Superior Strategic Positioning Corporate Presentation – December 2018 ASX: PLL NASDAQ: PLL ABN 50 002 664 495
Lithium Market Update Demand Growth Accelerating and Supply Delays Persist
Lithium Market Commentary ▪ Tesla Model 3 the #1 selling car in USA EV Demand Accelerating ▪ Wave of new models coming to market ▪ Cost parity has arrived ▪ Producers all under-performing expectations Supply Below Expectations ▪ Big 4 producing nations face challenges ▪ China spot down from 2018 but contract prices high Lithium Prices Remain Strong ▪ Albemarle and Livent contracting at record levels ▪ Required in high-nickel chemistry batteries EV Market Shifting to Hydroxide ▪ Spodumene the low-cost source ▪ Albermarle’s $1.15bb investment in Wodgina Positive Strategic Transactions ▪ Tianqi’s $4.1bb purchase of a 24% stake in SQM ▪ Posco’s $280mm purchase of lithium rights from Galaxy 3
Outstanding Lithium Demand Fundamentals ~10% 5x 1,047 Electric Vehicle Estimated Increase in demand Penetration Rate by 2025 of Lithium by 2025 845 10% 633 Lithium-ion Batteries Other Industrial Applications Glass & Ceramics Industries 489 387 317 270 240 218 189 1% 2017 2025 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Electric Vehicles in Market by 2025 1 Lithium Demand Forecast to 2025 (000’s tonnes ) 2 ~53% 30x Demand of Lithium by Increase in Lithium Supply Batter eries Li-ion Batteries in 2017 Required in 100% EV World 53% Othe her Lithium 2,900% Cobalt 1,900% Nickel 105% Copper 22% Glass Gl ss & Steel -1% Cera eramics PGM -53% Lithium Demand by Market 2017 2 Wall Street Consensus 1 UBS Securities 2018 Research Report 2 4
Wave of New EVs Driving Lithium Demand Tesla Outselling Audi, BMW and Mercedes Combined 25,000 Tesla Model 3 (2018) 20,000 Tesla Model 3 Tesla Model 3 15,000 Jaguar I-Pace(2018 ) Tesla Model 3 Mercedes C + E + CLS BMW 3 + 4 + 5 10,000 Audi 4 + 5 Lexus ES 5,000 Audi e-tron (2019) 0 Porsche Taycan (2019) Source: CleanTechnica 5
Lithium Prices Remain Very Strong Reported Lithium Carbonate Prices $18,000 “…contract prices in 2021 and 2025 are equal to or greater than the 2018 $16,000 sales price with opportunities for price $14,000 increases” – Luke Kissam, Albemarle CEO $12,000 “It’s almost impossible for me to see a meaningful $10,000 decrease in lithium prices” – Paul Graves, Livent $8,000 CEO $6,000 $4,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 2018 Orocobre SQM 6
Cost Parity Has Arrived TESLA MODEL 3 AUDI S4 / BMX 340ix CATEGORY Luxury sport sedan Luxury sport sedan “In the entry -level luxury market, (the 0-60 MPH 4.6 seconds 4.6 seconds Model 3) offers a better product at a RANGE 310 miles ~400 miles lower cost of Tesla Model 3 ownership…” Tesla Model 3 PRICE $55,000 $55,000 “…In the mainstream sedan market, it 5-YEAR FUEL 1 $2,549 $10,194 offers a dramatically superior product at a 5-YEAR MAINTENANCE 1 $3,018 $9,551 similar cost of ownership.” - 5-YEAR INSURANCE 1 $4,430 $4,513 CleanTechnica TAX INCENTIVE 2 ~$11,000 $0 $65,497 / $54,497 5-YEAR TCO 3 $82,696 (pre- / post- incentive) 1. Source: Clean Technica and OEM websites 2. Reflects New Jersey – $7,500 US tax credit plus waiver of 6.625% state sales tax 7 3. Includes insurance, Tesla shown pre-/post-tax benefits
Lithium Supply Disappointments Continue in Q3 2018 3 unplanned shutdowns; volume down 5% Carbonate expansion delay; volume down 15% 6-month stage 2 expansion delay; volume down 36% vs. Q2 Yield Optimization Project project delay; volume down 35% 8-week delay due to late deliveries from OEM suppliers Flotation plant delays H2 production guidance cut 15% 8
Big 4 Producing Nations Face Challenges 40% royalties / ‘war for water’ / active government Hyperinflation / ‘temporary’ 8% export tax High cost power and transport / labor shortages Imported raw materials / 16% VAT on re-exports Low costs and taxes / large market / critical material 9
EV Market Shifting to Hydroxide Hydroxide Demand Carbonate Demand Fast Growth… 400,000 Hydroxide preferred for high-nickel 300,000 tonnes chemistry batteries 200,000 Battery-grade hydroxide to grow from 20,000tpy to 400,000tpy by 2027 100,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Hydroxide Price Carbonate Price 18,000 …Premium Prices… 16,000 US$/tonne “We assume the current ~$2,000 14,000 premium for hydroxide remains constant” – Goldman Sachs & Co. 12,000 10,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 6,165 …and Low Production Costs 5,300 2,000 2,100 3,111 “Spodumene is 15% more cost -effective 3,500 1,975 to produce lithium hydroxide than salt 3,000 brine” – McKinsey & Co. 1,136 665 Brine Spodumene Piedmont Processing to Lithium Hydroxide (Upper Range) US$/tonne Costs Processing to Lithium Hydroxide Processing to Lithium Carbonate Concentrate Mining / Brine Harvesting 10
Piedmont Lithium Superior Strategic Position
Superior Strategic Position ▪ Conventional quarrying and processing Hard-Rock Base ▪ Lower risk and faster ramp vs brine or soft-rock ▪ Integrated spodumene projects at low end of cost curve + ▪ Nickel-intensive cathodes require hydroxide Hydroxide Integration ▪ Hydroxide demand growing 35% per annum ▪ Premium pricing vs. carbonate + ▪ 50+ years of lithium processing in North Carolina ▪ Abundant infrastructure and deep local talent pool North Carolina, USA Location ▪ Low operating costs, royalties and taxes = ▪ Strategic US source of lithium hydroxide ▪ Low-risk and low-cost Superior Strategic Position ▪ First-mover position as only US spodumene project 12
Piedmont Ideally Located in North Carolina # 1 0% 23% ~100% State for Business State Mining Royalties Corporate Tax Rate Historic Lithium Production Forbes 2017 13
North Carolina Cost Advantage Location drives 1 st quartile cost position NORTH CAROLINA WESTERN AUSTRALIA CANADA $42 / Hr $63 / Hr $65 / Hr LABOR 6c / kWh 17c / kWh 4c / kWh ELECTRICITY $0.65 / L $1.02 / L $0.91 / L DIESEL $4.00 / Gj $6.57 / Gj $12.54 / Gj NATURAL GAS $6 / T $46 / T $50 / T TRANSPORTATION 0% 5% 0% GOVERNMENT ROYALTIES 23% 30% 33% EFFECTIVE TAX RATE Source: Public filings, Primero and Company estimates 14
World-Class Spodumene Business + Low unit operating costs + Royalties <1% + Short transportation distances + By-product credits $900 $800 2023 Spodumene Concentrate Cost Curve Production Cost (US$/t Conc. - 6% Li2O) $700 $600 $500 $400 $300 $200 $100 $0 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Cumulatative Concentrate Production (Kt/yr) Source: Roskill, Refined production cost includes all direct and indirect operating costs related directly to the physical activity of producing a refined lithium compounds, including feedstock costs (either from internal sources measured using the all-in sustaining cost of production (site 15 operating plus other costs, as defined above), refining, on-site general and administrative costs and selling expenses. It does not include costs associated with corporate-level administrative expenses.
Positive Impact of By-Products By-products were a large business for past lithium producers in NC Strong local markets for quartz, feldspar and mica Imports represent large market share due to US mine depletions Initial offtake conversations underway with leading market participants Annual Volume Assumed Average Sales By-product Markets (tpy) Price (US$/t) Quartz 99,000 $100 Low-iron glass including solar panel cover glass, industrial ceramics Feldspar 125,000 $75 Glass, frit, and industrial ceramics Mica 15,500 $50 Specialty paints including automotive, filler uses, joint-compound 16
Ultra-Low-Cost Hydroxide Producer + Low-cost spodumene supply + Low input costs - Labor - Electricity - Natural Gas Source: Roskill, Refined production cost includes all direct and indirect operating costs related directly to the physical activity of producing a refined lithium compounds, including feedstock costs (either from internal sources measured using the all-in sustaining cost of production (site 17 operating plus other costs, as defined above), refining, on-site general and administrative costs and selling expenses. It does not include costs associated with corporate-level administrative expenses.
Vast Potential For Project Life Extension Drilling the Exploration Target Consolidating Land on the TSB Follow-up at Central & Sunnyside 18
2019 Catalysts Should Drive Re-Rating 2,690 Mine Life Extension • Land Acquisition • 2018E LCE Exploration Drilling • Production of 20,000t Resource Upgrade • Strategic Arrangements • Lithium Hydroxide Valuations (US$mm) Concentrate Offtake • By-Product Monetization • Chemical Plant Partnering • Permitting • 1,150 PFS / DFS Engineering • Resource of Project Financing • 16.6Mt @ 1.16% in March 2015 Final Investment Decision • 511 391 52 PLL KDR NMX ALB / MIN LTHM 19
Indicative Development Timeline 2018 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Resource Technical Consultants Scoping Study Pilot Plant Met Testwork Phase 4 Drilling – Resource Upgrade PFS Chemical Plant Partner Discussions DFS Permit Submissions Construction Decision Mine / Concentrator Construction & Commissioning Chemical Plant Engineering 20
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