Processing hub for European lithium supply

Rock Tech Lithium 18 December 2020 Update
Download PDF

Rock Tech Lithium

Processing hub for European lithium supply

Mining prospects

Metals & mining

18 December 2020

Price

C$1.10

Market cap

C$54m

C$1.2759/US$

Net cash (C$m) at end-September 2020

1.0*

*Pre-Q420 equity fund-raising of C$8.5m.

Shares in issue (thousands)

48,805

Free float

65%

Code

RCK

Primary exchange

TSX-V

Secondary exchange

Frankfurt

Share price performance

%

1m

3m

12m

Abs

12.2

86.4

144.4

Rel (local)

7.8

71.6

136.4

52-week high/low

C$1.18

C$0.37

Business description

Rock Tech Lithium (RCK) is a lithium exploration and development company. Its flagship asset is the 100%-owned Georgia Lake hard-rock lithium pegmatite project in Ontario, Canada, which is currently at the PEA stage of development.

Next events

Q420/FY20 results

March 2021

Q121 results

May/June 2021

Analyst

Charles Gibson

+44 (0)20 3077 5724

Rock Tech Lithium is a research client of Edison Investment Research Limited

Since our last note on the company in June, Rock Tech (RCK) has announced the results of an updated preliminary economic assessment (PEA) on its Georgia Lake lithium project in Canada and raised an additional C$8.5m. The updated PEA used the economic outputs of its October 2018 PEA to include a lithium hydroxide converter to create a fully integrated mining and processing operation. Operating at nameplate capacity, the converter would consume Georgia Lake’s production over 10 years to produce 15,000tpa of battery-grade lithium hydroxide. An alternative case considered a 24,000tpa converter that would operate over 20 years and would require RCK to supplement the feedstock from Georgia Lake with material from third-party spodumene producers.

Year end

Revenue (C$m)

PBT*
(C$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/16

0.0

(1.2)

(5.8)

0.0

N/A

N/A

12/17

0.0

(3.3)

(11.8)

0.0

N/A

N/A

12/18

0.0

(3.4)

(10.1)

0.0

N/A

N/A

12/19

0.0

(1.0)

(3.0)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding exceptional items.

Updated PEA results

Relative to the original 2018 PEA, which demonstrated a project NPV8 of US$165m (or C$4.30 per currently existing share), the updated PEA demonstrated a project NPV8 of US$270m (or C$7.06/share) for the 15,000tpa lithium hydroxide plant and US$875m (C$22.88/share) for the 24,000tpa plant. The internal rates of return for each were 24.2% and 30.9%, respectively. The updated PEA was based on a scenario in which RCK’s spodumene conversion plant was assumed to be located in Canada, which resulted in the lowest capital and operating cost environment. However, locating the plant in Europe has the potential to make the project eligible for material EU subsidies and RCK is in the process of evaluating these options as it advances the project towards pre-feasibility status.

Recent cash raising bolsters cash position

RCK had net cash of C$1.0m as at end-September 2020, since which time it has raised a further C$8.5m via the sale of 10.0m units of one share plus one warrant each at a price of C$0.85/unit. This compares with a cash burn rate of C$1.6m per annum for the four years FY16–19 (inclusive).

Valuation: EV just 12.8% of NPV8; perhaps just 4.0%

RCK’s enterprise value (EV) of C$44.1m (estimated end-FY20) equates to 12.8% of its updated Georgia Lake PEA NPV8 for a 15,000tpa lithium hydroxide plant and just 4.0% of its updated PEA NPV8 for a 24,000tpa plant. This compares with the analysis in our report Gold stars and black holes (published in January 2019), which found that companies with projects at the PEA stage of development that used an 8% discount rate on average had EVs that equated to 12.3% of NPV8 (within a range of 0.2–34.1%). As such, the market appears to be almost entirely ignoring the potential of the 24,000tpa development option.

Strategic thinking

RCK’s strategy is to leverage its novel proprietary processes, robust European network and PEA-stage Georgia Lake lithium project in Canada to become a fully integrated, low-cost and reliable supplier of lithium chemicals to the European electric vehicle market.

Since our last note on the company (see Georgia (Lake) on my mind, published on 12 June 2020), RCK has made a number of announcements including, most significantly:

The results of an updated PEA on its Georgia Lake lithium project in Thunder Bay, Ontario, on 4 November.

On 10 November, a private placement to raise C$5.0m via the issue of 5,882,353 units (of one share and one warrant each) at a price of C$0.85/unit, which was subsequently increased, on 30 November, to C$8.5m via the issue of 10,000,000 units.

Updated PEA

In 2018, RCK announced a mineral resource estimate at Georgia Lake of 13.29Mt at a grade of 1.09% lithium oxide (at a relatively conservative 0.65% cut-off grade), of which 49% was in the measured and indicated categories. Later in the same year, it announced the results of a PEA at Georgia Lake. Compiled by international mining consultant DMT, the PEA envisaged producing 1.1Mt of 6.2% Li2O chemical-grade spodumene concentrate over 11 years at a rate of 96,000tpa. However, it excluded any production from additional inferred resources on other areas of the property, which could have increased the mine’s life further. Within this context, the PEA estimated pre-production capex of C$65.3m, annual steady-state EBITDA of C$64.2m, an 11-year mine life, a pre-tax IRR of 62.2%, a 3.5-year payback period and a post-tax NPV8 of C$210m.

In 2020, RCK engaged Wave and DMT to update the PEA, using the economic outputs of the original piece of work, to include a lithium hydroxide converter to create a fully integrated mining and processing operation. Operating at nameplate capacity, the converter would consume Georgia Lake’s production over 10 years at an average rate of 105,000tpa to produce 15,000tpa of battery-grade lithium hydroxide monohydrate (LiOH.H2O) via the conventional sulphate processing route. An alternative case also considered a 24,000tpa converter that would operate over 20 years and would require RCK to supplement the available raw material feedstock from Georgia Lake with imported materials from existing and established spodumene concentrate producers and also possibly via a consolidation of lithium assets in northern Ontario. Within this context, RCK has announced that it has entered into a Letter of Intent with Avalon Advanced Materials to assess the technical and economic feasibility of a jointly operated lithium sulphate processing facility in Thunder Bay, which would be designed to accept lithium mineral concentrates from both Rock Tech’s and Avalon’s 100% owned hard rock lithium deposits and convert them into lithium sulphate as a precursor to subsequent lithium hydroxide production.

On 4 November 2020, RCK announced the results of its updated PEA, which may be summarised as follows with respect to the original:

Exhibit 1: Updated PEA results

Parameter

Original 96,000tpa spodumene concentrate plant*

15,000tpa LiOH plant

24,000tpa LiOH plant

Initial capital expenditure (US$m)

51

353

457

Average annual LiOH sales (tpa)

13,914

24,016

Average LiOH price received (US$/t)

14,612

14,813

C1 opex (US$/t LiOH)

5,956

7,199

All-in sustaining costs (US$/t LiOH)

6,546

7,561

Average annual revenue (US$m)

203

356

Average annual operating cost (US$m)

75

165

Average annual EBITDA (US$m)

50

120

179

Pre-tax internal rate of return (%)

62.2

24.2

30.9

Post-tax project NPV8 (US$m)

165

270

875

Post-tax NPV8 (US$/share)

3.37

5.53

17.93

Post-tax NPV8 (C$/share)*

4.30

7.06

22.88

EV**/Project NPV8 (%)

21.0

12.8

4.0

Source: Rock Tech Lithium, Wave International, Edison Investment Research. Note: *Converted from C$ at prevailing rate of C$1.2759/US$; **Estimated end-FY20.

Note that, within the industry, a 16,000tpa plant is generally considered to be entry point capacity for a western plant, based on capital cost intensity, as well as operating cost efficiency and the ability of the plant to pay back initial capex in an acceptable time frame. Above this, the alternative plant capacity of 24,000tpa is considered to provide optimal capital cost intensity given that, above this level, a second calcination kiln is required.

For the purposes of the study, capital and operating costs were estimated to a Class 5 level of accuracy (on a scale of 1–5, where 1 is most accurate), which is consistent with a PEA, as opposed to a higher (eg pre- or definitive feasibility) level of study.

PEA background

The results of the updated PEA were based upon an earlier trade-off study conducted by Wave for RCK, which considered seven potential processing options for the company. While the majority of the potential options can probably be discounted for the purposes of this report, three are worth highlighting:

The first option involved mining lithium ore and producing a spodumene concentrate at Georgia Lake in Canada and then exporting the concentrate to Germany for conversion into a lithium sulphate intermediate product and then, finally, into lithium hydroxide. In this case, the entire chemical processing operation would be undertaken in Germany. The particular advantage of this option is that it directs 100% of the ultimate lithium hydroxide product into the European market, where RCK has a competitive advantage in terms of its structure and existing consumer relationships. Its disadvantage is that it involves the long-distance transportation of relatively high volumes of relatively low value spodumene concentrate.

The second option was identical to the first, except that it involved the entire processing operation being conducted in Canada and the output of the plant being sold in North America. The advantage of this option is that it gives the chemical plant access to Canada’s relatively cheap hydro-electricity and avoids the logistical requirement of exporting and transporting any bulk chemicals or precursors, other than the finished lithium hydroxide product. Note however that lithium hydroxide (like sodium hydroxide, or caustic soda) is highly hydrophilic and would inevitably take up humidity on an ocean voyage, rendering it unsuitable to be exported to Germany in this form as it would require an additional c US$1,200/t in costs to reconvert it back into battery-grade LiOH upon arrival. As such, this option would have the effect of barring the output of the process from its natural end-market.

The last option involved the beneficiation of lithium ore in Canada into a lithium sulphate intermediate product, which would then be exported to Germany for onward processing into lithium hydroxide. Unlike lithium hydroxide, lithium sulphate is not strongly hydrophilic and may therefore be expected to arrive in Germany unadulterated by humidity. Owing to the lower volume of material being transported, it would not attract the costs of exporting concentrate (as in the first option). It would also ultimately produce lithium hydroxide close to its intended terminal market.

One other, rather innovative scenario considered the production of lithium sulphate in Canada and its export to Germany (as per the last option), but then its conversion into lithium hydroxide via an alternative nitrate (rather than the conventional sulphate) processing route. This option requires further technical work, especially into the economics of global reagent pricing. However, its specific advantage is that it removes the need for impurity removal and ion exchange at the point of lithium sulphate production in Canada and therefore reduces the complexity of its synthesis.

The updated PEA is based upon the second (all-Canada) option, which offered the most competitive capital and operating costs. However, RCK’s preferred option is the last one (lithium sulphate to Germany). Although it had neither the lowest capex nor the lowest opex of all of the options considered, it was considered globally competitive as well as achieving the strategic aim of accessing the European lithium hydroxide market, as opposed to the North American one. More analysis of this (preferred) option is provided in the section below.

RCK’s preferred option: Lithium sulphate to Europe

Current (conventional) spodumene processing

Globally, the majority of lithium produced from hard rock sources is derived from the mineral spodumene (LiAlSi2O6), the lithium content of which is approximately 3.7%. Conventional processing of spodumene involves froth flotation and/or gravity separation to generate a concentrate of c 6% lithium content followed by either roasting and acid leaching (typically) or carbonate leaching (less typically) to form lithium sulphate, from which either lithium carbonate or lithium hydroxide may then be synthesised.

Alternative RCK processing

In contrast to the conventional process flow route, RCK’s concept is to use its Georgia Lake project in Ontario, in the first instance, to provide technical-grade feedstock for its battery-grade lithium hydroxide production plant in Germany or Europe. The immediate advantages of such a ‘dual location’ strategy are the availability of subsidies in the EU for such value-added manufacturing, and the materially reduced transportation costs and emissions engendered by completing significant raw material upgrading close to the mine site. Conceptually, lithium sulphate would then be transported to a refinery in Western Europe for onward processing.

In simple terms, one tonne of 5% spodumene concentrate contains 23.3kg of lithium metal, which is sufficient to produce 183.3kg of pure, intermediate lithium sulphate, which can itself then be converted into 123.2kg of pure lithium carbonate with a market value of US$721 (at currently prevailing prices) or 139.8kg of pure lithium hydroxide monohydrate with a market value of US$1,433 (assuming no processing losses). On this basis, using lithium sulphate as an intermediate feedstock for the industry is feasible (note: on a profit and loss, rather than a return on capital, basis) as long as purchase and processing costs, combined, do not exceed US$1,586 per tonne of lithium sulphate for supply to lithium carbonate producers or US$5,472/t for supply to lithium hydroxide monohydrate producers.

SWOT analysis

RCK’s Georgia Lake project already benefits from its proximity to power sources and the national grid. It also has easy access to a transcontinental rail station and a deep-sea port less than 200km away, providing options for product delivery to end-users.

An initial SWOT analysis of RCK’s preferred option is as follows:

Strengths: low production costs, materially reduced shipping cost and emissions, and more affordable subsequent processing into lithium hydroxide.

Weaknesses: a new process, which will need to undergo pilot plant and industrial-scale testing before becoming generally acceptable.

Opportunities: subsidies currently available in Europe for the development of the lithium-ion battery industry. If successful, the lithium hydroxide manufacturing plant in eg Germany could become a hub for the upgrading of additional feedstock, sourced from Europe and around the world, as well as Georgia Lake material.

Threats: competing technologies; weaker than expected demand growth.

Variations

RCK is in the process of advancing its integrated project towards a pre-feasibility study (PFS), which is likely to consider two options, being the all-Germany and all-Canada ones. However, a variation on the all-Germany option is for RCK to site its lithium conversion plant in Romania, in particular, to which end we understand that senior management has been in talks with the Romanian prime minister, its finance minister, its environmental minister and its EU minister. Among other things, it is thought that this may make the chemical conversion plant eligible for a wider range of European subsidies.

RCK’s business model

Given the different exigencies of operating a spodumene mine and a chemical conversion plant, RCK’s business model is not that of a typical junior mining company of raising finance and developing a mine, but rather one that is more closely akin to that of a portfolio manager with a specific focus on minimising dilution for existing equity holders.

In the case of the 24,000tpa plant, RCK envisages initial capital expenditure of US$457m being financed in the ratio ⅓:⅓:⅓ subsidies:debt:equity – ie c US$152m each. In the case of the equity component, it envisages setting up a management company for the converter, which would be remunerated via a management fee (analogous to portfolio managers’ 2% plus 20 basis point charges for assets under management and performance) and funding only a 10% equity stake for c US$15m, with external equity partners funding the balance.

Up to project financing, RCK estimates that it will need to spend an additional US$15m on studies, of which C$8.5m has already been raised. As such, management anticipates one further equity raising in 2021 and one final (maximum) equity raising of US$15m (C$19.5m) as its share of the equity financing of the 24,000tpa plant project. On this basis, total (maximum) equity to be raised would be c US$23m (C$30m), or no more than 56% of the company’s current market capitalisation.

The lithium market

Recent developments

COVID-19

The COVID-19 pandemic has inevitably had an effect on the lithium price (both in the form of lithium carbonate and lithium hydroxide – see Exhibit 2), as a temporary reduction in electric vehicle demand has fed back up the supply chain to the spodumene producers. With the price of spodumene concentrate now well below levels that will incentivise future supply, producers have curbed both current production and future development plans to the point that commentators now widely believe that although demand in 2025 is likely to be in the order of 13% lower than pre-pandemic levels, supply will probably be c 10% lower as well. As a result, as evidence of a recovery in electric vehicle sales has mounted in the key market of China in the September to November period, longer-term price expectations for lithium carbonate have remained broadly unchanged around the US$10,000/t level.

Tesla

One consequence of the uncertainty surrounding future lithium chemical supply however has been to tempt Tesla to vertically integrate upstream by acquiring the rights to a 10,000 acre lithium clay deposit in Nevada to underwrite its planned 30x increase in battery manufacturing capacity (measured in GWh) over the course of the next decade to underpin its electric vehicle production target of 20m units in 2030.

In addition to mining lithium clay, Tesla has disclosed that it intends to construct a spodumene conversion facility in Texas in order to supply its own cathode plant. While this move has been widely interpreted as adding to the supply of lithium chemicals in future years, we prefer to interpret it as bringing a base-load of supply, that would otherwise have to be contracted externally, in-house. In the first instance, this is likely to reduce price volatility. However, lithium supply is still expected to need to expand by in excess of 10x to meet global demand in 2030, so that the effect of new lithium mining and processing projects operated by Tesla and any other auto manufacturers that wish to enter the market may be to create a benchmark pricing level around the incremental cost of production at their mining and chemical operations, rather than simply displacing other sources of supply.

Lithium hydroxide monohydrate price

Edison’s long-term lithium hydroxide monohydrate price is US$14,021/t, which we first adopted in February 2019. At the time, both the lithium carbonate price and the lithium hydroxide price were relatively high (see Exhibit 2, below), albeit the premium of lithium hydroxide relative to lithium carbonate was relatively low (see Exhibit 3, below):

Exhibit 2: Lithium hydroxide price and lithium carbonate price, January 2013 to present (US$/t)

Exhibit 3: Lithium hydroxide price premium vs lithium carbonate, January 2013 to present (US$/t)

Source: Bloomberg, Edison Investment Research

Source: Edison Investment Research. Note: Underlying data from Bloomberg and Edison Investment Research.

Exhibit 2: Lithium hydroxide price and lithium carbonate price, January 2013 to present (US$/t)

Source: Bloomberg, Edison Investment Research

Exhibit 3: Lithium hydroxide price premium vs lithium carbonate, January 2013 to present (US$/t)

Source: Edison Investment Research. Note: Underlying data from Bloomberg and Edison Investment Research.

At the time therefore, our February 2019 long-term lithium hydroxide price was derived from a long-term lithium carbonate price of US$12,000/t and an anticipated lithium hydroxide premium of 16.8% per tonne. Note that in terms of lithium metal units alone, lithium hydroxide monohydrate would be expected to trade at a discounted price relative to lithium carbonate in the ratio 74:84 based on the different masses of the two salts per mole of lithium ions. The fact that it trades at a premium to lithium carbonate and that it has a lower volatility relative to its mean price is, to some extent, indicative of its increasing attractiveness as a chemical input for lithium-ion battery manufacturers.

Since February 2019, the prices of both lithium carbonate and hydroxide have continued to fall. However, after initially remaining low, since February of this year, the lithium hydroxide premium has increased sharply as the price of more specialised lithium hydroxide has stabilised while that of the more commoditised lithium carbonate has continued to fall. As a result, in the past five months, lithium hydroxide has recovered the premium price (and more) relative to lithium carbonate that it used to enjoy prior to May 2017 (Exhibit 3).

One potential interpretation of this trend is that the lithium hydroxide price premium (in percentage terms) is inversely correlated with that of lithium carbonate (ie a high lithium carbonate price correlates to a low lithium hydroxide price premium and vice versa) and this is, to some extent, borne out by statistical analysis. A regression analysis between the two (see Exhibit 4), reveals a Pearson product moment (correlation) coefficient of -0.63, which, given the number of data points in the analysis, is statistically significant at the 5% level (ie there is less than a 5% chance that the observed relationship occurred by chance).

Exhibit 4: Lithium carbonate price (US$/t) vs lithium hydroxide price premium (%)

Source: Edison Investment Research

However, if data points prior to February 2016 (when the lithium market became more dynamic – see Exhibit 2) are excluded from the analysis, the correlation coefficient improves to -0.89, as shown in Exhibit 5, below, which also shows the price premium that is required for lithium hydroxide relative to lithium carbonate in order to achieve a lithium hydroxide price of US$14,021/t (the grey curve).

Exhibit 5: Lithium carbonate price (US$/t) vs lithium hydroxide price premium (%), post February 2016

Source: Edison Investment Research

As can be seen from the analysis:

Any long-term lithium carbonate price above US$9,500/t may be consistent with a lithium hydroxide price at or above US$14,021/t.

A long-term lithium hydroxide price of US$14,021/t is consistent with a long-term lithium carbonate price of US$10,325/t and a lithium hydroxide price premium of 35.8% (the intersection of the linear best-fit regression line with the ‘Required’ curve).

Above a long-term lithium carbonate price of US$11,500/t, the lithium hydroxide price is almost certain to be above US$14,021/t.

As a consequence of this analysis, we are maintaining our long-term lithium hydroxide price of US$14,021/t in anticipation of the long-term lithium carbonate price being at or above US$10,325/t.

Valuation

RCK’s enterprise value of C$44.1m (estimated end-FY20) equates to 12.8% of its updated Georgia Lake PEA NPV8 for a 15,000tpa lithium hydroxide plant and just 4.0% of its updated PEA NPV8 for a 24,000tpa plant (see Exhibit 1). This compares with the analysis in our report Gold stars and black holes, published in January 2019, which found that companies with projects at the PEA stage of development that used an 8% discount rate on average had EVs that equated to 12.3% of NPV8 (within a range of 0.2–34.1%).

It also equates to US$96.88 per resource tonne of lithium carbonate equivalent contained at Georgia Lake.

Financials

RCK had net cash of C$1.0m as at end-September 2020, since which time it has raised a further C$8.5m via the sale of 10.0m units of one share plus one warrant each at a price of C$0.85/unit. This compares with a cash burn rate of C$1.6m per annum for the four years FY16–19 (inclusive).

Exhibit 6: Financial summary

C$'000s

2016

2017

2018

2019

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

0

0

0

0

Cost of Sales

0

0

0

0

Gross Profit

0

0

0

0

EBITDA

 

 

(1,191)

(3,276)

(3,442)

(1,048)

Operating Profit (before amort. and except.)

(1,194)

(3,279)

(3,445)

(1,049)

Intangible Amortisation

0

0

0

0

Exceptionals

45

3

0

0

Other

0

0

0

0

Operating Profit

(1,149)

(3,276)

(3,445)

(1,049)

Net Interest

0

0

0

0

Profit Before Tax (norm)

 

 

(1,194)

(3,279)

(3,445)

(1,049)

Profit Before Tax (FRS 3)

 

 

(1,149)

(3,276)

(3,445)

(1,049)

Tax

0

0

0

0

Profit After Tax (norm)

(1,194)

(3,279)

(3,445)

(1,049)

Profit After Tax (FRS 3)

(1,149)

(3,276)

(3,445)

(1,049)

Average Number of Shares Outstanding (m)

20.7

27.8

34.0

35.0

EPS - normalised (c)

 

 

(5.8)

(11.8)

(10.1)

(3.0)

EPS - normalised and fully diluted (c)

 

(5.8)

(11.8)

(10.1)

(3.0)

EPS - (IFRS) (c)

 

 

(5.5)

(11.8)

(10.1)

(3.0)

Dividend per share (c)

0.0

0.0

0.0

0.0

Gross Margin (%)

N/A

N/A

N/A

N/A

EBITDA Margin (%)

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

2,008

2,989

3,542

3,840

Intangible Assets

1,995

2,978

3,533

3,833

Tangible Assets

14

11

9

7

Investments

0

0

0

0

Current Assets

 

 

3,242

2,959

1,299

1,731

Stocks

0

0

0

0

Debtors

150

62

72

80

Cash

3,087

2,898

1,227

1,651

Other

5

0

0

0

Current Liabilities

 

 

(306)

(344)

(292)

(243)

Creditors

(306)

(344)

(292)

(243)

Short term borrowings

0

0

0

0

Long Term Liabilities

 

 

0

0

0

0

Long term borrowings

0

0

0

0

Other long-term liabilities

0

0

0

0

Net Assets

 

 

4,944

5,605

4,548

5,328

CASH FLOW

Operating Cash Flow

 

 

(689)

(1,218)

(1,703)

(1,037)

Net Interest

2

0

0

0

Tax

0

0

0

0

Capex

(461)

(854)

(477)

(287)

Acquisitions/disposals

121

7

0

0

Financing

3,972

1,876

509

1,747

Dividends

0

0

0

0

Net Cash Flow

2,944

(189)

(1,671)

424

Opening net debt/(cash)

 

 

(143)

(3,087)

(2,898)

(1,227)

HP finance leases initiated

0

0

0

0

Other

0

0

0

0

Closing net debt/(cash)

 

 

(3,087)

(2,898)

(1,227)

(1,651)

Source: Company sources, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Rock Tech Lithium and prepared and issued by Edison, in consideration of a fee payable by Rock Tech Lithium. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Rock Tech Lithium and prepared and issued by Edison, in consideration of a fee payable by Rock Tech Lithium. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues