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[Ferro-Alloys.com] Australian Vanadium: Quarterly Activities Report

HIGHLIGHTS Upstream – Australian Vanadium Project

• Optimised Feasibility Study (OFS): The first phase of the OFS for the Australian Vanadium Project (Project) delivered key outcomes, including an updated Mineral Resource Estimate

(MRE) and identification of the preferred locations to commence mining and for the processing plant.

• Council Support: The City of Greater Geraldton passed a resolution to support a local planning scheme amendment regarding rezoning of an important Project site.

• Benefits of Federal Government Support: AVL continued to advance detailed engineering and the procurement of long lead items, enabled by Government grant funding.

• Financial Support: A non-binding Letter of Interest was received from the Export-Import Bank of the United States (EXIM), indicating up to US$31 million in potential financing for the Project, underscoring growing support for the development of vanadium projects in Australia.

Midstream – Vanadium Electrolyte

• Approval of Electrolyte Use: Achieved approval for the first use of AVL manufactured electrolyte in a commercial vanadium flow battery (VFB), a significant milestone demonstrating the Company’s capability to produce high purity electrolyte. Downstream – Vanadium in Energy Storage

• Business Development: Through its wholly owned subsidiary VSUN Energy, AVL engaged

with multiple energy offtakers in various Australian States for VFB deployment at utility-scale, advancing relationships with several potential technology providers, landholders and financial investors.

• Delivery of VFB Battery Energy Storage System (BESS): Successfully deployed a VFB containing AVL-manufactured vanadium electrolyte at a Horizon Power site, marking the first operational use of AVL's electrolyte in a VFB BESS.

Corporate

• Research and Development (R&D) Tax Incentive Scheme: Received a total of $2.63 million from the Federal Government’s R&D Tax Incentive Scheme in relation to R&D work undertaken by AVL and wholly owned subsidiary Technology Metals Australia (TMT) in the 2022/23 tax year.

• Financial Position: Cash position of $30.7 million as at 30 September 2024, including restricted cash of $0.4 million.

CEO, Graham Arvidson comments, “The Company’s progress across the upstream Project,

midstream vanadium electrolyte manufacturing and downstream VFB BESS activities is delivering our strategic objectives. Our ongoing work on the OFS underscores the Project’s strength and longterm viability, supported by high-quality engineering that establishes a foundation for excellence in both construction and production. The indication of support from the US EXIM bank and our Federal Government grants demonstrate the Project’s significance and the calibre of the parties that we are attracting. Approvals are progressing for the mine and processing plant sites, with several approval processes nearing completion.

“We are pleased to have been able to progress the delivery of the VFB BESS project for Horizon

Power, hopefully the first of many. This achievement in energy storage marks a key step in our

commitment to build a robust VFB BESS project pipeline and the capability to deliver both BESS

solutions and electrolyte into the growing long duration energy storage market.”

Activities for the quarter ended 30 September 2024 for the Company are as follows:

The Company’s vertically integrated ‘pit-to-battery’ strategy aims to use vanadium oxides from its upstream vanadium mining and processing Project for its midstream manufacture of vanadium electrolyte which, in turn, can be used in its downstream VFB BESS installation and maintenance business.

UPSTREAM – AUSTRALIAN VANADIUM PROJECT

The Company continued to advance the development of its upstream Project, which includes a

minesite and a crushing, milling and beneficiation plant (CMB plant or concentrator) located at Gabanintha, near Meekatharra in Western Australia and a processing plant at Tenindewa, near Geraldton in Western Australia

Progress with Optimised Feasibility Study

Significant progress was made on the OFS for the Project, which is focussed on the integration of the adjoining projects post-merger with TMT.1 The first phase of the OFS has been completed and during the quarter the Company announced that it had delivered the following significant milestones:

• Updated MRE showing a 39% increase in Measured and Indicated categories for the high grade vanadium domain and increased iron grades.

• Identification of optimal location to commence mining due to higher vanadium and iron concentrate grades and favourable weathering attributes for economic mining.

• Identification of optimal processing plant location at Tenindewa, near Geraldton in Western Australia, providing technical and economic advantages.

AVL continues work on the next phase of the OFS for the Project, with upcoming key milestones including:

• Finalising the detailed mining plan using the results of the updated MRE.

• Optimising the project infrastructure, including proposed roads and pit designs.

• Completing the layout and key design criteria for the CMB plant at Gabanintha and processing plant at Tenindewa.

The OFS continues alongside the approval processes for both locations, as well as ongoing offtake

and financing discussions. The OFS will enable AVL to have an up-to-date technical and economic

study available for potential funding partners, including Australian Government agencies. Project Approvals Permitting and approval processes continued through the quarter, including the following:

Minesite and CMB Plant

• The environmental approvals process commenced by TMT for its part of the Gabanintha site continued with the Environmental Protection Authority (EPA) issuing an assessment report with recommended conditions in February 2024. Following a 21-day appeal period, one appeal was received. The Office of the Appeals Convenor (OAC) has worked with the appellant, AVL and the EPA to address the appeal. The EPA’s role is now complete. The OAC will provide a report and potential changes to the conditions to the Minister for consideration and authorisation.

• The separate environmental approval process commenced by AVL for the minesite and CMB plant at Gabanintha has continued following the merger with TMT. AVL has been reviewing and optimising the design of the combined Project through its work on the OFS and in discussions with the Traditional Owners. AVL continues to focus on executing the approval pathway to ensure that Project changes are reflected in the EPA approval process.

Processing Plant

• AVL submitted a development application to the Department of Planning, Lands and Heritage (DPLH) via the State Development Assessment Unit (SDAU) in December 2021 and initiated a local planning scheme amendment process with the City of Greater Geraldton (CoGG) to allow for a rezoning of the land from “Rural” to “General Industry”. In response to public submissions received regarding the development application and scheme amendment, final updated Air Quality Assessment and Bushfire Management Plan reports were provided to both the SDAU and CoGG.

• During the quarter, the CoGG council passed a resolution to support the local planning scheme amendment. The council considered various issues raised by stakeholders during the public submission period, which resulted in the council supporting the amendment with modifications, all of which are supported by AVL. The council’s resolution has been forwarded to the WA Planning Commission for review, after which it will be determined by the Ministerfor Planning, followed by

gazettal within the legislated timeframe of 90 days.

Offtake

AVL is pursuing multiple avenues for vanadium offtake, including engagement with traditional steel end users and commodity traders, along with potential new offtakers in the energy and defence sectors. Work is also being undertaken on offtake of the proposed iron concentrate coproduct, with progress having been made towards forming binding offtake agreements.

MIDSTREAM – VANADIUM ELECTROLYTE

AVL continued the process of qualifying its vanadium electrolyte with several international VFB original equipment manufacturers (OEMs), aiming for certification in the coming months. During the quarter, the Company achieved approval for the first commercial use of AVL-produced electrolyte in a VFB BESS, a significant milestone demonstrating its capability to produce high purity electrolyte. The electrolyte has been utilised in a battery for Horizon Power (please see the downstream section below for further details).

The electrolyte manufacturing facility has provided the Company with the opportunity to showcase its capabilities and educate various stakeholders on AVL’s strategy across the entire vanadium value chain. This quarter, the Company hosted the Hon Roger Cook MLA, Premier of Western Australia; a delegation from the Innovate UK Global Business Innovation Programme battery technologies mission and two delegations from South Korea.

During the quarter, the Company continued to make significant progress in establishing the key partnerships required to underpin an energy storage solutions strategy for VSUN Energy. This involved multiple engagements with electricity market participants across the National Electricity Market (NEM) and the Western Australian Wholesale Electricity Market (WEM) who are seeking solutions for Long Duration Energy Storage (LDES). In addition, VSUN Energy has continued to work with VFB OEMs to optimise the development of grid-scale VFBs, alongside deployment contractors. As part of this process, VSUN Energy has engaged with potential funding partners, together with specialist consultants, to quantify the value of a VFB BESS to the electricity market.

Horizon Power VFB BESS project

During the quarter, AVL announced the successful completion of factory acceptance testing of a VFB BESS, which has been installed at a Horizon Power site in Kununurra, Western Australia, where it is undertaking site acceptance testing. The 220kWh VFB, which is designed to deliver up to 78Kw of power, was purchased by Horizon Power for a long duration energy storage pilot.4 The VFB contains vanadium electrolyte manufactured by AVL at the Company’s electrolyte manufacturing facility in Perth.5 This marks the first instance of AVL’s vanadium electrolyte being used in an operational VFB and the first instance of AVL’s electrolyte being approved for commercial use by a leading VFB manufacturer, Invinity Energy Systems plc, meeting stringent quality standards. Horizon Power is Western Australia’s regional energy provider. The use of long duration energy storage, in the form of VFBs, could assist Horizon Power to accelerate the decarbonisation of its 140 energy networks spread throughout a service area covering 2.3 million square kilometres.

The Company was pleased to be able to welcome the Hon David Michael MLA, Western Australian Minister for Mines and Petroleum, Ports, Road Safety, Minister Assisting the Minister for Transport, to visit the battery on a trip to Kununurra. Minister Michael has been following the progress of the battery since his attendance at the opening of AVL’s vanadium electrolyte manufacturing facility earlier this year. Horizon Power’s Acting CEO, Jennie Milne, also attended the site visit.

• [Editor:tianyawei]