due diligence and valuation report resources - abid report - 12... · due diligence and valuation...

Anson resources – Arrowhead BID 1 ASX: ASN Due Diligence and Valuation Report See important disclosures on page 33 of this report

Due Diligence and Valuation Report

Arrowhead Code: 27-02-02 Company: ANSON RESOURCES LTD

Coverage initiated: 02 July 2018 Ticker: ASN

This document: 12 July 2018 Headquarters: Perth, Australia

Fair share value bracket: AUD 0.13 and AUD 0.18

Share price (12 July 18): AUD 0.16i Chairman Bruce William McLeod

Analysts MD Bruce Andrew Richardson

Auditya Sankaranarayanan Sumit Wadhwa CFO & CS Kim Hogg +1 212 619-6889 +1 212 619-6889 Website: www.ansonresources.com [email protected] [email protected]

Market Data

52-Week Range: AUD 0.01– AUD 0.31ii

Average Daily Volume (3M Avg.): 9,952,885iii

Market Cap (12 July 2018): AUD 69.84 MM

Financial Forecast (in AUD) (FY Ending – June)

AUD ‘000s '18E '19E '20E '21E '22E

High NI (2,277) (4,760) (6,709) 14,838 95,422

High EBIT (2,277) 1,240 791 21,637 83,591

Low NI (2,398) (5,722) (8,303) 7,389 75,315

Low EBIT (2,398) 278 (803) 15,796 67,821

Company Overview: Headquartered in Perth, Anson Resources is engaged in minerals exploration in Australia and the United States. The company was founded in 2009. Along with exploration, company is also involved in acquisition and development of natural resources. The company got listed on Australian Securities Exchange in 2010. The company’s main focus is on extraction of Lithium through its Paradox Lithium Project which is located in Paradox Basin. Apart from it, company also has Ajana Graphite Project and Hooley Wells Nickel Cobalt Project. Previously the company was known as Mayan Iron Corporation Limited before changing its name to Anson Resources in 2010.

H1 2018 results: Anson earned an interest income of AUD 2,352 in H1 2018 compared to AUD 883. The exploration costs increased to AUD 0.7 million in H1 2018 from AUD 0.3 million in H1 2017. The net loss increased to AUD 1.2 million from AUD 0.4 million. The accumulated losses for the company increased by 16% to AUD 9.4 million in H1 2018 from AUD 8.1 million. Cash and cash equivalents for Anson stood at AUD 3.2 million at the end of H1 2018.

Arrowhead is initiating coverage on Anson resources with a fair value bracket of AUD 0.13 in the low bracket and AUD 0.18 in the high bracket scenario using Blended Valuation Method.

Key Highlights: (1) Anson is engaged in the exploration and development of natural resources in Australia and the United States for minerals such as Lithium, Boron, Bromine and Magnesium (2) The Company is based out of Australia and is listed on Australian Stock Exchange (3) The company is conducting sample testing of brines extracted from Clastic Zone 31 at its Utah Paradox Lithium Project, which could be potential share price catalyst (4) Anson Resource completed its Gold Bar Unit 2 sampling program in January 2018 (5) Anson resources has appointed SRK consulting (U.S.) Inc as Technical advisor for its Paradox Basin Project (6) Company received encouraging results from the evaporation tests carried on the brine sample from Cane Creek (7) The company has applied for drilling permit at Paradox Lithium Project (8) The company announced that its wholly owned subsidiary A1 Lithium has submitted the NOI, which contains completed environmental and archaeological surveys, to the BLM for approval to drill a new well at its Paradox Lithium Project in Utah (9) Anson resources announced flow rate of 45,600 gallons per day at Cane Creek

Key Risks: (a) The accumulated losses for Anson Resources grew by AUD 1.7 million to AUD 8.1 million in 2017from AUD 6.4 million in 2016 (b) Negative change in targeted commodities’ prices, or in investors’ sentiments about trends in those prices, could adversely affect the company and its securities

Valuation and Assumptionsiv: Given the due diligence and valuation estimates, Arrowhead believes that Anson resources fair share value lies in the AUD 0.13 to AUD 0.18 bracket calculated using Blended method. We have valued the company using the Blended valuation method, with equal weightage Net Present Value method and EV/Production multiple based valuation. Our NPV model suggests fair value bracket of AUD 0.17 to AUD 0.27, while relative valuation provides fair value of AUD 0.09.


Table of Contents

1. SUMMARY AND OUTLOOK ............................................................................................................................... 4

2. BUSINESS OVERVIEW .................................................................................................................................... 5

2.1 Company Projects ............................................................................................................................................ 5 2.1.1 Paradox Brine Project .................................................................................................................................... 5 2.1.1.1 Exploration and Mining History ..................................................................................................................... 5 2.1.1.2 Recent Drilling and Sampling ....................................................................................................................... 6 2.1.1.3 Key advantages ......................................................................................................................................... 6 2.1.2 Ajana Graphite Project ................................................................................................................................... 7 2.1.3 Hooley Wells Nickel-Cobalt Laterite Project ....................................................................................................... 7 2.1.4 Iconic Minerals Ltd Project .............................................................................................................................. 7 2.2 Business Model ................................................................................................................................................ 7 2.2.1 Adsorption Extraction Method ......................................................................................................................... 7 2.2.2 Precipitation and Solvent Extraction Method ...................................................................................................... 8 2.3 Company Premiums ......................................................................................................................................... 8 2.4 Company Risks ................................................................................................................................................ 8 2.5 Financial Overview ........................................................................................................................................... 9 2.5 Key Variables .................................................................................................................................................. 9 2.6 Shareholding Pattern .......................................................................................................................................10 2.7 Listing and Contact Details ...............................................................................................................................10

3. NEWS ........................................................................................................................................................... 11

4. MANAGEMENT AND GOVERNANCE................................................................................................................. 13

5. INDUSTRY OVERVIEW .................................................................................................................................. 14

5.1 Market Size – Overall and Lithium Carbonate ......................................................................................................14 5.1.1 Non-Ferrous Metals and Mineral Exploration Industry ........................................................................................14 5.1.2 Lithium Industry ..........................................................................................................................................14 5.2 Segmentation – Lithium Industry ......................................................................................................................15 5.2.1 Type of Deposits ..........................................................................................................................................15 5.2.2 Geography ..................................................................................................................................................16

Australia .................................................................................................................................................17 Chilex ......................................................................................................................................................17 Argentinax ...............................................................................................................................................17 Chinax .....................................................................................................................................................17 US ..........................................................................................................................................................17

5.3 Demand Drivers .............................................................................................................................................18 5.3.1 Increasing EV Penetration .............................................................................................................................19 5.3.2 Emerging Energy Storage Market ...................................................................................................................20 5.4 Market Risks ..................................................................................................................................................20 5.4.1 Macroeconomic Factors .................................................................................................................................20 5.4.2 Late Operating Cash flows .............................................................................................................................20 5.4.3 Downturns in Customers’ Industries ................................................................................................................20 5.4.4 Country Environment ....................................................................................................................................20 5.4.5 Weather Conditions ......................................................................................................................................21 5.5 Trends……………………………………………………………………………………………………………………………………………………………………………………… 21 5.5.1 Backward Integration by Automotive Players ....................................................................................................21 5.5.2 Rising M&A Activity ......................................................................................................................................21 5.6 Regulatory Framework ....................................................................................................................................21 5.6.1 Regulations in Australia ................................................................................................................................21 5.6.2 Regulations in Chile ......................................................................................................................................22 5.6.3 Regulations in the US ...................................................................................................................................22 5.6.4 Regulations in Argentina ...............................................................................................................................22 5.6.5 Regulations in China .....................................................................................................................................22 5.7 Competitive Landscape ...................................................................................................................................23 5.7.1 Market Share ..............................................................................................................................................23 5.8 Bromine…………………………………………………………………………………………………………………………………………………………………………………….24 5.8.1 Overview ....................................................................................................................................................24


5.8.2 Market Size and Forecast ..............................................................................................................................24 5.8.3 Growth Drivers ............................................................................................................................................24 5.9 Iodine……………………………………………………………………………………………………………………………………………………………………………………… .25 5.9.1 Overview ....................................................................................................................................................25 5.9.2 Growth Drivers ............................................................................................................................................25 5.10 Magnesium ..................................................................................................................................................25 5.10.1 Outlook.....................................................................................................................................................25 5.11 Boron…………………………………………………………………………………………………………………………………………………………………………………….. 27

6. VALUATION .................................................................................................................................................. 28

6.1 Net Present Value ...........................................................................................................................................28 6.2 Relative Valuation ...........................................................................................................................................29 6.3 Blended valuation ...........................................................................................................................................30

7. APPENDIX .................................................................................................................................................... 32

7.1 Anson Resources’s Balance Sheet Forecast .........................................................................................................32

8. ANALYST CERTIFICATIONS .......................................................................................................................... 33

9. NOTES AND REFERENCES.............................................................................................................................. 34


1. Summary and Outlook

(1) Founded in 2009, Anson Resources is engaged in the exploration and development of natural resources in Australia and the US for precious metals including lithium, graphite and gold. The company got listed on the Australian Securities Exchange in 2010

(2) Paradox Brine Project is a unique lithium project where the company has invested. An exploration target of the lithium-rich brine has been estimated 660 million barrels. Infrastructure facilities, such as road, rail, power and gas, are placed well around this area.

(3) Anson has been holding meetings in China with several prospective customers to discuss signing the agreements for supplying lithium from the company’s Paradox Lithium Project. The companies with which it has been holding discussions are Link Data Technologies Co. Ltd., Far East First New Energy Co. Ltd. and CBAK Power Battery Co. Ltd.

(4) The company ascertained a flow rate of 45,600 gallons per day along with good amount of pressure within the well which will lead to low operating costs.

(5) Anson Resources received encouraging results after 24 days of evaporation test work carried out on the brine sample extracted from the Cane Creek 32-1 well using heat lamps. The concentration of Lithium and Boron increased to 900ppm and 12,250ppm respectively. Magnesium concentrations have started decreasing.

(6) Lithium concentrations of 142 parts per million from Clastic Zone 29, add on to company’s belief that the lithium concentration will continue to increase in frequency to south. The company also expects other minerals such as bromine and iodine can be easily extracted in the proposed processing plant which they have selected for lithium production. Anson’s brine sampling program will continue for most of 2018 as it is an integral part of the company’s exploration program. Also, additional revenue generated by these possible by-products may impact the project’s financial feasibility.

(7) The company received positive results from evaporation test work on lithium brine sample. The lithium concentration increased by 250% to 310 ppm.

(8) The company completed its Gold Bar Unit 2 sampling program in January 2018. Under the sampling program, Lithium was lower than expected whereas high concentrations of bromine, iodine and magnesium were found.

(9) The company acquired Cane Creek 32-1 oil well and associated oil and gas lease at its Paradox Lithium project. The well is strategically placed near the pilot plant industrial lease under consideration by the Utah government. Anson completed its sampling program at Cane Creek 32-1 in March 2018, which yielded significantly higher lithium results along with high concentrations of bromine, iodine and magnesium.

(10) Anson is conducting sample testing of brines extracted from Clastic Zone 31 at its Utah Paradox Lithium Project, which could be a potential share price catalyst.

(11) The company was expected to complete its first production of lithium carbonate in April 2018. This came up as Anson made a steady progress since the achievement of removal of magnesium from synthetic brine in 2017.

(12) Anson Resources Limited has appointed SRK consulting (U.S.) Inc. as Technical advisor for its Paradox Basin Project. During April to June 2017, eight drilling locations were identified, including the re-entry of an existing well. An additional 805 claims were staked just at the cost of the application fee. An exploration target of 660 million barrels was estimated.

(13) Interest income for 2017 stood at AUD 3,530, which was earned through interest on investment. There was a surge in exploration costs which increased to AUD 812,700 from AUD 229,600 in 2016. Net loss stood at AUD 1,744,900 for 2017 compared to AUD 1,329,800 in 2016.

Key Risks: Key risks include the consistent net losses of the company which are affecting its profitability. Also, prices of commodities and regulatory requirements are the other key risks for the organization. Apart from these issues a huge cost is involved in exploration and development of mineral deposits. Since, the company is not generating revenues through its operations, it will be depending on selling equity in the capital markets to finance its working.


2. Business Overview

Founded in 2009, Anson Resources Limited is an Australia-based company which is involved in the exploration, acquisition and development of minerals. Headquartered in Perth, Australia, the company is registered on the Australian Securities Exchange. The company was earlier known as Mayan Iron Corporation Limited and changed its name to Anson Resources Limited in January 2016.At present, Anson has three ongoing projects, of which The Paradox Brine Project remains the flagship venture, while the other projects include Ajana Graphite Project and Hooley Wells Nickel-Cobalt Laterite Project. The company has focused its development efforts on the Paradox Brine Project located in Utah, US, which has lithium concentrations in the region up to 1,700 parts per million (ppm). An exploration target of lithium-rich brine within Clastic Zone 31 has been estimated around 30 to 40 million barrels. The Paradox Brine Project also has strong infrastructure advantages as it is well-connected through road and rail. On the Ajana project, tests and drilling have been conducted and have indicated higher graphite grades at depth.

2.1 Company Projects

2.1.1 Paradox Brine Project

The company’s flagship project, Paradox Brine Project consists of total 892 placer claims in one contiguous group encompassing 8,122 hectares of land owned by the Bureau of Land Management (BLM) located in Grand Country, Utah, 10 kilometres west of Moab.

The Property is lies approximately 10kms west of Moab and is within a 20-minute drive from the town centre. Originally, Moab was a uranium mining centre which has experienced workforce and well-established infrastructure to support exploration activities.

Apart from Anson, there are other companies such as Voltaic Minerals, MGX, American potash, Liberty One, US Cobalt, Power Metals and Standard Lithium. Brines covers an area of around 33,000 square miles throughout the Paradox Basin. Also, there are some historical wells in this region

2.1.1.1 Exploration and Mining History

The Paradox Lithium Project is located at the northern end of the Paradox Basin. Activities related to exploration of oil and gas were executed for some time in this area. The earliest discoveries of potash in the area were made in 1924 in oil and gas wells. In 1950, further exploration led to the development of the Cane Creek Potash Mine adjacent to the Colorado River.

The brines were present in good amount in these oil wells, but these wells were not economically feasible (for brines) until 1962 when the Southern Natural Gas Company drilled a well (Long Canyon Unit #1 well), which witnessed the most substantial flow of high density brine at a depth of 6,013 feet.

A historic oil well was drilled on the project area to target depth, another was dug and abandoned and a third was permitted but never drilled. In the region, there have been more than 200 oil and gas wells completed over the years. Many of them penetrated the Paradox formation and intersected its potash beds and brines.

Exhibit 1: Paradox Basin


2.1.1.2 Recent Drilling and Sampling

Anson has completed two drilling programs on its Paradox Lithium Projects claims. The first campaign mainly consisted of a re-entry of a plugged and abandoned oil well whereas the second was a sampling program carried out on an already producing oil well which had been purchased by the company.

During the first drilling program (Gold Bar Unit 2) completed in January 2018, the assays showed that the brine samples were rich in additional commodities such as bromine, iodine and magnesium whereas lithium and boron were on the lower side. These results confirmed the assay values obtained from the historical oil well samples throughout the area.

The second sampling program was carried out on the oil producing Cane Creek 32-1 well and completed in March 2018. Samples from the five clastic zones resulted in increased lithium values compared to those obtained at Gold Bar.

2.1.1.3 Key advantages

Infrastructure Facilities: The project is connected well through interstate highway and railway. Also, the availability of a gas line and a power line means that the project has closer proximity to key infrastructure.

Geological Features: The paradox basin includes a thick series of marine evaporite deposits that define the Paradox Formation. Also, the lithium-rich brines have previously been sampled in the area.

Existing Mining Infrastructure: Existing tracks provide access for exploration and project development. Also, there is a power line passing through the project area.

Exhibit 2: Paradox Brine Projects - Stages

Exhibit 3: Brine Volume Estimates

Area m2

Thickness m

Porosity %

Volume m3

Density Barrels of Brine

81,000,000 20 feet 20.0 100,000,000 1.3 622,000,000


2.1.2 Ajana Graphite Project

The project is in Northampton, Western Australia, a well-known and established mining province for zinc, lead, silver and graphite. This project is situated within the graphite prospective historic mining centre of Ajana. Anson has 100% ownership where it has 222 square km licences. In April 2017, Anson completed the first reverse circulation (RC) drilling program here. Also, this small drilling program showed that this place has graphite-rich clay horizon. Ajana graphite is said to be of a very high quality, resembling a highly ordered pyrolytic graphite profile. Apart from this, research shows that graphene could also be found there. Single-layer pristine sheets of graphene could be produced, and this graphene would be uniform and defect-free. The Ajana region mainly consists of Proterozoic gneiss with comfortable lenses of meta-sediment, pelitic gneiss, meta-quartzite, mafic gneiss and graphitic schist known as the Northampton Metamorphic Complex, which typically hosts high-grade graphite deposits in Western Australia and graphite deposits worldwide.

Key highlights of the project are:

(a) 100% ownership of the 222 square km exploration licences

(b) Four Regional Prospects: (1) Mary Springs (2) Walcott (3) Geraldine (4) Warribano

(c) 31 holes comprising of 1,906 metres of RC drilling was undertaken in 2017

(d) VTEM survey was done for the Ajana Graphite Project, and covered a total of 551-line km

2.1.3 Hooley Wells Nickel-Cobalt Laterite Project

The Hooley Wells Nickel-Cobalt Laterite Project is located 800 km north of Perth and 300 km east of Geraldton in Western Australia. The region possibly has some primary nickel sulphides. Anson acquired the Hooley Wells Nickel-Cobalt Laterite Project in March 2017 for a consideration of AUD 50,000 along with the issuance of 2,00,000 shares in the company.

2.1.4 Iconic Minerals Ltd Project

Anson has an investment in the TSX.V listed company Iconic Minerals Ltd. (Iconic), which owns a number of gold and lithium exploration projects in Nevada, US. The company realised AUD 376,516 from selling part of the investment in 2017.

2.2 Business Model

Anson Resources focuses on the exploration, acquisition, and development of natural resources in the US and Western Australia. The company’s Paradox Brine Project is a unique lithium brine project where lithium concentrations of up to 1,700 ppm have been assayed hardly at a distance of 800 metres from Anson’s tenements. Anson is also involved in extraction of boron, bromine, iodine and magnesium.

Anson has commenced metallurgical test work on samples from the Cane Creek exploration program that was conducted in March 2018. Approximately 2,000 litres of samples have been sent to laboratories. The company is using two processing methods to extract the minerals. 1) Precipitation and Solvent Extraction Method 2) Adsorption Extraction Method. The company expects to complete the test works for both the methodologies by August/September 2018.

2.2.1 Adsorption Extraction Method

The company has recently commenced test work using adsorption technology, which uses a process to extract lithium from the brine using specially designed beads that absorb the lithium. The extraction of the lithium can be conducted upstream or downstream of the extraction of the other minerals.

Exhibit 4: Rock Chip Sample


Anson’s focus area is lithium. Lithium is demanded across multiple applications and, by 2025, the demand for lithium is expected to be 30% for non-battery applications, 38% for electric vehicles, 6% for energy storage applications, 14% for e-bikes and 12% for traditional markets. Lithium is used as cathode in batteries. The market for lithium is likely to grow at 18% CAGR to 800.000 tons per annum.

2.2.2 Precipitation and Solvent Extraction Method

Efficient removal of magnesium and calcium from the brine solution is the main motive behind the adoption of this method. Once this method gets successfully executed, the next stage of the test work will be conducted for the extraction of lithium, bromine and iodine using a solvent extraction technology.

2.3 Company Premiumsv

Potential Reserves: Horizons such as Clastic Zones 7, 9, 13, 21, 25, 27 and 43 are known to have brines. Also, Clastic Zones 17, 19 and 29 were previously found to be super-saturated. Historically, Clastic Zone 17 has been attempted for lithium and lithium values of up to 339 ppm were found. The additional brine-bearing Clastic Zones may add some more potential to Anson’s exploration target.

Strong Locational Advantage: Anson’s key asset, the Paradox Brine Project benefits from good infrastructure, being closely located to the market and the Tesla Gigafactory. The basin is well-connected through the interstate highway and railway, along with gas and power lines.

Availability of Historical Data: There are some existing historical wells in the Paradox Basin. Apart from this, there is historic seismic data and local drill hole data available, which is a big advantage for Anson.

Experienced Management: The company has a good management, which includes people who have relevant and vast experience in the field of mining and exploration.

2.4 Company Risksvi

Historical Net Losses: The accumulated losses for the company grew by AUD 1.7 million to AUD 8.1 million in 2017, from AUD 6.4 million in 2016. The accumulated losses were almost equal to the equity of the company for both the years of 2016 and 2017. Anson’s net loss stood at AUD 2.4 million in 2017, compared to AUD 0.5 million in 2016. The company has been recording consistent losses as it is yet to start generating revenues from its core mining operations.

Exhibit 5: Proposed Test Worksheet


Commodity Price Risk: Negative change in targeted commodities’ prices, or in investors’ sentiments about trends in those prices, could adversely affect the company and its securities.

Revenue Uncertainty: The company started its operations in 2009 and is lagging in generating revenue from its core operations. It is earning its income from interest received on investments. There lies a risk of uncertainty in the extraction of minerals, which, in turn, will affect the revenue earning capacity of the company.

Financing Risk: A huge cost is involved in exploration and development of mineral deposits. Also, the company is not making any revenues through its operations, therefore, it will be dependent on selling equity in the capital markets to provide financing for its continuing substantial exploration budgets and general operations as a public company. However, there could be no assurance that the company will get funds through capital markets.

Regulatory Requirements: The operations and the activities of the company require permits from various government authorities and these operations are and will be subject to laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances and other matters. Companies involved in the development and operation of mines and related facilities generally experience increased costs, and delays in production and schedules because of the need to comply with applicable laws, regulations and permits. There is no assurance that approvals and permits required to commence production on its properties will be obtained on time.

2.5 Financial Overview

The company earned an interest income of AUD 2,352 in H1 2018 in comparison to AUD 883 in H1 2017. The exploration costs increased by 144% to AUD 0.7 million in H1 2018 from AUD 0.3 million in H1 2017. The net loss increased to AUD 1.2 million from AUD 0.4 million during H1 2017. The company’s long-term liabilities stayed at AUD 6,987 at the end of H1 2018. The accumulated losses for the company increased by 16% to AUD 9.4 million in H1 2018 from AUD 8.1 million. Cash and cash equivalents for Anson stood at AUD 3.2 million at the end of H1 2018.

Anson has generated an income of AUD 3,530 in 2017, all through interest received on investments. Net loss increased by 31% from AUD 1.3 million in 2016 to AUD 1.7 million in 2017. Exploration costs of the company jumped almost by 4 times to AUD 0.8 million in 2017 from AUD 0.2 million in 2016 because of which the bottom line was affected the most. Anson’s long-term liabilities increased by AUD 6,987, mainly because of lease liability. Cash and cash equivalents for Anson stood at AUD 0.52 million at the end of 2017.

2.6 Key Variables

Exhibit 6: Estimates - Lithium Production / Year (in Tons)

In ‘000s 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E

Low estimate - 500 998 5,000 16,264 17,020 17,020 17,020 17,020 17,020

High estimate - 452 798 4,286 13,368 17,020 17,020 17,020 17,020 17,020

The life of reservoir is approximately 17 years based on the brine volume estimate of 622 million barrels and extraction of 100,000 barrels of brine each day.

The project’s focus is Lithium production. Lithium which is used as a cathode in batteries is either processed into lithium carbonate 99.5% (Li2CO3) or Lithium Hydroxide 56.5% (LiOH). Based on the company’s volume estimation and production considerations, it plans to produce 17,000 ton/p.a. of Lithium Carbonate (Li2CO3) once it reaches its peak production phase. With a Lithium (Li) grade of 500ppm approximately 100,000 barrels of brine would need to be processed each day to achieve a production target of Li2CO3.


2.7 Shareholding Pattern

The company had 414,601,161 shares of common stock issued and outstanding on July 12, 2018.

2.8 Listing and Contact Detailsix

Anson Resources is listed on the Australian Securities Exchange (Ticker: ASN, Date of Listing – July 2010).

Company Contacts

Address: Suite 4, Level 3, 1292 Hay Street

West Perth, WA 6005

Telephone: +61 8 9226 0299

Fax: + 61 8 6313 4133

Exhibit 7: Shareholding Pattern (as on July 12, 2018)vii

Exhibit 8: Shareholding Patternviii

Shareholders No. of Shares % of total

Chai Tai Xingye Intnl 40,000,000 9.6%

Bruce Richardson 19,834,087 4.8%

Gregory Knox 10,688,271 2.6%

Apedaile Steven J 9,150,000 2.2%

McLeod Bruce William 5,931,376 1.4%

Others 328,997,427 79.4%

Total 414,601,161 100%


3. News

Anson Resources granted trading halt pending capital raising- The company has been granted a trading halt by ASX pending the release of an announcement regarding a capital raising till the start of normal trading on Thursday, July 12.

Anson Resources experienced improved exploration success close to Long Canyon area- The company witnessed a significant drilling success in the Cane Creek region and in mid-April it staked three additional blocks of placer claims. Drilling at Cane Creek has confirmed management’s expectation that lithium values increase towards the Long Canyon area where its wholly owned subsidiary A1 Lithium has recently staked claims. Cloud, Cane and LC South will be part of Anson’s Paradox Project with the claims being close to oil wells with historically recorded lithium values and the Roberts Rupture structure. Lithium concentration of 142 parts per million (ppm) from Clastic Zone 29 makes company more confident that the lithium concentration in the Roberts Rupture structure will continue to increase in the frequency to south.

Anson Resources sees good flow rates upon re-opening sampled well- The company has witnessed freely flowing brine from the recently sampled and re-opened Cane Creek 32-1 well within the Paradox Project. There is a flow rate of 45,600 gallons per day which indicates there is a good amount of pressure within the well which will lower the operating costs.

Anson Resources has busy year of exploration ahead- Speaking to Proactive Investors, Bruce Richardson mentioned that company is actively searching for graphite and cobalt in Western Australia along with its Paradox Project. The company is also in talks with some Chinese companies regarding potential lithium offtake arrangements.

Anson Re-opens Cane Creek to Compile Data for Production- Anson announced that it is re-opening the Cane Creek 32-1 well. The Cane Creek well be re-opened with a work-over rig similar to that used during the sampling program conducted by the company earlier at the Crane Creek 32-1 well.

Anson applied for Drilling Permit at Paradox Lithium Project- Anson’s subsidiary A1 Lithium, has submitted the NOI, which contains completed environmental and archaeological surveys, to the Bureau of Land Management (BLM) for approval to drill a new well at its Paradox Lithium Project in Utah.

Anson Upgraded Brine exploration Target- The company upgraded its exploration target to a new estimate of 65 to 130M tons of brine, with an estimated grade of 140 to 550 ppm Lithium at its paradox Lithium Project in the area.

Anson Stakes 3 blocks of Claims South of Lithium Rich Wells- The company announced that its wholly owned subsidiary, A1 Lithium has acquired stake in additional 3 blocks of placer claims at its Paradox Lithium Project in Utah.

142 ppm Lithium Assay Result from Artesian Flow Horizon- Anson announced that it has obtained assay values for all six sampled clastic zones that are significantly higher than those obtained from the Go sampling program at its Paradox Lithium Project. Maximum value of 142ppm Lithium from Clastic Zone 29, the free-flowing horizon, confirms the Company’s belief that the lithium concentration is related to the Roberts Rupture structure and the cross-cutting structures which continue to increase in frequency to the south.

Anson resources confirmed supersaturated brines at U.S. lithium project- Anson Resources has confirmed that supersaturated brines are present at the Paradox Lithium project in the Lithium Four Corners area of the U.S. state of Utah. The brines were intersected in the three clastic horizons sampled during re-entry drilling of the Gold Bar Unit 2 well.

Anson resources raised cash from exercise of options- Anson Resources has raised AUD 125,000 from the issue of 5 million shares on early exercise of options at AUD 0.025 per share.

Anson to start brine sampling for lithium at newly acquired well- Anson will start brine sampling for lithium early in March from the newly acquired Cane creek 32-1 oil well at its Paradox Lithium Project in the US. Through this well Anson will get an opportunity to collect additional samples and geological data to provide an understanding of the structure of the Paradox Basin.

Anson announced Gold Bar Assay Results- Anson has intercepted supersaturated brines in the 3 clastic horizon that were sampled during the re-entry drilling of the Gold Bar Unit 2 well at its Paradox Basin Project.

Anson changed its company secretary- Anson has appointed Mr. Kim Hogg as Company Secretary. He has replaced Ms. Nevenka Jackson. Hogg has an experience of around 25 years in helping clients to raise capital and get listed on ASX.


Anson acquired oil and gas well, lease for Paradox lithium project- Anson Resources announced that it has entered into an agreement to acquire oil and gas assets in Utah comprising a well and lease covering 480 acres. Anson plans to process a bulk brine sample in a bench-top plant to confirm that magnesium can be removed, and lithium carbonate can be produced.

Anson Resources acquired power source as it moves to first lithium carbonate in April- Anson Resources has acquired the Cane Crek 32-1 oil well and the associated oil and gas lease at its Paradox Lithium Project in Utah. Infrastructure is in place to service the pilot plant. The first production of lithium carbonate is expected in April 2018.

Anson Resources named CFO- Anson Resources appointed Nevenka Jackson as CFO and company secretary. The appointment of Jackson will enable Michael Uffelen to give up these roles to aid managing director with the strategic development of the company.

Anson Resources raised USD 1.33 million in second round of private placement of shares- The company has raised AUD 1.76 million (USD 1.33 million) in second round of private placement of 20 million shares at a price of AUD 0.08 (USD 0.06) per share to Zhongfan Group Co., Ltd. The deal was completed on 27 December 2017.

Anson moves closer to First Production- Anson is on schedule to start its fully funded drilling program at its Paradox Lithium project in December 2017, during which brine will be collected for processing in a bench-top plant enabling first lithium carbonate to be produced in April 2018.

Anson Resources shares surge, remains on track for lithium carbonate production- Anson is about to begin a drilling program during which brine will be collected for processing in a bench-top plant which will enable first lithium carbonate to be produced in April 2018. This news resulted in surge in share value to $0.105 in early trade on volume of more than 14 million.

Anson resources will begin phase I exploration this week at U.S. lithium Project- On 12 December 2017, Anson resources announced that will commenced phase I exploration in the same week at the Paradox Lithium Project in the U.S. state of Utah. The company has appointed key contractors for this week and the first task is to upgrade the access road followed by construction of a drill pad.


4. Management and Governancex

Exhibit 9: Management Team

Name Designation Background

Bruce William McLeod

Non-Executive Chairman

McLeod has more than 25 years of experience in the Australian capital markets

He holds B.Sc. (Maths) and M.Com. (Econ.) degrees Initially in his career, he was working in the New Zealand stock broking

industry He has been involved in raising debt and equity for many property and

resource projects and business operations Prior to Anson, he worked as Executive Director for 6 years for a leading

international bank

Bruce Andrew Richardson

Managing Director

Mr. Richardson has a vast experience in the public and private sector He has held senior positions in industry and government He has 16 years of experience in the private sector where he worked for

Australia- and UK-based companies in China He also worked for 10 years as an Australian Trade Commissioner in the

Australian Embassy in Beijing He also worked for the Western Australian government as Manager China,

Department of Industry and Resources, developing business and political relationships with China

Peter (Greg) Knox

Non-Executive Director

Mr. Knox holds a B.Sc. degree in Geology He has more than 20 years of experience as both exploration and mining

geologist He is also a member of Australian Institute of Mining and Metallurgy He is qualified as a “Competent Person” as defined in the 2012 Edition of the

Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves

Nevenka Jackson

CFO and Company Secretary

Ms. Jackson is a Chartered Accountant She has a bachelor’s degree in commerce from the University of Melbourne She has extensive experience in the resources industry Previously, she was serving as a Secretary in VDM Group Ltd


5. Industry Overview

5.1 Market Size – Overall and Lithium Carbonatexi

5.1.1 Non-Ferrous Metals and Mineral Exploration Industryxii

According to S&P Global Market Intelligence, the global non-ferrous minerals and metals exploration budget was estimated to be USD 7.95 billion in September 2017. The budget increased for the first time since 2012, rising by ~14% Y-o-Y due to high commodity prices and improved market conditions generating investor momentum.

Overall, the number of companies undertaking exploration remains relatively low; although in 2017, many mining companies with no exploration budgets in 2016 resumed their activities. Moreover, major mining companies witnessed a budget increase between 2016 and 2017 with 17% more allocation for exploration. Latin America continues to attract the bulk of exploration activities, with the region's aggregate budget increasing 20% Y-o-Y to ~USD 2.4 billion in 2017.

5.1.2 Lithium Industryxiii

Lithium is gradually becoming an integral part of various commercial and industrial sectors, owing to its excellent electrochemical potential, catalytic characteristics and light weight. Lithium is found in continental brines, hard rock minerals and clay globally.

Lithium carbonate is one of the key intermediate and most traded products in the lithium market as it can be easily converted into specific industrial salts and chemicals and can be processed into lithium metal.

Therefore, production numbers are usually measured in terms of lithium carbonate equivalent (LCE), despite there being several compounds which are formed from lithium.

According to Albemarle, one of the leading lithium producers, lithium carbonate is often the first chemical in the production chain, with other

Exhibit 11: Non-Ferrous Exploration Budgets by Region (2017)

Exhibit 10: Global Non-Ferrous Exploration Budget (USD billion) (2011 – 2017)

Exhibit 12: Lithium Exploration Budgets (USD million) (2011- 2017)

30%

14%

14%

13%

8%

4%

17%

Latin America

Canada

Africa

Australia

United States

Pacific/S.E Asia

Rest of the World

17.20

20.60

14.40

10.80

8.807.00

7.95

2011 2012 2013 2014 2015 2016 2017

77.73

168.10

118.64

86.28

57.27

36.20

72.90

156.50

2010 2011 2012 2013 2014 2015 2016 2017


compounds such as lithium hydroxide being produced after subsequent steps. For that reason, global lithium production numbers are generally broken down in terms of LCE.

The global lithium exploration budget witnessed significant growth in the last two years and is expected to continue this trend primarily owing to the rising demand of lithium-ion batteries. In 2017, the mining industry's budget for lithium exploration more than doubled from USD 72.9 million in 2016 and quadrupled from USD 36.2 million in 2015 to USD 156.5 million. The slump and downturn in budget allocation between 2011 and 2015 were due to low lithium prices and an appreciating USD.

The lithium supply market is relatively small and under-developed compared to most other industrial commodities.

Global lithium output in 2015 was 171 kilotons (kt) LCE, a small percentage of the global lithium reserves (102 Mt LCE). Global lithium reserves are estimated to be 594 times the 2015 global output, which is relatively high when compared to other commodities. Therefore, lithium remains an underexploited commodity with a huge potential for increase in supply.

According to Deutsche Bank, the lithium supply is expected to triple between 2015 and 2025 to reach 548 kt LCE. This will be primarily led by the increasing demand for lithium-ion batteries.

5.2 Segmentation – Lithium Industry

5.2.1 Type of Depositsxv

Currently, hard-rock deposits (high-grade lithium ores) and brines are the commercial sources of lithium production. While mines for production from clay are still under development, their lithium feed grades are estimated to be low.

The brines are found in the desert areas of Chile, Argentina, Bolivia, the US and China. Producing lithium (which is of a low grade) from brines requires high capital input, but subsequent operating costs are low.

Hard-rock deposits are found in Australia, Canada, Zimbabwe and Portugal. Conventional mining techniques that are used to produce lithium from pegmatites (containing high-grade spodumene and petalite) require low capital input but lead to high operating costs.

Hard rock deposits generally have 12-month construction periods, while brine deposits are easier to mine and have shorter construction periods. Therefore, brine deposits are more advanced in terms of development – 48% are in

the mining stage, preproduction and production, compared with 21% of hard rock deposits.

The largest hard-rock lithium deposit is Bacanora Minerals' Sonora in Mexico, which has 3.6 Mt of lithium oxide in reserves and resources. Among brine deposits, government-owned Comibol's Uyuni Salt Flat project in Bolivia is the largest with 39 Mt of contained lithium oxide.

Exhibit 13: Global Lithium Supply (LCE kt) (2015- 2025)xiv

Exhibit 14: Type of Deposits (% Share)xvi

171201

242278

311

358

411450

497523

548

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

65%

35% Hard-RockDeposits

BrineDeposits


5.2.2 Geographyxvii

Besides the geology and mineral potential, there are certain other aspects which drive exploration activity in a region. These factors include presence of required infrastructure such as ports and railway lines, favorable government regulations, weather conditions, political stability and security of tenure. Countries which fulfill these characteristics are the ones which are in high demand for mineral exploration.

Regionally, Latin America had the highest lithium exploration budget of USD 42.7 million in 2017 – 41% higher than in 2016, owing to its largest lithium brine deposits and relative political stability. Australia, the US, Argentina and Canada were the leading countries in terms of lithium exploration spending in 2017.

According to S&P Global Market Intelligence, out of the primary lithium properties, 70% are still in the early stages of exploration and development and only 6% are in production. Around 78% of these properties are in the US, Canada, Australia and Argentina, which have shares of 24%, 23%, 20% and 11%, respectively, with the remainder scattered across the globe.

Exhibit 15: Lithium Exploration Budgets by Country (2017, %)xviii

Exhibit 17: 2017F Lithium Supply – by Countryix

Exhibit 16: 2015 Lithium Supply – by Countryxix

27%

40%

15%

12%

2% 4% Chile

Australia

Argentina

China

US

Rest of World

37%

33%

11%

10%

3%

3% 2% 1%Chile

Australia

Argentina

China

US

Zimbabwe

Portugal

Brazil

Total Lithium Exploration Budget for 2017 – USD 156.5 million

171 kt LCE 242 kt LCE


Australia, Chile, China and Argentina are the leading producers of lithium. Three spodumene (a lithium aluminum silicate mineral) operations in Australia and two brine operations each in Argentina and Chile account for the majority of world lithium production.

Australiaxx

According to the US Geological Survey, Australia holds more than 2.7 million Mt of identified lithium reserves (in hard rock form) — behind China and Chile. In 2017, Australia’s production witnessed an increase of 34% Y-o-Y due to the two new spodumene operations that ramped up the production. Moreover, the leading spodumene operator in Australia has planned to double its concentrate production capacity to 1.34 million tons per year by mid-2019. The majority of the country’s lithium is exported to China as spodumene.

Chilex

Chile’s lithium is found in brine deposits, unlike Australia. Although Chile was one of the world’s top lithium producers in 2017, its production decreased by 1.4% Y-o-Y in the year. The decline can be attributed to the weather conditions that impacted the country’s brine production. SQM is the leading lithium producer in Chile, which generates 50% of its revenue from the Atacama salt flat (3,000 square kilometer Salt Lake in Chile which has the largest and highest-quality proven lithium reserves).

Chile is expected to witness increased production in future. In January 2018, SQM finally agreed on a deal over disputed royalties with Chilean development agency Corfo, which is expected to impact its production in the future. The Chilean government also recently gave Albemarle permission to expand its lithium operations. Hence, the country’s lithium output is forecast to grow exponentially in the near term.

Argentinax

Argentina’s lithium is also found in brine deposits. In 2017, Argentina’s output decreased by 5.7% Y-o-Y which can be attributed to heavy snowfall that limited production at the country’s new brine operation. Argentina’s Salar del Hombre Muertos district hosts significant lithium brines, while its reserves are sufficient for at least 75 years of production. According to Reuters, lithium carbonate production in Argentina is expected to triple by 2019 and has the potential to grow even more, contingent on the funding received by companies for their projects. Argentina’s leading lithium producer expanded its lithium hydroxide production capacity by 80% in 2017 to meet increasing demand from the global electric vehicle (EV) industry.

Chinax

China grew its lithium production by ~30% in 2017. However, the production is still considered low in comparison to other countries as China is the largest consumer of lithium due to its electronics manufacturing and EV industries. China imports the majority of its lithium from Australia; however, due to increasing demand from these industries, the country is planning to expand its lithium capacity in the future to bridge the gap. In 2017, China’s Tibet Summit Resources and its partner NextView Capital undertook an investment of USD 206 million in Lithium X, a Canadian lithium exploration firm, to secure lithium to meet the growing demand of batteries in China, the world’s largest electric car market.

USxxi

Lithium in the US is produced from an active brine operation in Nevada owned by Albemarle. US imports more than half the lithium it consumes. Several other companies, such as Westwater Resources, US Lithium Corp and Pure Energy, are trying to develop new lithium projects in the US to fulfill the burgeoning demand for lithium. Areas being explored by these companies include the Paradox Basin in Utah.


5.3 Demand Driversxxii

The demand for lithium is increasing, given its growing importance in industrial sectors –EVs, consumer electronics and the energy sector. Lithium has numerous applications, from lubricating grease and glass fabrication, to glazes for ceramics, and batteries. The metal is expected to continue to play an integral role in battery-powered vehicles and other devices.

However, the lithium market is currently underdeveloped in comparison to other industrial commodities, with a few conglomerate giants controlling the market.

The supply of lithium is expected to be ramped up to meet the growing demand. According to Deutsche Bank, global lithium market will grow from 184 kt in 2015 to 535 kt LCE by 2025. The rise in demand will be driven by batteries for EVs and energy storage for wind and solar plants.

Exhibit 18: Global Lithium Demand (LCE kt) (2015-2025F)

Exhibit 19: Global Lithium Demand – by Applications (2015-2025)

Application Demand (2015)

Estimated Demand (2017)

Forecasted Demand (2020)

Forecasted Demand (2025)

EVs 25.1 50.4 109.4 204.8

Energy Storage 0.4 1.4 5.8 33.8

Batteries (Traditional Markets)

45.6 48.1 55.0 62.7

E-Bikes 2.9 16.9 53.6 73.8

Glass Ceramics 42.6 45.7 50.9 61.0

Greases 19.0 20.3 22.5 26.3

Air Treatment 7.3 7.8 8.7 10.4

Polymer 6.2 6.5 7.2 8.1

Medical 6.7 6.9 7.1 7.4

Primary Battery 2.9 3.1 3.5 4.2

Aluminum 2.5 2.7 3.0 3.5

Casting Powders 7.6 7.8 8.1 8.8

Others 15.0 20.7 24.5 29.4

Total 184 238 359 534

184209

238277

312359

392427

464498

534


The primary driver of demand for lithium carbonate is lithium-ion batteries, the demand for which is set to increase exponentially in the medium term. These batteries have several advantages such as the ability to be recharged many times over and slow loss of charge when not in use. Hence, these batteries are an integral component of EVs and other electric and electronic storage products.

Moreover, the substantial decrease in lithium-ion costs from USD 900/kWh in 2010 to USD 225/kWh in 2017 has also made EVs and energy storage products more affordable and has opened new demand markets as well.

While traditional markets (consumer electronics, glass, ceramics, greases, medical, etc.) are not perceived as major growth drivers, they are expected to grow marginally, resulting in increased lithium consumption in the future. According to Deutsche Bank, these existing markets are expected grow at 3.6% p.a. over 2015–2025, leading to increased lithium consumption (in these markets) from 155 kt in 2015 to 222 kt in 2025.

Besides advances in electric transportation, factors such as the need for alternatives to fossil fuels, growth in the communication and consumer electronics, the increasing use of renewables, demand for both fixed and portable power storage, the advent of smart grids and the growth of infrastructure-sharing by utilities will also drive demand for lithium.

5.3.1 Increasing EV Penetration

Lithium is used in high-energy-density rechargeable lithium-ion batteries which power full-electric, plug-in hybrid and hybrid vehicles. Due to the growth in EV technology, concerns over increased CO2 pollution and rising fuel costs from combustion engines, lithium has witnessed widespread use in EV batteries. This market is primarily driven by the mass uptake of EV technology in China, where government subsidies are in place for both passenger EV vehicles and commercial EVs (buses and small trucks).

.

The demand for EVs is increasing due to rising environmental concerns which is leading to mandates/regulations by governments throughout the world to reduce emission levels. Countries such as China, Germany, Norway and India

Exhibit 20: Global EV Forecasts (in millions) (2015-2025)

Type of EV Number of Units

(2015) Number of Units

(2020) Number of Units

(2025)

Hybrid 2.9 6.9 9.0

Plug-in Hybrid 0.3 0.7 3.9

Full EV- Passenger 0.4 1.6 2.6

Full EV – Commercial 0.1 0.3 0.4

Subtotal 3.7 9.5 16

Diesel 18 19 20

Gasoline 67 73 76

Total 89 102 112

Hybrid as % of global market 3.2% 6.8% 8.0%

Plug-in Hybrid as % of global market

0.4% 0.7% 3.5%

Full EV as % of global market 0.6% 1.8% 2.6%

Full EV as % of Total EV 14.3% 19.4% 18.7%

EV as % of global market 4.1% 9.3% 14.2%


have already issued mandates for EVs and even announced aggressive targets for EV sales. Norway and Netherlands have passed parliamentary motions to ban sales of new gasoline and diesel cars by 2025 and Germany has passed the motion to ban these cars by 2030. In 2015, China announced an operation subsidy for EV buses running in the city.

For this reason, several major companies such as Tesla, Apple, Google and large vehicle manufacturers such as Volvo, BMW, Nissan, Volkswagen and Chevrolet are now working on the electrification of vehicles, using lithium-ion batteries. Volkswagen group is targeting 25% of EV sales by 2025 and BMW, Land Rover and Jaguar are developing multiple all-electric models.

The demand for lithium-ion batteries will be largely driven by the increasing penetration and mass uptake of EVs across the world. According to Deutsche Bank, EV sales are expected to grow to over 16 million vehicles by 2025. This rise is expected to increase lithium consumption in EVs at a CAGR of 23% over 2015–2025 to reach 205 kt LCE in 2025.

5.3.2 Emerging Energy Storage Market

Energy storage has five major applications, namely load shifting, peak shifting, grid management, ancillary services and reserve power. Currently, the energy storage market is dominated by pumped hydro energy storage, However, battery storage is now becoming economically feasible for many energy storage applications due to the declining costs of lithium-ion batteries. According to Deutsche Bank, battery use in global energy storage will grow at a CAGR of 46% till 2025 and lithium-ion batteries are expected to comprise the leading technology for energy storage. According to the bank, lithium-ion battery consumption is expected to grow at a CAGR of 54% to 48 GWh, equivalent to 97% of total battery use in energy storage.

5.4 Market Risksxxiii

5.4.1 Macroeconomic Factors

Since mineral exploration and production require substantial financial investment and commitment, the industry is highly dependent on market conditions. A global, regional or localized economic downturn, and declining customer and business confidence may reduce consumer demand or inhibit the industry’s ability to secure funds for production. Downturns such as credit market tightness can impact its liquidity and that of its customers, suppliers and other business partners.

The industry is highly dependent on metal prices and therefore is severely impacted by any fluctuations in them. Low metal prices entail diminished exploration activity and vice versa. A mine typically takes 10-15 years to develop following its discovery; however, commodity prices drive the current exploration activity, whereas the production commodity prices may be different. This impacts the future profitability of the business.

Other factors include currency fluctuations, especially of dollar prices, which usually move in reverse direction to the metal prices. This is primarily because the dollar is the benchmark pricing mechanism for most commodities. Therefore, the dollar is an exchange medium when it comes to international trade for raw materials. When the value of the dollar appreciates, the value of commodities rises in terms of local currency. Therefore, high dollar prices may lead to low commodity/metal prices, which also adversely impact the activities in the industry.

5.4.2 Late Operating Cash flows

Companies in this industry do not realize operating cash flows till the production stage, when the metal/mineral is ready for sale. This typically takes 10-15 years after the beginning of the exploration activities; therefore, the funds of the investor get trapped for a long period of time without any operating cash flows or significant returns. During this time, negative economic conditions may adversely impact the business which might also hamper the industry’s potential revenue generating capabilities.

5.4.3 Downturns in Customers’ Industries

Downturns in the businesses that use lithium may adversely affect its sales, and in turn, production and exploration. Lithium demand is mainly generated from industries such as electronics and automotive which are cyclical in nature. Cyclical industry downturns result in diminished product demand, excess manufacturing capacity and lower average selling prices, which may have an adverse effect on sales and profitability.

5.4.4 Country Environment

Since the companies in the industry have significant international exposure, it is subject to risks related to the different legal, political, social and regulatory requirements and economic conditions of many jurisdictions. This is a major risk factor for the industry as the security of tenure is essential for generating investment and stable operations of any mineral exploration or production company. Risks include restrictions on foreign trade or investment, termination or


substantial modification of international trade agreements, compliance with a variety of laws and regulations, local currency fluctuations, and increase in transportation and other shipping costs.

5.4.5 Weather Conditions

Exploration, mining and extraction operations are severely impacted by unfavorable weather conditions and natural disasters. In 2017, Chile’s and Argentina’s lithium exploration were halted, and production decreased due to heavy rain and snowfall, respectively. Similar weather-related matters or natural disasters can negatively impact operations in the affected regions and operations of the global economy.Moreover, growing concerns about climate change may result in the imposition of additional regulations or restrictions that may impact the business. Several governmental bodies have introduced or are contemplating regulatory changes in response to climate change, including regulating greenhouse gas emissions.

5.5 Trends

5.5.1 Backward Integration by Automotive Players

Automotive companies are investing in lithium explorers and producers to ensure stable lithium supply to meet future EV demand, which is growing at a fast pace.

In January 2018, Toyota Tsusho, trading arm of Toyota Group, acquired a 15% stake in Orocobre, an Australian lithium mining company, to secure stable supplies of lithium. The company also plans to more than double lithium carbonate production capacity at Orocobre’s Argentinian mine Olaroz to 42,500 tons per year from 17,500 tons previously. This follows similar investments by Chinese electric carmaker BYD, which formed a joint venture with a Chinese pot ash producer to produce lithium carbonate and China’s Great Wall Motor, which in 2017 acquired a 3.5% stake in Australia’s Pilbara Minerals to secure a supply of the metal.

These moves by automotive makers will increase competition in the lithium market but will also lead to increase in investment avenues for the exploration companies.

5.5.2 Rising M&A Activityxxiv

For the past few years, the players in the industry are resorting to M&As for asset acquisition and geographical expansion. According to S&P Global Market Intelligence 2017, the lithium industry witnessed 166 deals with deal value of USD 565 million in 2017.

In 2017, Galaxy Resources completed its merger with General Mining, which provided them a diversified suite of lithium assets including the Mt Cattlin lithium project in Western Australia. In September 2017, SQM announced a joint venture with Kidman Resources for developing Mt Holland integrated lithium project, which is centered on the Earl Grey hard-rock lithium deposit in Western Australia. In March 2016, SQM announced a 50:50 joint venture with Lithium Americas to develop Cauchari-Olaroz lithium project in Jujuy, Argentina into a 40 ktpa LCE operation. In 2015, Albemarle acquired Rockwood Holdings, the parent company of Rockwood Lithium, which gave it access to the Greenbushes mine, which has the world’s largest known reserves of lithium spodumene minerals.

The increasing M&As by leading players are expected to further consolidate the market, which is currently dominated by a few top players. This will increase the competition in the industry which is already witnessing emergence of new players due to the increasing global lithium demand.

5.6 Regulatory Frameworkxxv

5.6.1 Regulations in Australia

Each of the states in Australia has enacted a separate legislative regime that governs the exploration and extraction of minerals within their respective states and territorial boundaries, in addition to the environmental, health and safety laws. The states grant exploration license or permit, which are often up to five years and may be renewed under special circumstances. To conduct commercial mining activities, another license is required which is generally granted for a 21-year term and may be renewed under special circumstances.

Foreign investment approvals are governed by the Foreign Acquisitions and Takeover Act 1975 (Cth). Foreign companies or companies owned directly or indirectly by the foreign companies can own exploration or mining rights, however, these must be approved by the Commonwealth Treasurer acting on the advice of the Foreign Investment Review Board (FIRB). Applicants are assessed against various factors related to national interest and security. Foreign government investors are subject to more rigorous screening than other investors.


5.6.2 Regulations in Chile

Mining in Chile is regulated by three legal bodies, namely The Chilean Constitution, The Minings Concession Act No. 18,097 and The Mining Code (MC) and its Regulation (Decree No 1/1989). MC establishes regulations related to mineral exploration, exploitation and benefit. Moreover, the Ministry of Mining along, with the National Geology and Mining Service, approves technical and safety issues of mining projects and also promotes investment in the area. The Mining Sites and Facilities Closure Act No. 20,551 regulates closure of mines and their facilities and The Mining Activity Royalty Act No. 20,026 and No. 20,469 establish special tax over mining sales.

To conduct exploration activities, a mining concession is required, which is granted by the state which owns the properties. The exploration concession is limited to two years and does not allow companies to exploit minerals. To conduct mining, an exploitation concession is required, which is of indefinite duration, contingent on the payment of mandatory license fee and fulfillment of requirements of the MC.

In case of lithium deposits placed in maritime waters under national jurisdiction, only state-owned companies through administrative concessions or entering into special operational agreements, can exploit the resources.

Foreign entities can own mining rights in Chile, except in the state-owned lands located 10 km from the country borderline or 5 km from the coast.

5.6.3 Regulations in the US

In the US, federal and state governments have developed comprehensive mining regulatory schemes; the law applicable may depend upon surface and mineral ownership. The General Mining Law of 1872 (GML) is the principal law governing locatable minerals on federal lands. The US Securities and Exchange Commission (SEC) regulates mineral resources and reserves reported by entities subject to SEC filing. The companies need to disclose exploration results, mineral resources and mineral reserves.

For conducting exploration and mining on federal lands, GML requires the mine claimants to be US citizens, however, a wholly owned subsidiary of a non-US company can also get the license issued. There is no such restriction in state laws.

For exploration, companies need to get licenses depending on the stage and extent of exploration work and amount of ground distributed.

5.6.4 Regulations in Argentina

The main federal laws regulating mining include The Argentine Mining Code (AMC), Mining Investment Law (MIL), Environmental Protection for Mining Activities (which has been incorporated into the AMC), Federal Mining Agreement, and Financing Regime for Value Added Tax and Resolutions from the National Mining Secretariat.

All the provinces have their own enforcement authorities that control mining affairs within their geographic boundaries and have the power to grant and/or revoke mineral rights to interested parties and control compliance of the titleholders. At a national level, the National Mining Secretariat is the mining enforcement authority that is in charge of proposing and implementing federal mining policies such as MIL.

For exploration, a company needs an exploration permit, which grants such rights for a limited time which is usually 150 days and may be extended to 50 additional days for each additional unit granted. The limit per person is 20 exploration permits or 400 exploration units per province. For conducting mining, the company needs exploitation permits which enable the titleholder to conduct extraction or exploitation activities within the granted area for an undetermined term, if the titleholder complies with certain conditions.

There is no restriction on foreign individuals and entities acquiring and holding mineral rights in Argentina.

5.6.5 Regulations in China

There are 16 laws which currently govern the mining sector in China. Under the Mineral Resources Law, all property rights and control over mineral resources in or under China are vested in the State Council, and therefore, the government grants permit to prospect or extract mineral resources.

Mining rights can be obtained by applying to the department of geology and mining or participating in the public bidding process. Prospecting or exploration permits are usually granted for three years and may be extended for 2 years at the most. Prospecting or exploration companies have an exclusive right to secure an extraction permit within the area covered by the prospecting permit if mineral resources are discovered.


An extraction permit can last a maximum of 30 years for a large mine and 20 and 10 years for medium and small mines respectively. Extraction permit holders can extend the terms of their permits by applying to the competent authorities 30 days before expiration, otherwise, the permits will automatically expire.

There is no restriction to foreign ownership of companies regarding lithium investment as per The Catalogue of Industries for Guiding Foreign Investment (2017 version).

5.7 Competitive Landscape xxvi

A company in the lithium carbonate industry generally passes through four stages, namely exploration, appraisal, development and production. With each stage of the lifecycle, the risk of the company reduces as its ability to generate revenue increases with the reduction in gestation period.

The initial stages consisting of exploration and appraisal require high financial commitment as companies are focused on mineral discovery and evaluating potential for development. The later stages involving development and production are less risky as the companies start preparing the plan for mine development and future production and sale of the minerals.

Large companies, having high market capitalization, usually operate at the later stages of the lifecycle such as production, as compared to the smaller companies, which operate at the exploration or appraisal stage.

The lithium carbonate market is dominated by these large companies as these companies have stable revenue generating capabilities.

5.7.1 Market Share xxvii

The global lithium market is accounted for by producers located in the Americas, Asia-Pacific and Africa. The market is highly concentrated. The top three players, which produce most of the world’s lithium, include Albemarle Corporation, SQM, FMC Corporation. Together, these players accounted for 58% of the market in 2015.

Moreover, players often undertake M&A activity which gives them access to lithium resources as well as the markets of the acquired companies, leading to further concentration in the market. Albemarle acquired Rockwood Holdings, owner of Chile’s second-biggest lithium deposit in 2015, which gave it access to the Greenbushes Mine, Australia’s largest lithium mine.

Although, these companies account for most of the world’s lithium, in recent years these have been challenged by Chinese producers due to increasing demand for lithium in China.

Exhibit 21: Lifecycle in Lithium Carbonate Industry

Exploration Appraisal Development Production


SQM is one of the largest players with lithium resources held in salar brines within the Atacama Salt Desert region of Chile.

Albemarle operates the world’s second-largest brine project on Salar de Atacama in Chile and another at Silver Peak in Nevada, US.

FMC generates lithium Salar de Hombre Muerto operation in Argentina and Chile.

The largest Chinese producer, Sichuan Tianqi Lithium Industries has lithium resources in China and Western Australia.

Albemarle (through Rockwood Holdings) and Tianqi are 49%/51% partners in Talison Lithium, an Australian company which operates the Greenbushes Mine.

Other players in the market include Avalon Advanced Materials, Orocobre, Lithium Americas,

Neometals, Pilbara Minerals, Lithium Power International, Prospect Resources, and Anson Resources. Most of these players have not reached the production stage, and therefore they have a minimal share in the market.

In addition to existing companies increasing supply, new suppliers are also expected to emerge especially in the regions of South America and China. Recently, many new projects to develop lithium deposits have been announced. Some of these projects are already under advanced development and others are expected to materialize in the medium term.

In 2016, SQM announced a joint venture with Lithium Americas, a Canadian miner, to develop a lithium project in Argentina. The project is planned for production in 2019, with a 50,000 Mt/year capacity. Moreover, in 2015, Albemarle announced its plans to spend USD 600 million over a period of 6-7 years to increase lithium supply and expand its Chilean operations.

To meet the growing demand, companies are exploring new areas for lithium production. One such area is the Paradox Basin in Utah, US, which is currently being explored by companies such as Liberty One Lithium, MGX Minerals, American Potash Corp, Anson Resources, Powers Metal Corp and Voltaic Minerals.

5.8 Bromine

5.8.1 Overview

Bromine is mainly found in lakes, the sea and underground bores and mines. It is widely used in water treatment plants and the pharmaceutical industry. Bromine is used as a water purifier/ disinfectant for water purification. There also are multiple applications in several industries such as oil and gas, agriculture, automobiles, healthcare and photography.

5.8.2 Market Size and Forecast

The global Bromine market was valued at USD 2,320 million in 2017 and will reach USD 2,920 million by the end of 2025, growing at a CAGR of 2.9% during 2018-2025. Also, the bromine market in the Asia-Pacific region is estimated to grow for the forecasted period due to the presence of emerging economies such as India, China and others. Additionally, this market accounted for the largest revenue share of 30% in 2015 in the overall bromine market across the globe, followed by Europe (27%) due to the presence of a large number of pharmaceutical companies and extensive research for effective drugs. North America accounted for 25% of the overall bromine market worldwide.

5.8.3 Growth Drivers

There has been an increase in investments in oil and gas extraction industries; rise in the production of bromine across the globe; rise in export and import of elements such as bromine owing to miscellaneous applications in the agriculture and water-treatment set-ups; and rise of funding in the agriculture sector and water-treatment industry in order to provide better daily-need resources to consumers. These are some of the key factors likely to further trigger the demand for bromine in the near future.

Exhibit 22: Market Share – Lithium Carbonate Producers (2015)

40%

26%

20%

12%

2%Chinese Producers(Sichuan Tianqi LithiumIndustries and others)

SQM

Albemarle

FMC Corp

Others


Also, factors such as the introduction of effective flame retardants, technological advancements in bromine derivatives, research in the pharmaceutical industry to develop effective drugs for the treatment of various diseases, and a greater initiative aimed at polymer fabrication are expected to accelerate the demand for bromine for the entire period of 2016-2023.

5.9 Iodine

5.9.1 Overview

The global iodine market is expected to reach USD 1,021.3 million by 2025, from USD 812.6 million in 2017, growing at a CAGR of 4.8% during the forecast period of 2018 to 2025. Iodine and its derivatives are widely used as an intermediate in industrial chemicals for human nutrition. It is sourced from water bodies, such as oceans and water pools, and from seaweed.

5.9.2 Growth Drivers

The medical & healthcare and industrial-chemical industries are the major growth drivers for the iodine market because these industries use iodine as a chemical intermediate. Iodine derivatives are being used as expectorants and as medications to treat goiter. Iodine is also used as a radiocontrast agent due to its ability to absorb X-rays. It is used in biocide as a substituent in crop protection chemicals. It is also used as a raw material in the manufacturing of bactericides and disinfectants. It is used in LCDs as catalyst stabilizer and in polarizing films.

5.10 Magnesium

5.10.1 Outlook

The global magnesium market is expected to grow at a CAGR of 5.73% by volume during the period 2016-2020. Magnesium is mainly found in seawater and brines, as well as in deposits in the earth. It is also found in salt wells. Resources from which magnesium may be extracted range from large to virtually unlimited and are globally widespread. Magnesium-bearing brines are estimated to constitute a resource quantifiable in billions of tons, and magnesium can be recovered from seawater at many places. Magnesium ores are mainly of three types: 1) Magnesite 2) Dolomite 3) Carnallite.

Exhibit 23: Iodine Reserves by countries as of 2017


The top five countries where magnesium reserves can be found are Russia, North Korea, China, Brazil and Australia.

5.10.2 Growth driversxxviii Magnesium is required in the automotive sector. The use of magnesium in vehicles helps in lowering their overall weight. Many large automotive companies have replaced steel and aluminum with magnesium for the manufacturing of various parts of their products. Also, the aerospace industry is dependent on magnesium as it helps to lower the weight of aircraft as well as projectiles, and, therefore, to achieve decreases in emissions and greater fuel efficiency. Magnesium is an ideal material used in these applications because of limited continuing improvements on aluminum weight reductions and high costs of fiber metal laminates. The electronics market is also dependent on magnesium as many magnesium alloys are now being used to replace plastic as they are lighter than plastic but are much stronger and durable. Magnesium is also used for applications in sports because of its light weight and impact resistance. Since magnesium can be formed into intrinsic shapes, it is used in golf clubs, tennis rackets and handles of archery bows.

Exhibit 24: Magnesite Reserves by countries as of 2017


5.11 Boron

The global Boron market, valued at USD 2,040 million in 2017, is expected to reach USD 2,641 million by the end of

2023, growing at a CAGR of 4.40% between 2017 and 2023.xxix The market for boron is mainly driven by agriculture, insulation fiber glass, and frits and ceramics. Turkey accounts for the largest Boron reserves, followed by the United States, Russia, Chile and China.

Exhibit 25: Boron Reserves by countries as of 2017


6. Valuation

The Fair Market Value for one Company publicly traded share stands between AUD 0.13 and AUD 0.18 as of July 12, 2018 using blended valuation (Net Present value and EV/Production Multiple).

6.1 Net Present Value

Year Ending- June 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

NPV Higher Estimate

Total Revenues

- 22,576 38,931 1,95,051 6,34,412 6,63,886 6,70,525 6,77,230

Total Operating Costs

2,233 20,588 34,790 1,67,914 5,43,236 5,59,249 5,55,996 5,62,493

Total Capex

8 75,000 75,000 75,000 75,000 19,917 20,116 20,317

Depreciation

10 751 751 3,354 5,503 7,588 8,784 9,121

Free Cash Flow to Firm

(2,251) (73,763) (71,610) (51,217) 10,672 77,132 85,630 85,299

Discount factor

0.99 0.84 0.71 0.60 0.51 0.43 0.36 0.31

Net Present value

(2,238) (62,009) (50,887) (30,765) 5,419 33,107 31,068 26,161

NPV Lower Estimate

Total Revenues

- 15,688 27,684 1,48,607 4,63,489 5,90,110 5,96,011 6,01,971

Total Operating Costs

2,354 14,662 25,137 1,27,312 3,88,083 4,94,570 4,95,668 5,02,351

Total Capex

8 75,000 75,000 75,000 75,000 17,703 17,703 17,880

Depreciation

10 751 751 3,354 5,503 7,588 8,751 9,022

Free Cash Flow to Firm

(2,372) (74,726) (73,204) (57,059) (5,098) 70,248 73,889 72,717

Discount factor

0.99 0.84 0.71 0.60 0.51 0.43 0.36 0.31

Net Present value

(2,359) (62,818) (52,019) (34,274) (2,588) 30,152 26,808 22,302

Valuation

WACC

Discount Rate) 18.3%


6.2 Relative Valuation

The Fair Market Value of one of Anson Resources’ publicly traded regular shares stands at AUD 0.09 on July 12, 2018.

(All figures are in AUD MM, unless stated differently)

Particulars

Anson Production (tons) 17,020.0

PEER EV/ Production 0.0022

Relative Valuation Discount 0%

Enterprise Value (AUD MM) 38.24

Net Debt (2.8)

Implied Equity Value 35.5

Adjustment

Less: Debt (Net cash) (2.8)

Implied Equity Value 35

Shares o/s (MM) 414.6

Intrinsic Value per share 0.09

Current market Price 0.16

Upside / (Downside) -46.6%

Arrowhead Fair Value Bracket Low High

Present Value of FCF 69,426 1,12,912

Shares O/S (000s) 4,14,601 4,14,601

Intrinsic Value per share 0.167 0.272

Company Namexxx Market Cap

(in AUD MM)

Current Enterprise Value (in AUD MM)

Estimated Production

(tons) EV/Production

Sayona Mining Limited 65 51 99,000 0.0005x

American Pacific Borate & Lithium Ltd 43 37 90,000 0.0004x

Lithium Australia 42 26 20,800 0.0013x

Neo Lithium Corp. 144 87 35,000 0.0025x

Lithium Power international 77 43 20,000 0.0021x

Millennial Lithium 209 169 25,000 0.0067x

Pure Energy Minerals 25 22 10,300 0.0022x

Average 0.0022x


6.3 Blended valuation

The Fair Market Value of one of Anson Resources’ publicly traded regular shares stands between AUD 0.13 and AUD 0.18 as on July 12, 2018 according to blended valuation method.

Blended Valuation

High Low

Net Present Value 0.27 0.17

Relative Valuation 0.09 0.09

Intrinsic Value 0.18 0.13


Important information on Arrowhead methodology

The principles of the valuation methodology employed by Arrowhead BID are variable to a certain extent depending on the subsectors in which the research is conducted, but all Arrowhead valuation research possesses an underlying set of common principles and a generally common quantitative process.

With Arrowhead Commercial and Technical Due Diligence, Arrowhead extensively researches the fundamentals, assets and liabilities of a Company, and builds solid estimates for revenue and expenditure over a coherently determined forecast period.

Elements of past performance, such as price/earnings ratios, indicated as applicable, are present mainly for reference purposes. Still, elements of real-world past performance enter the valuation through their impact on the commercial and technical due diligence.

Elements of comparison, such as multiple analyses may be to some limited extent integrated in the valuation on a project-by-project or asset-by-asset basis. In the case of this ANSON RESOURCES report, there are no multiple analyses integrated in the valuation.

Arrowhead BID Fair Market Value Bracket

The Arrowhead Fair Market Value is given as a bracket. This is based on quantitative key variable analysis, such as key price analysis for revenue and cost drivers or analysis and discounts on revenue estimates for projects, especially relevant to those projects estimated to provide revenue near the end of the chosen forecast period. Low and high estimates for key variables are produced as a tool for valuation. The high-bracket DCF valuation is derived from the high-bracket key variables, while the low-bracket DCF valuation is based on the low-bracket key variables.

In principle, an investor who is comfortable with the high-brackets of our key variable analysis will align with the high-bracket in the Arrowhead Fair Value Bracket, and likewise in terms of low estimates. The investor will also take into account the Company intangibles – as presented in the first few pages of this document in the analysis on strengths and weaknesses and other essential Company information. These intangibles serve as supplementary decision factors for adding or subtracting a premium in the investor’s own analysis.

The bracket should be understood as a tool provided by Arrowhead BID for the reader of this report and the reader should not solely rely on this information to make his decision on any particular security. The reader must also understand that on one hand, global capital markets contain inefficiencies, especially in terms of information, and that on the other hand, corporations and their commercial and technical positions evolve rapidly: this present edition of the Arrowhead valuation is for a short to medium-term alignment analysis (one to twelve months). The reader should refer to important disclosures on page 33 of this report.


7. Appendix

7.1 Anson Resources’s Balance Sheet Forecast

Exhibit 26: Consolidated Balance Sheet

All figures in AUD 000s, unless stated differently

Low Bracket estimates

Year Ending-June 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Total current assets

3,090 (1,098) (5,687) (11,334) (11,989) 61,816 1,36,249 2,11,588

Total non-current assets

42 74,291 1,45,938 2,15,434 2,82,846 2,91,799 3,00,657 3,09,426

TOTAL ASSETS 3,132 73,193 1,40,251 2,04,101 2,70,858 3,53,615 4,36,906 5,21,014

Total current liabilities

338 1,120 1,482 7,942 24,384 31,044 30,865 31,173

Total non-current liabilities

7 75,007 1,50,007 2,00,007 1,75,007 1,50,007 1,25,007 1,00,007

TOTAL LIABILITIES

345 76,127 1,51,489 2,07,949 1,99,391 1,81,051 1,55,872 1,31,180

Total shareholder's equity

2,787 (2,935) (11,238) (3,849) 71,466 1,72,564 2,81,034 3,89,833

TOTAL LIABILITIES & EQUITY

3,132 73,192 1,40,251 2,04,101 2,70,857 3,53,616 4,36,906 5,21,014

Exhibit 27: Consolidated Balance Sheet

All figures in AUD 000, unless stated differently

High Bracket estimates

Year Ending-June 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

Total current assets

3,211 439 (2,457) 1,032 27,234 1,04,488 1,94,439 2,86,778

Total non-current assets

42 74,291 1,45,938 2,15,434 2,82,846 2,93,979 3,04,974 3,15,837

TOTAL ASSETS 3,253 74,730 1,43,481 2,16,467 3,10,081 3,98,466 4,99,413 6,02,615

Total current liabilities

338 1,574 2,035 10,183 33,375 34,107 33,621 33,957

Total non-current liabilities

7 75,007 1,50,007 2,00,007 1,75,007 1,50,007 1,25,007 1,00,007

TOTAL LIABILITIES

345 76,581 1,52,042 2,10,190 2,08,382 1,84,114 1,58,628 1,33,964

Total shareholder's equity

2,908 (1,852) (8,561) 6,276 1,01,699 2,14,353 3,40,784 4,68,650

TOTAL LIABILITIES & EQUITY

3,253 74,729 1,43,481 2,16,467 3,10,080 3,98,467 4,99,413 6,02,614


8. Analyst Certifications

I, Auditya Sankaranarayanan, certify that all the views expressed in this research report accurately reflect my personal views about the subject security and the subject Company, based on the collection and analysis of public information and public Company disclosures.

I, Sumit Wadhwa, certify that all the views expressed in this research report accurately reflect my personal views about the subject security and the subject Company, based on the collection and analysis of public information and public Company disclosures.

Important disclosures

Arrowhead Business and Investment Decisions, LLC has received fees in 2018 and expects to receive further fees in 2018 from Anson Resources for researching and drafting this report and for a series of other services to Anson Resources including distribution of this report and networking services. Neither Arrowhead BID nor any of its principals or employees own any long or short positions in Anson Resources. Arrowhead BID's principals intend to seek a mandate for investment banking services from Anson Resources and may receive compensation for investment banking activities for Anson Resources in 2018 or 2019. Aside from certain reports published on a periodic basis, the large majority of reports are published by Arrowhead BID at irregular intervals as appropriate in the analyst’s judgment Any opinions expressed in this report are statements of Arrowhead BID’s judgment to this date and are subject to change without notice. This report was prepared for general circulation and does not provide investment recommendations specific to individual investors. As such, any of the financial or other money-management instruments linked to the company and company valuation described in this report, hereafter referred to as “the securities”, may not be suitable for all investors. Investors must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors are advised to gather and consult multiple sources of information while preparing their investment decisions. Recipients of this report are strongly advised to read the Information on Arrowhead Methodology section of this report to understand if and how the Arrowhead Due Diligence and Arrowhead Fair Value Bracket integrate alongside the rest of their stream of information and within their decision making process.

Past performance of securities described directly or indirectly in this report should not be taken as an indication or guarantee of future results. The price, value of, and income from any of the financial securities described in this report may rise as well as fall and may be affected by simple and complex changes in economic, financial and political factors. Should a security described in this report be denominated in a currency other than the investor’s home currency, a change in exchange rates may adversely affect the price of, value of, or income derived from the security. This report is published solely for information purposes, and is not to be considered in any case as an offer to buy any security, in any state. Other than disclosures relating to Arrowhead Business and Investment Decisions, LLC, the information herein is based on sources Arrowhead BID believes to be reliable but is not guaranteed by Arrowhead BID and does not purport to be a complete statement or summary of the available data. Arrowhead Business and Investment Decisions, LLC is not responsible for any loss, financial or other, directly or indirectly linked to any price movement or absence of price movement of the securities described in this report.


9. Notes and References

i Source: Bloomberg, retrieved on July 12, 2018 ii Source: Bloomberg: 52 weeks to July 12, 2018 iii Source: Bloomberg: 3 months to July 12 2018 iv Arrowhead Business and Investment Decisions Fair Value Bracket-AFVBTM. See information on valuation on pages 25-26 of this report and important disclosure on pages

30 of this report v Source: Company Fillings vi Source: Company Fillings vii Source: Company Management viii Source: Bloomberg ix Source: Company Website x Source: Company Website xi Source: (https://pages.marketintelligence.spglobal.com/global-exploration- budget-trends- 2017-EMC.html?aliId=87124701) xii Note: Lithium exploration falls under non-ferrous exploration xiii Source: (https://pages.marketintelligence.spglobal.com/Lithium-in-focus- MS.html) xiv Source: (http://www.belmontresources.com/LithiumReport.pdf) xv Source: (https://pages.marketintelligence.spglobal.com/Lithium-in-focus-MS.html) xvi Note: The data pertains to the 89 primary lithium properties covered by S&P Global Market Intelligence in its Corporate Exploration Strategies xvii Source: (https://pages.marketintelligence.spglobal.com/Lithium-in-focus-MS.html) xviii Note: 7 other countries and one regional allocation account for 1.8% xix Source: Deutsche Bank Lithium 101- May 2016 (http://www.belmontresources.com/LithiumReport.pdf) xx Source: Investing News – Lithium (https://investingnews.com/daily/resource-investing/energy-investing/lithium-investing/lithium-producing-countries/) xxi Source: (https://www.reuters.com/article/us-usa-minerals-lithium/tapping-the-lithium-rush-canadian-miner-stakes-claims-in-utah-idUSKCN1GE2AZ) xxii Source: Deutsche Bank Lithium 101- May 2016 (http://www.belmontresources.com/LithiumReport.pdf) xxiii Source: Albemarle 10K Fillings (http://investors.albemarle.com/phoenix.zhtml?c=117031&p=irol-sec) xxiv Sources: Market Wired (http://www.marketwired.com/press-release/lithium-americas-and-sqm-announce-joint-venture-tsx-wlc-2109434.htm xxv Source: ICLG Australia Mining Law; ICLG Chile’s Mining Law; ICLG US Mining Law; Practical Law – Argentina’s Mining Law; Practical Law – China’s Mining Law xxvi Source: Lithium Power International Investor Presentation -October 2016 xxvii Source: Mining.com (http://www.mining.com/web/lithium-supply-demand-story); Investing News (https://investingnews.com/daily/resource-investing/energy

investing/lithium-investing/top-lithium-producers/); Company Websites (https://libertyonelithium.com/about-us/why-lithium/); SQM – Annual Report 2016 (http://s1.q4cdn.com/793210788/files/doc_financials/2016/annual/Memoria-Anual-2016_ing_final.pdf)

xxviii Source:http://metalpedia.asianmetal.com/metal/magnesium/application.shtml xxix Source:https://marketersmedia.com/boron-market-2018-global-analysis-opportunities-and-forecast-to-2023/299817 xxx Source: Cap Iq

due diligence and valuation report resources - abid report - 12... · due diligence and valuation...

Documents