Objective Capital's Rare Earths, Speciality & Strategic Metals Investment Summit 2011 Ironmongers' Hall, City of London 17 March 2011 Speaker: Gerry Clarke, Strategic Metals Expert

1. RARE EARTHS, SPECIALITY
& STRATEGIC METALS
INVESTMENT SUMMIT
Lithium oversupply?
Gerry Clarke – Strategic Metals Expert
IRONMONGERS’ HALL, CITY OF LONDON ● THURSDAY, 17 MAR 2011
www.ObjectiveCapitalConferences.com

2. Lithium Oversupply?
Rare Earths, Speciality & Strategic
Metals Investment Summit
Gerry Clarke
Objective Capital 17 March 2011

3. Lithium Consumer Awareness
Mood stabilising drugs since the 19th century
1929 lithium citrate a component for a hangover cure
Mundane spectrum of uses
7Up
Late 20th century the preferred battery for portable computers,
communications devices & tools
Today – one of the best known elements – consumer goods
Future -- auto mobility, grid storage, nuclear

4. Lithium in transition post millennium
Forecasts of prospective automotive demand growth
so disproportionate to established lithium markets,
exacerbated by ill-informed opinion concerning
lithium reserves and resources, spawned wide-
ranging commentary as to whether or not there is
sufficient lithium available in the Earth’s crust and
therefore the capability of the extractive industries
to meet growth prospects. Decades of unexciting
lithium market dynamics with just a few producers
fuelled scepticism and created the conditions that
have led to a gold-style “rush” by the industry to
prove otherwise. Pain looks an inevitability for many.

5. Scene Setter
Pre-2000
Through 1990s markets stable, well known, generally unexciting growth
Small batteries for hand held devices and power tools growing demand
During 1990s supply restructured with entry of SQM in 1996
Major shift from minerals in USA to brines in Chile
Lithium carbonate prices fell 60%: $4,300 (‘95) to $1,600/te (‘99)
Post-2000
New markets exciting: automotive, high tech, energy related, green
Alarmist statements made over lithium resource adequacy
Lithium rush accelerates: today 50 companies support 82 projects
The four established major producers are all expansionist
Lithium carbonate prices now in the $4,500-5,000/te range (SignumB)
Demand forecasts difficult , range up to 283k tpa LCE in 2020 (Byron Capital)
Recycling lithium from batteries 2030s expected to reduce primary demand

6. What is lithium?
• A highly chemically reactive element not
found on Earth in elemental form.
• The commercial world uses the name of the
element when talking about the array of
lithium resource types, supply and demand.
• Lithium is a very broad term of convenience.

7. Terrestrial Lithium Occurrence
Sodium Magnesium Potassium Lithium
Earth’s Crust (ppm*) 23,000 29,000 15,000 17
Sea Water 11,050 1,326 416 0.18
Lithium is the lightest and smallest metallic element. Geochemically, lithium
is relatively rare having an average crustal abundance value of just 17 ppm
which compares with 23,000 ppm for sodium. However, geological processes
provide traps for all elements at different stages of crustal evolution which act
to concentrate many of them to levels that far exceed their average crustal
abundance values. Lithium is elusive until the later stages of geochemical
differentiation where it is found trapped in crystalline form in older intrusive
igneous rocks, in younger sedimentary sequences, and in solution in naturally
occurring brines.
*ppm: parts per million

8. Lithium Resources Types
The lightest, smallest, highly reactive metallic element
17 ppm crustal abundance, 150 mineral species, 4 brine types
Hard Rock: Spodumene LiAlSi2O6 8.0% Li2O
Petalite LiAlSiO4 4.9% Li2O
Soft Rock: Hectorite Na0.3(Mg,Li)3Si4O10 (OH)2 1.2% Li2O
Jadarite LiNaSiB3O7(OH) 7.3% Li2O
Brines: Continental variable chemistry 200-2700 ppm Li
Geothermal other elements are up to 400 ppm Li
Oilfield important such as up to 700 ppm Li
Seawater K, B, Mg, Br 0.1-0.2 ppm Li
Lithium carbonate now expected to be produced from all resource types
Conversion factors: Li: Li2O: Li2CO3 = 1.00:2.153:5.323

9. Lithium Resource Provinces
High Altitude Continental Plateaus
Americas
Puna Plateau: Argentina salars: Hombre Muerto, Cauchari, Olaroz, Rincon
Bolivia salars: Uyuni, Pastos Grandes
Chile salars: Region II Atacama, Region III various
Clayton Valley: Silver Peak, Nevada, USA
Asia
Western China & Tibet: Qaidam basin salt lakes, Qinghai , China
Zabuye & Dangxiongcuo salt lakes, Tibet
Green colour denotes lithium producing region

10. Lithium Resource Provinces
Hard Rock Pegmatite Veins
Americas: Canada: Ontario & Quebec
USA: North Carolina (former major production)
Brazil: Minas Gerais
Australia: WA: Greenbushes, Mt Cattlin, Mt Marion
Southern Africa: Zimbabwe: Masvingo, Bikita
Congo: Manono& Kitolo, Katanga
Asia: Eastern China: Sichuan, Hunan & Jiangxi Provinces
Northwest China: Xinjiang Province
South Asian Russia: Tuva, Irkutsk &Chita Republics
Europe: Atlantic: Portugal, Spain, Ireland
Alpine: Austria
Fennoscandia: Finland, Russia (Murmansk, Kola)

11. The Lithium Majors
Continental Brines ‘000s mtpa LCE
SQM Salar de Atacama, Chile 40.0 (+??)
Chemetall Foote Salar de Atacama, Chile 38.0 (+17)
FMC Corp S Hombre Muerto, Argentina 17.5 (+5.5)
Hard Rock
Talison Lithium Greenbushes, WA 47.0 (+63.0)
Bikita Minerals Masvingo, Zimbabwe 7.5e (??)
Total 150.0
China brines and hard rock could add 100k tpa LCE
Expansions (if all occur) at all majors add another 86k tpa LCE
Add to this near pipeline development/exploration projects --

12. Automotive Electrification Revolution
A very long time coming as not new
Driven by fear , demographic change, and aspiration:
Peak oil production imminent: fossil fuel resource depletion
Adverse fossil fuel demographics: national energy security concern
Adverse effects of global climate change
Pollution associated with urbanisation and traffic congestion
Mobility aspirations of increasing populations in emerging nations
Structural change transiting from total fossil fuel dependency to mixed dependencies
Resource-rich /Battery technology poor: Argentina, Bolivia, Chile, Australia
Resource-poor/Battery technology rich: China, Korea, Japan
Resource-rich/Battery technology improving: USA, Canada
Resource-poor/Battery technology improving: Europe (Germany, France)
National Roadmaps to electrification
Canada: 500,000 evs by 2018; USA: 1m evs by 2015; Australia: 1m evs by 2015;
Germany: 1m evs by 2020; S Korea: 1m evs by 2015; China: 1m evs by 2015;
Japan: 50% next generation vehicles by 2020 evs: electric vehicles

13. But, it’s not just auto demand (Byron Capital)
Nuclear Energy: Nuclear reactors controlled through absorption of neutrons
Lithium occurs as two isotopes: 7.5% 6 Li & 92.5% 7Li – a good neutron absorber
Safer smaller nuclear reactors being developed, e.g. Japanese micro RAPID (apartments)
RAPID needs 1.9 tonnes 95% 6Li LCE (from 40 tonnes LCE) to produce 200 kW electricity
IAEA forecasts 1,000 such reactors in service by 2040 with 1,900 tonnes LCE in them
A 1.2 GW reactor, 6,000 times RAPID, testing by 2020: would use 11,400 tonnes LCE
Solar Energy: Due to Li ‘s low melting point (181oC) & high heat capacity (3.6J/gK)
Major potential for large scale concentration of solar power
LiNO3 combined with other salts: very low melting toC and very high decomposition toC
Enables far higher energy storage characteristics compared with oils
Greenpeace study: modest 5.5 GW, annual installs by 2015: maybe 7,500 tpa LCE
Glass: Adding 0.10-0.17% Li2O to glass mixture saves energy and reduces costs
Lowers melting temperature by 25oC and energy consumption by 5-10%
Total market penetration for worldwide flat glass production of around 50m tpa
Would require 48 tonnes of Li2O mostly in mineral form : maybe 119, 000 tpa LCE

14. Lithium Demand Forecast (after Byron Capital 2011)
‘000 Tonnes LCE 2008 2011 2014 2017 2020 CAAG%
Long established uses: 73% of total market reducing to 42% over 10 years
Grease, Aluminium, A/C, Casting, Other 52.4 58.9 66.2 74.5 4.2
Glass and ceramics 28.9 33.2 38.4 44.4 5.4
Sub-Total 81.3 92.1 104.6 118.9 4.6
High-tech change uses underway: 27% of total market rising to 43%
Small Batteries 28.2 35.5 44.7 56.3 10.0
Automotive 2.2 15.9 41.7 64.2 28.4
Sub-Total 30.4 51.4 86.4 120.5 29.7
Energy related uses waiting to happen: rising to 15% of total market from zero
Grid storage 0 2.2 8.4 9.7
Solar 0 4.5 8.8 11.0
Nuclear 0 0 0.2 22.7
Sub-Total 0 6.7 17.4 43.5
GRAND TOTAL 118.6 111.6 150.1 208.3 282.8 14.5

15. By 2012 Talison’s Greenbushes, WA capacity will
equal Near Projects in Development
2010 world lithium demand: 110k tpa LCE
Reserves: 9.6m. tonnes 3.9% Li20 (920k LCE) M&I Resources :22.0m tonnes 3.7% Li20 (2m LCE)
Total resource unknown as open along strike & depth. Update reserves statement June 2011
Capacity: 315k tpa spodumene concentrates (47k LCE) going to Plan capacity*
Company Start Location 740k tpa (110k LCE) June 2012
Reviewing potential to establish lithium carbonate plant in Australia
Courtesy: Talison Lithium, Greenbushes, WAAus/China
Galaxy Resources 2011 17k
Orocobre 2012 Argentina 15k
Canada Lithium 2012 Quebec 19k
Western Lithium 2014 Nevada 27k
Lithium Americas 2014 Argentina 15k
Total 93k tpa LCE
*Company published LCE annual capacity

16. Salar de Atacama, Chile
2,800 square kms
All Chile lithium reserves: 7.5m tonnes (USGS)

17. SQM’s final LiCl evaporation pond
In 2010 the brine volume (2,700 ppm Li) pumped to produce 1.5m tonnes
of potash contained such a large volume of lithium in excess of the 40k
tpa LCE capacity that 400k tonnes LCE were reinjected into the aquifer.

18. Pipeline Lithium Projects
Traditional Resource Types
Continental Brines Projects
Orocobre Salar de Olaroz, Argentina Toyota Tsusho 15k* 2012
Rincon Lithium Salar de Rincon, Argentina 1.5k 2011
Lithium One Salar de Vida, Argentina KORES/GS Caltex/LG ? ?
Lithium Americas Salar de Cauchari, Argentina Magna, Mitsubishi ? ?
Comibol Salar de Uyuni, Bolivia KORES pilot 480 ?
Hard Rock Projects
Galaxy Resources Mt Cattlin, WA Mitsubishi/ 17k 2011
Chinese Cathode Makers
Nemaska Exploration Tianqi 25k
Canada Lithium Val d’Or, Quebec Mitsui 20k 2012/13
Nordic Mining Lantta, Finland 4k 2011/12
NB: Scores of other exploration/early development projects down the list roughly evenly split
between brines and minerals *tpa Li2CO3

19. Brines or Mines for Li2CO3
Brines Mines
Capital Expenditure Lower Higher
Unit production cost Lower Higher
Grade Lower/Variable Higher/Consistent
Recovery Lower Higher
Deposit geology Highly variable More predictable
Mineral chemistry Highly variable Predictable
By-product credits Large potential Some potential
Production lead time Longer (harvesting) Shorter (mining)
Ease for expansion Resource dependent Resource dependent
Process complexity Variable – chemistry Est physical/chemical

20. Different Strategies Apparent
Talison Lithium: 25 years as a WA lithium miner in WA Began trading on TSX September 2010
September 2010, stepped into brines by merger with Salares Lithium Inc.
Greenbushes, WA: world’s largest and highest grade (3.9% Li2O) spodumene deposit
Present Greenbushes expansion designed for further expansion and increased recovery
Salares 7 Project: Atacama Region III, Chile; started drilling 2 of 7 brine lakes February 2011
Completed scoping study for Li2CO3 plant W.A. -- potential opex of $US2,800/tLCE indicated
Talison strategy of being in mines & brines: two-pronged strategy for long term & credibility
Galaxy Resources: New WA miner, late 2010 Postponed Hong Kong IPO indefinitely (14/03/11)
Mt Cattlin, WA: Ore grade 1.1% Li2O, 137k tpa spodumene concentrates
Commissioning 17,000 tpa Li2CO3 plant Zhangjiagang Port, Jiangsu Province, 2nd qtr 2011
Acquired 20% in Lithium One’s James Bay spodumene project, 11.75m M+I, 1.3% Li2O
Galaxy focussed on mines and Li2CO3 plant in China
NB: As Galaxy ramps to 137k tpa concs (2011), Talison expands to 315k (‘11) &740k tpa (‘12)

21. Novel Lithium Resource Developments
Brines
Oilfield: Canada, Alberta: Leduc/Beaverhill Form’s: Channel Resources
Recovery of Li, Br, B, K from hydrocarbon well waters
USA, Mid-West: Smackover Formation
Geothermal : USA, Salton Sea, California: Simbol Materials initiated
Production of Li2CO3 (99.999%) & Mn, Zn from geothermal plants
Seawater: South Korea, POSCO
5-year plan to establish 20k-100k tpa C plant by 2014
Soft sedimentary rocks
Hectorite: USA, Kings Valley, northern Nevada: Western Lithium Corp
27.7k tpa LCE, 11m. tonnes LCE history reserve*, 2014 commission
Jadarite: Serbia, Jadar Valley: Rio Tinto Exploration
New mineral, 114m. tonne inferred, 13.1% B2O3, 1.8% Li2O, 2016

22. Lithium Reserves & Resources (USGS 2011)
Resources of which Reserves (tonnes Li)
Argentina 2,600,000 850,000
Australia 630,000 580,000
Bolivia 9,000,000 -
Brazil 1,000,000 64,000
Canada 360,000 -
Chile 7,500,000+ 7,500,000
China 5,400,000 3,500,000
Congo 1,000,000 -
Portugal - 10,000
Serbia 1,000,000 -
USA 4,000,000 38,000
Zimbabwe - 23,000
Total 32,490,000 12,565,000 contained elemental Li
NB: Refer US Geological Survey (USGS) for resource and reserve definitions

23. Prognosis
Projects in Argentina, Australia, Bolivia, Canada, China, Finland, Serbia, USA announced
cumulative target tonnages of at least 228k tpa LCE. Others such as Lithium One in
Canada and Argentina, and Lithium Americas in Argentina set to join the list.
Three of the four majors combined 102.5k tpa LCE capacity increasing to 188k tpa
LCE by 2020. SQM’s intent, to sustain market share, implies at least 268k tpa.
Adding pipeline projects takes combined capacity towards 380k tpa LCE & beyond all
2020 demand forecasts: Byron Capital: 283,000 LCE. TRU Group: 245,000 tpa LCE
A widening lithium supply-demand gap by 2020 looks set for around 100k tpa LCE
Other longer term lithium exploration projects part of broader portfolios including Au,
Ta, Nb, U, REMs, PGMs, add market value and the stock of resource knowledge for
future benefit. Market play profits versus longer term resource knowledge need.
Fall-out from 82 “lithium projects” would appear inevitable in today’s supply
demand scenario but a sceptical world is being shown that there are
substantial lithium resources to partner technological change before lithium
recycling kicks in around 2035.

24. Arguments for supply diversity
What is the reality for majors’ production and expansion?
• Lead times for new pond build, processing expansion,
pumping and concentration time to 6% Li2O: 4-5 years?
Supply diversification
• Corporately -- away from oligopoly
• Geographically -- South America and Australia
• National strategic dimension encouraging resource ID
Two broad geographical markets
• East Asia: China increasing demand to feed under capacity
Japan & South Korea
• Rest of the World:
Resource type: brines variable & unpredictable in nature

25. March 2011 Developments “from left field”
Orocobre, Olaroz, Jujuy Province, Argentina
A new decree, in addition to EIS approval, announced: Exploration and
exploitation level projects will now require assessment by a Committee of
(7) Experts and, following a positive recommendation from this
Committee, approval by the joint resolution of the Minister of Production
and the Secretary General of the Provincial Government.
Orocobre has two projects in Jujuy, one with EIS approval and one in
submission, and a third in neighbouring Salta Province. The company
expects to win approval in close cooperation with Jujuy Province
Rodinia Lithium has distanced itself from the new decree reminding
investors of its two flagship projects in Salta Province (Salar de Diaballos)
and Clayton Valley, Nevada. Rodinia has Salinas Grandes, Jujuy

26. March 2011 Developments “from left field”
Nemaska Exploration closes $3.7m. private placement
with Chengdu Tianqi Industry group March 2011
Heralded last year but closed this month was “new boy” Nemaska
Exploration clinching a deal with China’s leading lithium battery chemical
producer Sichuan Tianqi Lithium Industries Inc.
Tianqi converts spodumene concentrate , imported mainly from Australia ,
to produce Li2CO3 (& others) and, through subsidiaries, has a significant
share of the Chinese lithium market.
Tianqi policy to diversify sources of supply – anecdotally spooked by W.A.’s
now rescinded 40% mineral project tax last year.
Tianqi now looking to markets outside China and longer term potential for
Tianqi to establish conversion plant in Canada.

27. March 2011 Developments “from left field”
Canada Lithium undertaking compliant resource audit
Following internal review indicating a material reduction in the measured,
indicated and inferred mineral resources incorporated in its Oct. 28, 2010 43-
101-compliant report *, Canada Lithium appointed Roscoe Postle and
Associates Inc. to undertake a preliminary independent review of its
previously announced mineral resources.
The review will take a couple of weeks but the ensuing audit is expected take a
number of months. Engineering and design continues. The current mine plan,
developed on the basis of the Oct. 28 20101 compliant report*, will be
reviewed following the review/audit.
*M+I Resources: 46m tonnes grading 1.19% Li2O
Inferred Resources: 57m. Tonnes grading 1.18% Li2O
To early to know whether or not the required review/audit may delay Canada
Lithium from becoming Canada’s first lithium mine into production in 2012

28. Thank You
Keith Evans
Ihor Kunasz
Pedro Pavlovic
Roskill Information Services
Daniela Desormeaux at SignumBox
Many other individuals