Mr Ken Brinsden, President, Managing Director of Patriot Battery Metals Strategic Investment Webinar

Thanks very much Nicholas, fantastic to be with you and a pleasure to be joined by Olivia. Thanks also for joining the call. Olivia is a great resource for all shareholders and analysts and I encourage you to either make contact with her or with me, and especially as we explain the rationale for what we've been up to at Patriot in respect of the Shaka Janan project, its development credentials, in attracting such a powerful strategic partner as the combination of VW and PowerCo. And that's really the objective of the call, to help explain what we've been up to and why, and why we imagine this is such an important step forward for the company. So thanks very much everyone for joining. Both Olivia and I really appreciate your participation. Let's say 10 to 15 minutes worth of presentation materials and hopefully plenty of time for all those questions that I'm sure are pressing in everybody's minds. We look forward to being able to answer them effectively on this morning's call.

As well, for Australians you might be wondering about the time in respect of the call and I completely understand that line of inquiry, but from our point of view, a very important representation of a step forward for the North American supply chain, and I believe that to be equally true in respect of VW and PowerCo objectives. So hence the timing of our release and the timing of this call is very much focused on North American markets, but in particular how we imagine it represents a really key step forward for supply chains in those jurisdictions. So let me talk you through the materials. You'd be aware of our forward-looking statements. Please make reference to them on our website. These presentation materials are lodged there and also on the respective platforms.

Okay, well, where to start? Such an important step forward for Patriot in the relationship that's been growing and culminates today with PowerCo and VW. VW being one of the preeminent car manufacturers globally, but in particular with respect to the future around EVs, EV manufacturing, EV sales, and then PowerCo being a 100% subsidiary of VW focused on cell manufacturing. The combination of those two brands is a really important element of our rationale around where we take the project. Strategic partners being aligned with respect to the project and what they represent for the markets that we imagine we will effectively participate in. We've made no secret of our objectives in being a raw materials project that is focused on Western markets. The presence of the Shaka Janan project in North America and its proximity to Europe means that we have a really powerful position, with the scale and the grade in the project at Shaka Janan, to be a key supplier for those markets.

So we've been deeply engaged with industry to see how we could ensure we attract the right partners to the project, but in particular those that have a similar or a like mind about the future of the industry. And in VW and in PowerCo, we're confident that we've found that common purpose in terms of being focused on those markets, and that culminates in today's deal. The deal comes in a couple of different parts and I'll come back to each of them to describe it in a little bit more detail, but broadly speaking, a combination of investment in support of the project's continued development, and that'll be closing over approximately the next two to three weeks, also a forward-looking reference to investment and/or funding support for the project. So as part of today's dealings we've established a window for PowerCo to support our final investment decision and then to reconsider the combination of financing and offtake in addition to today's offtake, then of course the offtake that's matched to this early stage investment in the project, and lastly an MOU that contemplates the common objectives very much aligned with that thesis I described earlier: the common objectives that we see in building out the future of supply chains for the growth that we all imagine, that being Patriot, VW and PowerCo, is going to occur in North American and European markets.

So it's an all-encompassing deal. A basic premise: VW and PowerCo are moving from paddock to plate, they're looking to be established all the way through the supply chain including their first direct investment in lithium raw materials. So yeah, we're very proud and pleased to be part of VW's future in those key markets. Why do we do it? Well, I've already touched on some of those key points. Clearly we require funding to continue to support the project's development and the combination of VW and PowerCo have come along to help support that objective. The funding assists in the progress of the combination of our feasibility study and the associated environmental documentation that's encompassed in the ESIA. This funding round will take us well past the submission of those two documents in the September quarter of next year. I'll come back to the timeline for the project during the latter part of the presentation. Then of course there's the offtake. It's modest in scale, at least in respect of this first stage. So 100,000 tonnes per annum of spodumene concentrate. In the scheme of things, not a huge amount of concentrate, at least not as we imagine what ultimately happens at Shaka Janan. And so in the stage one project it's 100,000 tonnes of a total of 400,000 tonnes production, but once we've expanded into stage two, 100,000 tonnes of a total 800,000 tonnes. So in our view, leaving plenty of room for future growth in offtake relationships, of which it seems likely VW and PowerCo will be an important partner for the future of growth in spodumene concentrate.

And it's possible that that comes through the commitment that we've made to review the FID funding package, but in particular providing a window for VW to participate in the final investment decision funding round. It's to be agreed, but nonetheless an important signal from VW in respect of their support for our project and for that matter for Patriot to also recognise the potential in that funding and growth in future offtake positions. So to be determined, but I think a strong statement from VW about what they're prepared to do to continue to support the project's development. I think this is a key theme that I'd hope you'd be able to take away with you today.

The MOU, well the MOU is again another, it's slightly more all-encompassing. It's to say there is a lot of work to be done in the establishment of these Western-facing supply chains. I don't think you'd be putting too fine a point on it by saying that there is already significant concentration risk in respect of the front end of the lithium raw materials industry in and from China. China is clearly a dominant player and whilst they've been very successful in building a successful lithium-ion supply chain, I think it's fair to say that Western players in the market recognise there should be, and likely will be over time, further diversity in those supply chains. So what this MOU contemplates is what we can do to continue to work together to expand the supply chain so that it supports the growth in ultimately what we expect to be North American and European demand. So in our view that's also a really important point to be made in respect of today's dealings with VW and PowerCo.

Lastly, VW themselves and what they're already doing in support of the future of mobility, and a lot of that is centred on EVs. Of the Western EV players they are the second largest and they have very, very strong ambitions, but in particular through the growth that they imagine is going to occur in North America and to a certain extent in Europe. So that means there will be a lot more investment in the supply chain. Some of that starts already, or has already started, certainly in the latter parts of the planning phase, to build significant capacity in Ontario. 90 gigawatt hours is ultimately proposed for the St Thomas facility in Ontario, and we would suggest, and I'm sure VW sees it the same way, that Shaka Janan will be an important part of ultimately supplying raw materials and value-added raw materials to those facilities, not necessarily just Ontario because they already have a substantial development underway in Europe as well with respect to the future of cell-making capacity that'll make its way through to VW's EV-making capacity.

So on the strategic investment, VW, that is through their financing vehicle, will own 99.9% of Patriot. They're subscribing for shares at a significant premium and I think that's a vote of confidence in the direction that the combination of the Shaka Janan project, but equally the company, takes as we seek to develop the Shaka Janan project, which is being recognised through this deal as the premier, or if not one of the premier, assets in North America. It's fair to say that VW has done extensive due diligence as you would imagine for a significant deal like this and they've come to the conclusion that it's a key one to back, but also to back with strength. So clearly that is a really important piece of recognition for the combination of our project being large scale, very high grade and well located, but equally in respect of our team and the strong work that's already been put into this premier project. So a ringing endorsement for the combination of the project itself but also the team, and I'm really proud of the team's efforts and how far they've taken the project in a relatively short period of time. It is fantastic.

So, strategic investment, significant premium, recognition of all those things that are important about the Shaka Janan project. Moving on to the offtake, and in respect of the offtake it's relatively straightforward: 100,000 tonnes per annum during the process of stage one project capacity being 400,000 tonnes, so about 25% of the stage one capacity or 12.5% of this combined stage one and stage two capacity at 800,000 tonnes per annum. In respect of what ultimately happens with that spodumene concentrate, that's going to be the subject of a lot more discussion and also future work by PowerCo as to ultimately where that product makes its way. But in any case, the MOU also contemplates Patriot and PowerCo working together in respect of how we imagine this supply chain can unfold, and I really can't think of a better partner to be working with. They genuinely fit the bill of being a key strategic partner in the supply chain as a very, very strong end user, a sophisticated player with deep knowledge of the markets within which we're all participating. So from our point of view, a very important piece of the puzzle in bringing on our first offtake partner, but equally VW and their first investment directly in lithium raw materials. So yeah, again a really important endorsement of the project and the team.

In respect of the offtake itself, just to provide a little bit more detail, pricing is captured through lithium chemicals pricing and that's motivated principally by the concept that the chemicals indices carry a bit more volume in terms of price input, but that is also cross-checked against spodumene pricing through a basket of spodumene price references. And the logic in the model is that whilst headline prices will follow the chemicals index, it's being checked against spodumene to make sure that the two are not moving too far apart from each other. So nothing particularly different or necessarily, let's say, tricky in respect of pricing, just ensuring that the price ultimately matches directionally where the market's at and in absolute terms where price is at.

It's 10 years' worth of offtake and when you think about the scale of the Shaka Janan project that's also an important element. The mine is likely to be around for many, many decades to come, so having an important cornerstone player to the first round of offtake, and especially at this relatively early stage of the project's development — we're in the feasibility study, but nonetheless the feasibility study is not yet complete — having VW participate at this relatively early stage provides a really strong endorsement again in respect of the project and for that matter the sorts of capacity that can be won over time. So that's the offtake.

In respect of the future around funding, I glossed over that, but if you go back to the concept of how VW and PowerCo are viewing our project, one of the additional points that I would make is to say that yes, they're providing funding in respect of investment, but in return, first rounds of offtake. There is also the concept of them participating — subject to more discussion — but participating in the final investment decision funding round. And yeah, we look forward to obviously completing the feasibility study, all of the engagement that would go on with respect to the project's progress, approvals, including the engagement with the Cree. And at the time that we launch a final investment decision or a funding round, VW had been provided with the opportunity to link cornerstone funding in respect of the FID to a further round of offtake at that time. So nothing definitive other than the fact that VW and PowerCo have a window to provide that funding package and should it be agreed, commensurate offtake, potential commensurate offtake to match that round of funding at the FID stage. I hope that makes sense.

Okay, moving on. We've discussed the offtake. So in the end, the other element of the project is the MOU, and the MOU is designed to provide a collaborative and consultative approach to the continued development of the supply chain. What is it that we can do to work together to see this Western-facing supply chain emerge in a way that today is very much in its infancy? So like minds working together, ultimately either end of the supply chain, i.e. an end user in the form of PowerCo and VW, but equally us as a raw material supplier, and doing a good job of interconnecting that Western-facing value-added supply — so raw materials as presented by this Shaka Janan project, but equally value-added chemicals, how we could work together to support those objectives, cathodes and ultimately cell-making capacity in the form of PowerCo. So yeah, we feel that's another important element in respect of today's deal, basically capturing the opportunity in what's yet to develop with a view to growing Western supply of those key value-added chemicals to North American and European markets.

Okay. Lastly, there's a reminder for the phased development strategy. So taking you back to our PEA and as currently under consideration in the feasibility study, we haven't changed the model. The logic is that there will be a staged development at Shaka Janan: stage one encompassing 400,000 tonnes per annum of spodumene concentrate and stage two doubling that capacity. Stage one capacity is ultimately where PowerCo will receive their 100,000 tonnes per annum of spodumene concentrate and there'll be a discussion down the track that considers the potential for more offtake with a commensurate funding package in support of, or cornerstoning, the final investment decision funding round for the commencement of construction.

Okay, how does all that unfold? Well, in respect of our timeline, nothing has changed. We've made a lot of project progress in a relatively short period of time. It's worth remembering that to get to this point in time, but in particular to be presenting the combination of a feasibility study and the ESIA documentation, you in essence have to have already been doing three years' worth of field study, drilling, and of course whatever engineering or feasibility elements grow your database for the presentation of a feasibility study. So it is clear that Patriot and our Shaka Janan project is now pretty well advanced, to the point where we are firm on the presentation of the feasibility study and the ESIA targeting the September quarter next year, and that kicks off the comprehensive review process which will ultimately facilitate the mine approval or mine authorisation which we expect to fall out approximately two years later. In the intervening period we'll have obviously continued with our engagement with the Cree and the progress of an IBA. We'll be working on the final investment decision or detail engineering and final investment decision, of which we expect an important conversation with VW in support of that funding round, and then ultimately we move into construction late 2027 through to the end of 2028 at which time we'd be commissioning the project and ramping up production from 2029.

Reminding everyone that by the end of the decade consensus view is that there will be — and it's hard to imagine that based on today, especially today's investment thesis around mining activity, that the world is not going to be short lithium raw materials at that time — on the expectation that there will be continued substantial growth in demand, of which important subsets will come out in North America and in Europe. And we feel the combination of Patriot, the quality in our Shaka Janan project, combination of scale, longevity and very high grade subsets of the resource, its key location in Quebec and North America implies, and especially now with the consortium approach: investment of VW, offtake with PowerCo, that we have a really powerful consortium to support the growth that we expect to come from those key markets. And I think that probably is the key position that we've announced today. And Nicholas, I'm sure there's going to be some great questions amongst our listeners today, so I look forward to having a crack at answering them.

Yeah, completely understand the question Nicholas and appreciate where it's coming from. I would simply say that in your engagement that's going on with industry, there's no such thing as really a short conversation. You can only imagine how much work has gone into the combination of due diligence, respective reviews, whether it's on the VW PowerCo side or even from our point of view being the Patriot side and assessing VW and PowerCo as a partner. That doesn't happen overnight and therefore it's not necessarily that easy to be timing your run to ultimately raise the money. So that combined with the healthy premium that VW is happy to pay in respect of their participation in our business means that we should do the deal at the time that it's ready to be done. So I think that's probably about as clear as I could be in respect of that question. It's not so much a question of timing the market, it's ensuring that you've had full engagement with industry and facilitating the relationship as and when it arises as compared to trying to time the market.

Yep, again a good question and the answer is no, there is no floor and no ceiling. As you would expect, there is the standard terms and conditions that would relate to a couple of other key events. Firstly the conditions precedent: that ultimately there is a mine approved and there is a mine constructed to facilitate the offtake itself, of course. And also in the event that market conditions imply that it's no longer making sense to actually produce a product, so-called difficulties or hardship clauses. So you would like to think that everybody is protected in respect of the sort of classic terms and conditions that sit around an offtake agreement. But no, yep, no floors, no ceilings.

Yep, consistent with what we've shared in the public domain historically. I'm recalling some key slides that arose in our PEA. It was fully our expectation that industry would be key to continuing to fund the project and hence we're both pleased and proud to be working now with VW and PowerCo because they clearly fit that bill. The idea that industry itself is going to continue to support projects like ours because of its importance to underwrite investments downstream, and I think that today's deal is really just further evidence of that and affirms that objective. But other than that in terms of additional funding, well it's conceivable, yes, that there is other counterparties that we could engage with, but suffice to say the support that VW and PowerCo have shown us indicates that they're a logical counterparty to continue to work with from here and to be the first port of call. But that doesn't mean that we can't deal with others. I'm not suggesting that in the slightest. But it's an important relationship and one that we're looking forward to continuing to grow.

No, I don't think you should think of it like that. What we're really implying is that to derive a spodumene price from a chemical price, you obviously have to include modifying factors because roughly speaking, you could multiply the value in the spodumene six to ten times to equate to the value in the chemical. So clearly there has to be some modifying factors, that's really what we're referring to there. In effect you are prorating down from the headline chemical price the value in the spodumene itself. So that's what we mean by modifying factors. In assessing that, we're also testing that against the basket of spodumene prices, and I think I alluded to it in the presentation portion, we're basically checking that there is relativity between the chemical price and the basket of spodumene prices so that at different points in time the market doesn't get too — or sorry, the price derived using those modifying factors doesn't get too disconnected from the spodumene price. So to be clear, I don't really think that you should think about modifying factors somehow relating to the original investment, that's not really the way to think about it. It's just that to get to a spodumene price you have to apply modifying factors to get from the headline chemical price. Last point: the main reason for using the chemical price is obviously to assist PowerCo in their assessment of the value in the combination of the chemicals versus the spodumene, but it's also a more liquid index and therefore should ultimately be a better price print.

Sorry, one more key point. It's possible that there is more evolution of markets between now and the time that we commence supply. So the agreement also facilitates the opportunity to discuss how the market has evolved in the intervening period to consider whether an alternative structure might make sense. So it's not necessarily fixed, but we are taking a view today that you can process what you need from the chemical price, but that might change over time.

Yeah, it's going to be the subject of a lot more discussion and I don't think that PowerCo would say today that they have a definitive view. It's going to have to be the subject of more discussion, but when you think about the time between now and the commencement of our mine supply, it's also possible that there's a hybrid solution in amongst it all that deals with existing capacity somewhere around the world. The objective in the MOU is that we very much keep the conversation live about where in fact chemical capacity should go, and working together to see if there's useful solutions through our relationships, i.e. as a raw material supplier in the case of Patriot, but equally PowerCo and VW as an end user. What do we see as opportunities to continue to build this Western-facing supply chain and where should those chemicals go? So yeah, nothing definitive yet, going to be the subject of a lot more discussion, but hopefully some useful developments for Western supply chains as part of this healthy relationship.

Well I won't go into the detail, that's quite a detailed question. The logic in the model is that you're using, as I said, the headline chemical price to derive a spodumene price, therefore you're prorating that in the spodumene. We have the opportunity to assess that on a semi-regular basis. I won't give away all the terms, but basically often enough that either side, i.e. the buyer or the seller, are not going to find themselves in a difficult position for a disconnect that's emerged in the market. So between the two counterparties we worked out what timeline we think is relevant to assess that. Not very frequent, but equally not that long as well.

Yeah, look, in this particular case, I think the answer we could supply is to say no, not really. But we have received approaches historically to consider such a model. Now we would take the view that it's definitely worth considering, but equally you should make sure that if there is a deal to be done at a mine level that it equally makes sense for shareholders because once you've sold a portion of the project it's gone, it's gone forever so to speak. So I think the answer is: well, in this particular case not necessarily, but we have received approaches like that historically and yes, of course we would consider such a model. But in the end you just want to make sure that it's the right thing for shareholders for the long term.

Well, at the very least it is a significant step forward in support of the funding of the project. You can surely take away that an organisation the significance of VW and I want to say PowerCo as an offtaker is a very strong endorsement of our project, and I think that the implication you could draw from that is that definitely helps from a funding point of view. So yes, of course VW has taken a strategic stake today, but equally they've done that knowing full well that we still have more work to do to ultimately fund the entire project, and they've provided a strong endorsement to indicate that they're going to seriously participate in that process or at the very least put their best foot forward to continue to support the project. So yeah, we feel like that's a very strong endorsement. Does that help with respect to the timeline? Well, I can assure you it's supportive to the timeline, but could you be definitive about acceleration? I don't think so, not necessarily. But does it put a big tick in the box to indicate you've got strength and the consortium is a very strong consortium that ultimately builds the project? I think the answer is yes.

Yeah, it's in late planning stages and PowerCo already has a substantial presence in Ontario for sure. Ultimately there's 90 gigawatt hours of capacity, which is a very, very substantial cell-making facility by global standards. It's right up there. Olivia, I don't know if you want to add anything else there, to add to the St Thomas facilities. Sorry mate, you're either on mute or we can't hear you.

Yeah, if you think about the total pool of proposed cell capacity through PowerCo, 200 gigawatt hours through the combination of St Thomas we've just mentioned, but also Valencia in Spain and Salzgitter in Germany. So yeah, they're well advanced in respect of the combination of their objectives and capacity. And I think from memory, Olivia, that the proposal within VW is that PowerCo supplies greater than 50% of the overall cell capacity to the EV platforms. Have I got that roughly right?