22% depletion allowance
• 3.02% Esmeralda property tax rate.

The table below summarises the key financial outcomes of the ungeared Base Case.

Funding Options

With the PFS completed and funding in place through to the final investment decision (“FID”), the Company is well positioned to advance discussions with potential market (lithium and boron) and funding partners.

Project fundamentals and the PFS outcomes bode well for various attractive funding options to be available to the Company because:

• Robust economics including strong cash flow, fast payback and moderate capital intensity bode well for funding options.
• 100% ownership and revenue from two products
• Nevada location is an attractive jurisdiction
• Both products are critical to emerging clean-energy markets with limited long-term supply in USA - critical metals requiring secure, stable long-term supply.
• Opportunity to fund the sulphuric acid separately to the rest of the operation.
• Scalable with economics that are not very sensitive to capex.

The Company’s board and management have deep and relevant experience to drive assessment of funding options.

The Project has the capacity to attract material debt financing and the Company is also exploring other opportunities for the funding required to build the Project, including potential offtake partners or other strategic investors at Project level.

Next Steps

The work program over the coming months includes:

• Appointment of engineering firm for the DFS
• Pilot scale testing of the flowsheet aimed at confirming recovery and design parameters as well as producing samples for potential customers
• Ongoing metallurgical testwork to further optimize the PFS flowsheet
• Drilling to upgrade the Mineral Resource to the measured category and extend high-grade, shallow mineralisation to the south
• Updated Resource/Reserve estimation
• Testwork and trade-off study relating to the Project potentially producing various lithium products, including battery-grade lithium carbonate and lithium hydroxide
• Environmental permitting – complete remaining baseline surveys and start NEPA process
• Advance discussions with potential market and financial partners.

Contacts at Global Geoscience

About Global Geoscience
Global Geoscience Ltd. (ASX:GSC) is an Australian-based lithium-boron mine developer focused on its 100%-owned Rhyolite Ridge Lithium-Boron Project in Nevada, USA.

Rhyolite Ridge is a large, shallow lithium-boron deposit located close to existing infrastructure. It is a unique sedimentary deposit that has many advantages over the brine and pegmatite deposits that currently provide the world’s lithium. Rhyolite Ridge is one of only two known large lithium-boron deposits globally.

Global Geoscience is aiming to capitalise on the growing global demand for lithium and boron. Lithium has a wide variety of applications that include glass, ceramics, lubricants and its main growth market, batteries. Boron is used in glass, fiberglass, insulation, ceramics, semiconductors, agriculture and many other applications. Global Geoscience aims to develop the Rhyolite Ridge Lithium-Boron Project into a strategic, long-life, low-cost supplier of lithium and boron products. To learn more please visit: www.globalgeo.com.au.

Compliance Statement

The information in this report that relates to Exploration Results is based on information compiled by Bernard Rowe, a Competent Person who is a Member of the Australian Institute of Geoscientists. Bernard Rowe is a shareholder, employee and Managing Director of Global Geoscience Ltd. Mr Rowe has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being 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’. Bernard Rowe consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

In respect of Mineral Resources referred to in this report and previously reported by the Company in accordance with JORC Code 2012, the Company confirms that it is not aware of any new information or data that materially affects the information included in the public report titled “Updated Rhyolite Ridge Lithium-Boron Mineral Resource” dated 23 October 2018 and released on ASX. Further information regarding the Mineral Resource estimate can be found in that report. All material assumptions and technical parameters underpinning the estimates in the report continue to apply and have not materially changed.

Forward Looking Statements

Various statements in this report constitute statements relating to intentions, future acts and events which are generally classified as “forward looking statements”. These forward looking statements are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other important factors (many of which are beyond the Company’s control) that could cause those future acts, events and circumstances to differ materially from what is presented or implicitly portrayed in this presentation. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “potential” and similar expressions are intended to identify forward-looking statements.

Global cautions security holders and prospective security holders to not place undue reliance on these forward-looking statements, which reflect the view of Global only as of the date of this report. The forward-looking statements made in this report relate only to events as of the date on which the statements are made. Except as required by applicable regulations or by law, Global does not undertake any obligation to publicly update or review any forward-looking statements, whether as a result of new information or future events. Past performance cannot be relied on as a guide to future performance

Lithium and Boron Conversion Factors

Lithium and boron grades are fundamentally presented in parts per million (“ppm”) or percentages of each element in a given sample or estimate.

Lithium and boron grades are also expressed as various compounds in percentages in order to facilitate comparisons between different types of deposits and/or various products. The conversion factors presented below are calculated on the atomic weights and number of atoms of each element in the various compounds.

The standard lithium conversion factors are set out in the table below:

Lithium (chemical symbol: Li) is the lightest of all metals and the third element in the periodic table. The element lithium does not exist by itself in nature but is contained within mineral deposits or salts including brine lakes and sea water.

The lithium carbonate grades reported in the Company’s Mineral Resource estimates are calculated using the conversion factors in the table above and assume 100% of the contained lithium is converted to lithium carbonate.

The use of Lithium Carbonate Equivalent (“LCE”) is to provide data comparable with various lithium industry reports. LCE is often used to present the amount of contained lithium in a standard manner, i.e. – to convert lithium oxide into lithium carbonate. LCE is also used to convert revenue from other products (e.g. boric acid) produced at lithium operations into the amount of lithium carbonate that would provide revenue equivalent to a tonne of lithium carbonate.

The formula used for the LCE values quoted in this report is:

LCE = (lithium carbonate tonnes produced + [(boric acid tonnes produced * US$700/tonne))/
US$10,000/tonne]

The standard boron conversion factors are set out in the table below:

Boron (chemical symbol: B) is a rare light metal and the fifth element in the periodic table. The element boron does not exist by itself in nature. Rather, boron combines with oxygen and other elements to form boric acid, or inorganic salts called borates.

Borates are an important mineral group for modern society with demand expected to continue to grow at or above global GDP rates. There are few substitutes for borates especially in high-end applications and agriculture. These markets are expected to grow as global population grows and becomes more affluent.