Keliber OyBusiness Review Q1 2020January–March 2020

April 24, 2020

Content

Q1 in brief 3CEO’s summary 4-5Health and safety 6-8Market development 9-10Financial information 11-13Progress of the project 14-20Key activities in Q2 21Market outlook 22

www.keliber.fi

Q1 in brief

• EUR 5.77 million through directed share issue• Pilot scale test work completed - Battery grade lithium hydroxide produced

in continuous pilot• Hannu Hautala appointed as the CEO of the Company from March 16, 2020• EIA report of the Kokkola lithium chemical plant submitted to the Centre for

Economic Development, Transport and the Environment of South Ostrobothnia("ELY Center")

12.5.20203

www.keliber.fi

CEO’s summaryDuring the first months of 2020, Keliber continued its work towards battery-gradelithium hydroxide production for the needs of the growing international market. Todemonstrate the functionality of the production process, a continuous lithium hydroxidepilot was carried out at Outotec R&D Center. The purity of the product received wasextremely high and lithium recovery in the process was better than the one used in theDefinite Feasibility Study in February 2019. The results were very convincing.

The Covid-19 pandemic has influenced lithium markets and disturbed lithium supplychains globally. Demand of cars, including electrical cars or hybrids, has been temporarilyreduced. However, the pandemic is not expected to change the trend of trafficelectrification during the coming years and decades: Electrical Vehicles are here to stay.

Due to the Covid-19 pandemic, sourcing strategies of raw materials for variousindustries, including car manufacturing and batteries, will be reconsidered. The goal is toreduce dependency on single sources, or in other words: to welcome new suppliers andnew regions.

12.5.20204

www.keliber.fi

CEO’s summaryI took over the interesting and inspiring task of CEO at Keliber in March. During my first weeks at the company,I have met a professional team of enthusiastic and very flexible people at Keliber. I have also had the pleasure to discusswith some of the shareholders, and I have discussed with other stakeholders such as neighbors, municipality authorities,potential customers and advisors. There is a very positive spirit at Keliber, based on ore discoveries, growing lithiumdemand and solid technological know-how.

To my predecessor, Pertti Lamberg, I address my warmest thanks for his excellent work for Keliber during 2016-2020and for the professional handover of the CEO tasks to me. I also wish him all the success in his next professional taskof developing a new mine, while Keliber is ready to move into the project execution phase.

For all shareholders of Keliber and other readers of this Q1 report, I wish a pleasant spring despitethe Covid-19 restrictions.

Hannu Hautala

12.5.20205

Health and safety

www.keliber.fi

Health and safetyZero incidents

KPI Q12020

Q1-Q42019

Significantenvironmental incidents

0 0

Number of employees 17.7 15.9

Sickness absence 4.4 1.2LTI* 0 0TRI* 0 0High potential work-related incidents

0 0

12.5.20207

Special circumstances due to Covid-19pandemicGuidelines and instructions of the Finnishgoverment and authorities are followedand practices are updated when needed.• Remote working is recommended

when possible.• Trainings are delayed and meetings

are held remotely.

Safety analysis conducted for the chemical plant• Early identification of process risks.

*ICMM criteria

www.keliber.fi

Health and safetyLeading indicators

Every employee is encouraged to do atleast two safety activities per month• reporting a safety observation• participating in a risk assessment,

safety walk or improvement project.

0

0,5

1

1,5

2

2,5

Safety activities / person / month

12.5.20208

Target: to enforce a world-classsafety culture

Market development

www.keliber.fi

Market development – Roskill

Strong demand growth and erodingoversupply of lithium in the long-termCovid-19 pandemic has affected demandand supply of EV’s and lithium in the short term.• Take-off in demand of lithium has been

delayed due to Covid-19, but the impact onlithium price has been smaller than for otherindustrial metals. The demand decline isexpected to continue in Q2 2020.

12.5.202010

Consumption of lithium by first use, 2018-2040 (000t LCE)

Source: Roskill Consulting Group Ltd: Keliber Oy Lithium market update – December 2019.

Financial information

12.5.202011

www.keliber.fi

FinancingEnsuring smooth continuation of the project

Gross proceeds of EUR 5.77 million raised throughdirected Share Issue• The Share Issue was not registered by March 31, 2020,

so it is not accounted for in equity yet. It will betransferred from liabilities to equity once theregistration is finished.

Summer IPCEI project funding decision received fromBusiness Finland• Other operating income of EUR 0.2 million accrued in

Q1 2020 related to the project. To receive the grant infull, the company must implement an extensivedevelopment plan and meet the financing conditions.

12.5.202012

www.keliber.fi

Financial informationMajor shareholders

Shareholder Capital & votes (%) Country

1 Suomen Malmijalostus Oy (Finnish Minerals Group, FMG) 1) 26%

2 Nordic Mining ASA 16%

3 Jorma Takanen 10%

4 Ab Mine Invest Oy 8%

5 Thominvest Oy 6%

6 Pohjanmaan Arvo Sijoitusosuuskunta 5%

7 Keskinäinen Eläkevakuutusyhtiö Ilmarinen 5%

8 Case Invest Oy 5%

9 Jussi Capital Oy 4%

10 Räsänen Simo 1%

Source: Company information (as of May 11, 2020)Note: 1) Fully-owned by the Finnish stateRegistration in progress.

Progress of the project

12.5.202014

www.keliber.fi

Progress of the project

5/12/202015

The project schedule is monitored by usingMicrosoft Project tool to decrease projectrisks• all tasks in one file• task dependencies visualized• timely follow-up of the project• prioritization of tasks• critical paths identified.

Improving processes using a project tool

www.keliber.fi

Progress of the projectImproving profitability

Improving key figures to increase IRRTargeting to increase capacity andoptimize manufacture chain andtransportation.• A study has been prepared during Q1

and will be finalized during Q2.• Condemnation drilling related to the

study has continued at Päivänevaswamp (peat production area), close tothe planned Rapasaari mine site.

12.5.202016

www.keliber.fi

Progress of the projectImproving profitability – Condemnation drillings

12.5.202017

Exploration and condemnation drillingsThe exploration and condemnationdrillings have returned several new oreintercepts in Rapasaari area in winter2019-2020.• A total of 4,087 meters have been

drilled with several intercepts ofspodumene pegmatite veins withthe length of 2-15 meters by 1-2 drillrigs in Q1 2020.

The best assayed intercepts in Q1 2020

www.keliber.fi

Progress of the projectDecreasing project risks – Testing and planning

Three phase pilot-scale test workcompleted• Battery grade lithium hydroxide

produced in continuous LiOH pilot inJanuary 2020 at Outotec.

• Excellent results demonstratethe functionality and strength of thechosen technology.

• SRK preparing an observational reportof the pilot.

Study on recycling business opportunitiesin preparation

Technology engineeringChemical plant basic engineering is ongoing andpreparations to start conversion and concentratorbasic engineering have started.• Outotec was selected as a provider of Vendor’s

BE for the chemical plant and FLSmidth as aVendor’s BE for the conversion kiln.

• Procurement for selecting CM&P partner isongoing and procurement process to selectEngineering partner is nearing completion.

5/12/202018

www.keliber.fi

Progress of the projectDecreasing project risks – Development of EIA processesand environmental permitting

Chemical plant

Completing the EIA of the chemical plantThe EIA report submitted to ELY(coordinating authority) on March 6, 2020• Public notice coordinated on

March 26 – May 22, 2020.• The reasoned conclusion

of the coordinating authority (ELY) isexpected by the end of June.

Mine site and concentratorEIA process of the mine site andconcentrator in progressStudy on improving project key figuresand lowering project risks preparedduring Q1.• Mineral resources and ore reserves

increased at the end of 2019.

12.5.202019

EIAEnvironmental

ImpactAssessment

www.keliber.fi

Progress of the projectResearch and development

Business Finland granted EUR 2.6 million for thelithium project’s sustainable development andinnovation work on March 2020 as a part of theIPCEI summer project.

R&D activities concerning recovery of lithium-ionbattery materials using a pyrometallurgicalprocess under the BATCircle project haveprogressed well and the results have beenexcellent.

Preparation and execution of the second stage ofthe crushed rock and moraine sample percussiondrilling program under Green Minerals project hasbeen finished.

12.5.202020

www.keliber.fi

Key activities in Q2

12.5.202021

Bridge financing actionspart 2 to be started.

Annual General Meeting2020 to be held on May26, 2020.

Decision on increasingcapacity and deliveryvolume of LiOH andoptimizing productionprocess and logistics.

Observational report on theOutotec LiOH pilot to befinalized by SRK.

EIA process readiness• Condemnation drillings to

be continued until mid-May 2020.

• Vendor’s basic engineeringdesign in all three processareas to be continued.

Reasoned conclusion onthe EIA of the chemicalplant and court decision onSyväjärvi environmentalpermit are expected at theend of Q2.

www.keliber.fi

Market outlook

Roskill and Fastmarkets estimate that theincrease in lithium chemicals production exceedsthe growth in lithium chemicals demand duringthe first half of 2020. This is expected to affectprices of all lithium products, and the prices areexpected to remain relatively low in the first halfof 2020.

Lithium demand and supply is expected tostabilize over the medium term, and demand isexpected to increase faster than the estimatedproduction growth in the long term. Roskillforecasts that oversupply will be eroded in early2020’s..

12.5.2020 -22

Price recovery of lithium is expected in Q3 2020

Source: Roskill Consulting Group Ltd: Keliber Oy Lithium market update –December 2019.Note: Nominal forecast rounded to nearest US$100/t. Real prices adjusted toconstant 2018 US dollars using World GDP deflator data from the InternationalMonetary Fund's World Economic Outlook Database

www.keliber.fi