Lithium Australia Quarterly Activities Report December 2022

Lithium Australia (ASX:LIT) is pleased to present its quarterly activities report ended on December 2022.

Recycling Division: Envirostream Australia Pty Ltd (‘Envirostream’)

• 275 tonnes of mixed batteries collected and improvements to lithium-ion battery processing rates reduced the LG Energy Solution inventory.
• A new trading company was engaged during the quarter for sale of Mixed Metal Dust, diversifying customer base and improving economic returns for this product.
• Multiple electric vehicle (‘EV’) companies hosted with work progressing to secure contracts with these companies for the future supply of EV batteries.

Batteries Division: VSPC Pty Ltd (‘VSPC’)

• An engineering study for a lithium ferro phosphate (‘LFP’) pre-qualification pilot plant was completed.
• Study will help determine the optimal commercialisation pathway and allows engagement with offtake and joint development partners.
• Following multiple requests for lithium manganese ferro phosphate ('LMFP') samples, further development of LMFP cathode powder was undertaken with improvements demonstrated.

Lithium Chemicals Division

• Evaluation of potential LieNA® commercial partners was undertaken during the quarter.
• In response, piloting at ANSTO was temporarily ceased to allow discussions towards a potential technology commercialisation agreement.
• Potential partners identified have an interest in the refining of fine or low-grade spodumene to produce high-purity lithium chemicals.

Corporate

• LIT completes the sale of the Greenbushes South Lithium Project to Galan Lithium (ASX: GLN) for a consideration of A$3.0 million - A$2.0 million in cash and A$1.0 million in equity.
• Multiple investors and government agencies hosted at Envirostream and VSPC operations, including attendance by Simon Linge, incoming LIT Chief Executive Officer.
• Reclassification of ASX listing from a "mining exploration entity" to a standard materials entity.
• Annual general meeting held with all resolutions carried.
• As at 31 December 2022, the Company had a cash balance of A$13.5 million and investments in listed equities of A$6.2 million.
• On 31 January 2023, the At-the-Market Subscription Agreement with Acuity Capital expired.

CORE STRATEGY

Lithium Australia is focused on its battery recycling business (Envirostream), lithium ferro phosphate (‘LFP’) cathode powder (VSPC) and LieNA® (Lithium Chemicals) divisions, all of which the Board believes will promote growth and shareholder value.

Recycling of end of life (‘EOL’) batteries via Envirostream underpins the Company’s ESG credentials. Envirostream is well-positioned to take advantage of the expected significant increase in volumes of spent batteries available for recycling, particularly as a result of vehicle electrification and Australia’s national battery stewardship scheme.

The production of LFP cathode powder for lithium-ion batteries (‘LIBs’) via VSPC represents a significant commercial opportunity. An accelerated strategy is being developed to increase production capacity of LFP and lithium manganese ferro phosphate ('LMFP'), both of which are subject to strong industry support for offtake development.

The LieNA® processing technology allows a unique method of refining fine or low-grade spodumene to produce high-purity lithium chemicals. With an expected increase in lithium chemicals demand and an industry focus on improving sustainability of lithium chemical production worldwide, the company is now seeking potential partners to commercialise the opportunity.

RECYCLING – Envirostream

The Company, through its 100% owned subsidiary Envirostream, is the national leader in mixed- battery recycling, providing sustainable solutions for the disposal of EOL batteries and the recovery of critical energy metals which are used to manufacture new LIBs.

Production improvements

During the quarter, Envirostream undertook the following to improve production capacities ahead of expected volume increases:

• Manufacturing Diagnostic Report delivered following an independent review of safety, production and maintenance opportunities; and
• Recruitment of additional dismantling personnel and improvement to LIB dismantling processes to increase the throughput of LG Energy Solution battery packs.

EOL battery collections steady for the quarter

B-cycle, the Australian government-backed battery recycling scheme, has been operational for one year (launch January 2022). Over the past 12 months, Envirostream has experienced increased EOL battery collections due to B-cycle volumes and through brands such as LG Energy Solution. Collections during the quarter were 275 tonnes (September 2022 quarter: 354 tonnes).

Shortfalls in collections were experienced in December 2022 due to Christmas related closures with January 2023 volumes strong following the festive period.

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