Investor Presentation

Transcript Investor Presentation

Investor Presentation

May 2012

www.talisonlithium.com

Forward Looking Information

  Certain information contained or incorporated by reference in this document, including any information regarding Talison Lithium Limited’s (“Talison” or the “Company”) strategy, projects, plans, prospects, future outlook, anticipated events or results or future financial or operating performance, constitutes “forward-looking statements” within the meaning of Canadian securities laws. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements can often, but not always, be identified by the use of words such as “plans”, “expects”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “predicts”, “potential”, “continue” or “believes”, or variations (including negative variations) of such words; or statements that certain actions, events or results “may”, “could”, “would”, “should”, “might”, “potential to”, or “will” be taken, occur or be achieved or other similar expressions concerning matters that are not historical facts. The purpose of forward-looking statements is to provide the reader with information about management’s expectations and plans for the 2012 financial year and subsequent financial years. Forward-looking statements are necessarily based on a number of factors, estimates and assumptions that, while considered reasonable by Talison, are inherently subject to significant business, economic and competitive uncertainties and contingencies. While Talison considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect and actual results may vary.

 Readers are cautioned that forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Talison and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and factors are discussed in the unaudited condensed consolidated interim financial statements of Talison and the related notes thereto as at March 31, 2012 (collectively, the “Financial Statements”) dated May 10, 2012, which can be found on Talison’s SEDAR profile at www.sedar.com

, and in the Company’s annual information form for the year ended June 30, 2011 dated September 23, 2011 (the “Annual Information Form”), which can be found on Talison’s SEDAR profile at www.sedar.com

. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made or incorporated in this document are qualified by these cautionary statements.

 Although Talison has attempted to identify statements containing important factors that could cause actual actions, event or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.

Forward-looking information contained herein are made as of the date of this document based on the opinions and estimates of management on the date statements containing such forward looking information are made. Except as required by law, Talison disclaims any obligation to update any forward-looking information, whether as a result of new information, estimates or opinions, future events or results or otherwise. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.

An investor should read this document and the documents to which Talison refers to in this document completely and with the understanding that Talison’s actual future results may be materially different from its expectations. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities.

2 www.talisonlithium.com

Talison Lithium Overview: TSX-TLH

Established pure play lithium producer positioned to take advantage of expected market growth

Sales Volume & Pricing Largest Global Lithium Producer

• • • Lithium producer in Australia for >25 years Over 30% global market share Track record of growth: 70 60 50 40 30

15% price increase H2 FY12

$400 $300 $200 20 Sales volume 15% CAGR (10yrs) $100 10 FY2004 FY2006 FY2008 FY2010 FY2012 $0

Clear Growth Strategy

• • Current expansion nearing completion Down-stream lithium carbonate plant: • FID late 2012 Salares 7: Chilean brine exploration project 30 25 20 Sales Volume (LHS) Price (RHS)

EBITDA & EBITDA Margin 24% EBITDA Margin H1 FY12

30% 25% 20% 15 15%

Strong Financial Position

• Sales price increase of 15% for H2 FY12 • • Declining Cash Operating COGS Cash reserves A$85m at Mar. 31, 2012 • Market Cap C$340m (May 2012) www.talisonlithium.com

10 5 0 FY2008 FY2009 FY2010 FY2011 FY2012 EBITDA (LHS) EBITDA Margin (RHS) 10% 5% 0% Source : Talison, See “Disclosure Regarding Financial Information”.

Sales Volumes & Pricing excludes sales of crushed ore.

LCE denotes lithium carbonate equivalent. 3

Lithium Market

www.talisonlithium.com

Conventional Lithium Applications

Key Uses

Accelerates melting of glass, reducing energy requirements Hardens ceramic glazes Strengthens glass cook tops Enables high working temperature greases Pharmaceuticals

Growth Outlook

Currently 70% of global market GDP growth globally Faster growth in Asia and BRICs 5 www.talisonlithium.com

Emerging and Growth Applications

Key Uses

Energy dense consumer batteries Strengthens wind turbine blades Lightweight aerospace alloys Large format batteries for electricity grid stabilization

Growth Outlook

20%+ annual growth since 2000 Currently 30%+ of global market Rapid development of new applications 15%+ annual growth expected to 2020 6 www.talisonlithium.com

Transport of the Future

Wide Range of EVs using Lithium

Electric bikes / scooters Passenger electric vehicles Electric buses/ taxis / trucks

Market Drivers

Energy security Reducing oil dependence Decreasing carbon emissions

Growth Outlook

Currently <1% of global market Significant growth accelerator from 2015 Government mandated Asia driving growth 7 www.talisonlithium.com

Strong Demand Outlook for all Applications

400 000 300 000 200 000 100 000

Future Transport High Case Future Transport Base Case

2010 2011 2012 2013 Conventional 2014 2015 2016 2017 2018 Emerging and Growth Future Transport 2019 Source: Talison, based on current market conditions and pricing.

Future Transport: EVs as a proportion of global passenger vehicle sales in 2020: Base Case 3.5%, High Case 6.0%.

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2020 8

Existing Producers Dominate Global Supply

Talison Lithium 32% Others 6% Company C 22% Company A 29% Company B 11%

Lithium Supply by Company, 2011.

Source: Talison www.talisonlithium.com

Existing Producers Expanding to Meet Demand

Existing producer advantages

Highest quality lithium deposits Economies of scale Existing infrastructure & logistics Experienced technical capabilities

New projects difficult

Lower quality lithium deposits High capital costs Technical challenges Longer development timelines Substantial ramp up period

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Capturing Rapid Market Growth

Demand from new technologies growing quickly

67 million iPads sold in first 2 years of sales iPad sales growing significantly faster than iPhones – required over 3 years to reach 67 million iPhone sales For the quarter January to March 2012  Apple sold 35 million iPhones globally  Samsung estimated to have sold 44 million smartphones globally  Total smartphone sales in China estimated to have grown by 20% Global smartphone sales expected to grow to over 700 million in 2012 www.talisonlithium.com

220

Comparison of sales of iPhones and iPads

200 180 160 140 120 100 80 60 iPad iPhone 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quarter since sales commenced New model released Source: Apple Inc.

Lithium Prices Increasing

• Global supply tightening since mid 2011 has impacted prices • Price increases announced by other major lithium producers in mid 2011 and May 2012 • Talison secured 15% price increase for H2 FY2012 across its entire product range • Price increases support investment in Talison’s business to meet growing global demand for lithium www.talisonlithium.com

$400

Talison’s average sales price increasing

$350 $300 $250

15% price increase agreed for H2 FY12

$200 FY08 FY09 FY10 FY11 H1 FY12 H2 FY12 Source : Talison, excludes sales of crushed ore.

Talison’s Growth Strategy

Talison currently produces approximately one third of global lithium supply and the current expansion (shown in photo) will more than double production capacity.

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Greenbushes Lithium Operations

Expansion near completion

On time and budget – commissioning Q4 FY2012 Highly flexible and efficient plant Positions Talison to meet future market growth High quality feedstock for Talison’s lithium carbonate plant

Chemical-grade processing facility – March 2011 Chemical-grade processing facility – April 2012 14 www.talisonlithium.com

Greenbushes Lithium Operations

Increasing Lithium Reserves

• March 2011 Lithium Mineral Reserves increased from 0.9Mt to 2.4Mt LCE Grade 3.1% Li 2 O Orebody open both along strike and at depth • Resource definition drilling in H2 FY2012 To support future expansions of lithium concentrate plants and lithium carbonate plant www.talisonlithium.com

Greenbushes Lithium Operations Total Lithium Mineral Resources & Reserves*

6 5 4 3 2 1

Resource definition drilling H2 FY2012

150 000 100 000 50 000 0 Mar-2010 Reserves Mar-2011 FY2012 Resources Source: Talison. *See “Disclosure Regarding Mineral Resources and Mineral Reserves”.

0 Production Capacity (RHS) 15

Lithium Carbonate Plant

• Conversion of lithium concentrate to produce 20,000 tpa lithium carbonate • Provide additional secure supply of lithium carbonate to global markets • Kwinana Industrial Area, Western Australia selected as preferred location

Synergies with surrounding industries Availability of infrastructure Close to Fremantle Port for container exports

• Accelerating the formation of customer relationships

MOUs with Sojitz and Mitsui & Co. to discuss marketing and distribution opportunities in Japan

Kwinana Talison Operations

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Lithium Carbonate Plant

2012 Objectives

Complete engineering study Commence regulatory approval process Provide product samples to potential customers Final Investment Decision anticipated end calendar 2012 Targeting production 2015

Lithium carbonate test facility at the Greenbushes Lithium Operations * 2012 Calendar Year www.talisonlithium.com

Salares 7 Project

• Located in the Atacama Region III, Chile • Outstanding results for both lithium and potassium from initial drilling at Salar de la Isla in 2011

Up to 1,080 milligrams per litre (“mg/l”) lithium, with an average of 863 mg/l lithium Up to 9,830 mg/l potassium, with an average of 7,979 mg/l potassium

• Focus in H2 FY2012 on environmental approvals www.talisonlithium.com

Financials

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Strong Operating Results

(Unaudited)

Sales Volume (tonnes lithium concentrate) Sales Volume (tonnes LCE)

Q3 2012 111,896 16,600 Q2 2012

75,221 11,200

Q1 2012

80,315 12,000

Q4 2011

92,416 14,000

Q3 2011

97,001 14,400

Q2 2011

97,559 14,500

Q1 2011

52,525 7,800 Average sales price (US$/tonne lithium concentrate) Revenue (A$’000) Cash operating cost of goods sold (A$/tonne lithium concentrate) General/Administration/Other (A$’000) EBITDA ( A$’000) EBITDA as percentage of sales revenue (%) Operating Cashflow (A$’000) See “Disclosure Regarding Financial Information”.

340 36,965 195 3,235 11,964 32% 16,269

310 22,686 187 3,203 5,387 24% 11,973 330 25,879 207 3,159 6,126 24% 8,214 302 303 315 26,412 184 3,680 5,755 22% 10,462 29,207 195 3,937 6,308 22% 8,149 32,810 208 3,566 7,233 22% (4,292) 313 21,072 221 2,003 4,770 23% 8,010 www.talisonlithium.com

Summary Balance Sheet

Statement of Financial Position (A$ ’000)

Assets Cash and cash equivalents Trade and other receivables Inventories Other assets Property, plant and equipment Exploration and evaluation assets Total assets Liabilities Trade and other payables Interest-bearing liabilities Provisions Deferred tax liabilities Tax payable Total liabilities Shareholders’ equity See “Disclosure Regarding Financial Information”.

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As at March 31, 2012 (Unaudited) 85,057 12,879 17,808 3,891 142,314 62,982 324,931 12,954 27,647 15,182 9,136 6,781 71,700 253,231 As at June 30, 2011 (Audited)

102,605 21,543 11,182 10,205 95,215 61,714 302,464 12,380 29,243 14,668 10,622 66,913 235,551 21

Proven Management Team

Peter Oliver

CEO / MD

Lorry Mignacca

CFO & Company Secretary

• Over 20 years of lithium mining and production experience • Former COO of Talison • Over 25 years experience as a Chartered Accountant, the bulk of which is with Talison or its predecessor • Previous finance roles with Normandy Mining (formerly ASX:NDY) and Barrack Mines (formerly (ASX:BRM) • Over 25 years of public Canadian company experience • Former VP and General Counsel of Gabriel Resources (TSX:GBU)

Frank Wheatley

Executive Director Corporate Affairs & Strategy

Paul Wallwork

Marketing Manager

• Over 20 years sales experience in the chemicals/mineral resource industries • Variety of technical, sales and marketing management roles for companies including Iluka Resources (ASX:ILU) and ICI Australia (formerly ASX:ICI)

Pat Scallan

General Manager Greenbushes Lithium Operations

• General Manager at Greenbushes since 1997 • Previous senior roles with Gwalia Consolidated and various mineral sands operations in Western Australia www.talisonlithium.com

Greenbushes Lithium Operations

Greenbushes Lithium Operations - Lithium Mineral Reserves as of March 31, 2011 Category

Proven Mineral Reserves

Tonnage (Mt)

0.2

March 31, 2011 Li 2 O Grade (%)

3.9

LCE (Mt)

0.02

Previous - March 31, 2010 Tonnage (Mt)

0.1

Li 2 O Grade (%)

3.9

LCE (Mt)

0.01

Probable Mineral Reserves

Total Proven and Probable Mineral Reserves

31.3

31.4

3.1

3.1

2.38

2.39

9.5

9.6

3.9

3.9

0.92

0.93

Notes: (1) There may be some rounding errors in totals.

(2) For the updated calculation (as of March 31, 2011) a 2% Li 2 O cut-off grade has been applied.

(3) Proven Mineral Reserves comprises the Run of Mine and Fine Ore stockpiles. All the Probable Mineral Reserves are contained within the Indicated Mineral Resources.

(4) Mineralization was classified according to the definitions in National Instrument 43-101 and the guidelines published by the Council of the Canadian Institute of Mining, Metallurgy and Petroleum (the CIM Standards).

Greenbushes Lithium Operations - Lithium Mineral Resources as of March 31, 2011 Category

Measured Mineral Resources

Tonnage (Mt)

0.2

March 31, 2011 Li 2 O Grade (%)

3.9

LCE (Mt)

0.02

Previous - March 31, 2010 Tonnage (Mt) Li 2 O Grade (%) LCE (Mt)

0.10

3.9

0.01

Indicated Mineral Resources 70.2

2.6

4.55

21.9

3.7

2.00

Total Measured and Indicated Mineral Resources 70.4

2.6

4.56

22.0

3.7

2.01

Total Inferred Mineral Resources 2.0

2.2

0.11

2.7

3.5

0.23

Notes: (1) There may be some rounding errors in totals.

(2) For the updated estimate (as of March 31, 2011) the lithium Mineral Resources are within lithium domains drawn at a 1% Li 2 O grade boundary, and above 1,000RL; and Measured Mineral Resources comprises the Run of Mine and Fine Ore stockpiles. For the previous estimate (as of March 31, 2010) the lithium Mineral Resources are within lithium domains drawn at a 2.8% Li 2 O grade boundary. (3) Mineral Reserves are included in Mineral Resources. Mineral Resources are not Mineral Reserves and, as such, do not have demonstrated economic viability.

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Disclosure Notice Disclosure Regarding Mineral Resources and Mineral Reserves

Mineral Resource estimation was performed using Ordinary Kriging into 20mNx20mEx5mRL parent blocks, with each variable Li 2 O, calcium oxide (CaO), ferric oxide (Fe 2 O 3 ), potassium oxide (K 2 O), manganese oxide (MnO), sodium oxide (Na 2 O), phosphorus oxide (P 2 O 5 ), tin (Sn), and tantalum oxide (Ta 2 O 5 ) being estimated independently. This work was overseen by Andrew Purvis, a full-time employee of Talison, who is a in accordance with National Instrument 43-101 and a “Qualified Person” ‘‘Competent Person’’ as defined by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 Edition (the JORC Code).

Talison does not consider that the estimate of lithium Mineral Resources and Mineral Reserves will be materially affected by any known environmental, permitting, title, mining, infrastructure or metallurgical issues. For further information refer to the technical report in respect of the Greenbushes Lithium Operations titled “Greenbushes Lithium Operations, Located in Western Australia – Australia” dated June 15, 2011, a copy of which can be found on Talison’s SEDAR profile at www.sedar.com.

NI 43-101 - Technical Report

Readers are cautioned not to rely solely on the summary of the Mineral Resources and Mineral Reserves contained in this presentation, but should read the Greenbushes Technical Report.

The Mineral Resource estimates were prepared by Mr. Scott Jackson (BSc (Hons), CFSG, MAusIMM, MAIG), Director and Principal Consultant, of Quantitative Group Pty Ltd (“Quantitative Group”) of Perth, Western Australia, in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 Edition (the JORC Code), which is comparable with the requirements of National Instrument 43 101 – Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators. Quantitative Group undertook statistical analysis, block estimation, validation and classification of the Mineral Resource, constructed the Mineral Resource block model and reviewed the QA/QC data. The Quantitative Group work was undertaken or supervised by Mr. Jackson, who also reviewed data collection and data quality. Mr. Jackson is independent of Talison and a “Qualified Person” in accordance with National Instrument 43-101.

The Mineral Reserves were prepared by Messrs. Andrew Purvis (BSc (Hons), MSc, MAusIMM), General Manager Geology, Talison, and Stephen Green (B. Eng, MAusIMM), Manager, Mining and Environment at the Greenbushes Lithium Operations each of whom is a full-time employee of Talison and a “Qualified Person” in accordance with National Instrument 43-101. The lithium Mineral Reserves were calculated based on a 2% Li 2 O cut-off grade and the costs and recoveries for the second stage expansion of the Greenbushes Lithium Operations. The Mineral Reserve calculations were reviewed by Mr. Peter Ingham (MSc, BSc, FAusIMM, MIMMM, Cen), General Manager Mining, of Behre Dolbear Australia Pty Ltd. Mr. Ingham is independent of Talison and a “Qualified Person” in accordance with National Instrument 43-101.

Scientific and technical information in this presentation was reviewed by Andrew Purvis, General Manager Geology, Talison .

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Disclosure Notice Disclosure Regarding Financial Information

Information in this presentation is in relation to the financial condition and results of operations of Talison Lithium Limited (“Talison” or the “Company”) as at March 31, 2012 and for the three and nine months ended March 31, 2012. This presentation should be read in conjunction with the unaudited condensed consolidated interim financial statements of Talison and the related notes thereto as at March 31, 2012 and for the nine months ended March 31, 2012 (collectively, the “Financial Statements”). The financial information contained in this presentation is derived from the Financial Statements, which were prepared in accordance with International Financial Reporting Standards expressed in Australian dollars (“IFRS”). All amounts in this presentation are (“A$”) unless otherwise identified. References to “C$” are to Canadian dollars and references to “US$” are to United States dollars.

Prior to acquiring the Greenbushes Lithium Operations on August 12, 2010 (the “Reorganization”), Talison was a dormant entity and did not trade in any capacity. However, the acquisition of the Greenbushes Lithium Operations has been determined to be a common control transaction which the Company has elected to account for on a continuity of interest basis. While continuity of interest accounting is not required by IFRS, it is also not prohibited by IFRS. Continuity of interest accounting is common practice under Canadian generally accepted accounting principles for such transactions. As a result of Talison’s election to use continuing of interest accounting, the results of the Greenbushes Lithium Operations prior to the date the Company acquired the Greenbushes Lithium Operations (being, from July 1, 2010 to August 11, 2010) have been included as comparatives in the Financial Statements. The results of the Greenbushes Lithium Operations prior to the Reorganization have been extracted from the group financial statements of Talison Minerals Pty Ltd (“Talison Minerals”), which became a wholly-owned subsidiary of Talison on August 12, 2010.

Readers of this presentation are cautioned that certain statements in this presentation may relate solely to the debt and capital structure of Talison Minerals before the Reorganization and may be of no consequence to the ongoing operations of Talison. For further information refer to Management’s Discussion and Analysis of the financial condition and results of operations of Talison Lithium Limited as at March 31, 2012 and for the nine months ended March 31, 2012 (which can be found on Talison’s SEDAR profile at www.sedar.com).

Disclosure Regarding Non-IFRS Performance Measures

This presentation uses EBITDA as a key metric in assessing Talison’s operating performance without the effect of interest, taxes and depreciation and amortization, as it reflects the cash generated by Talison’s business. This term is not a defined financial measure according to IFRS and does not have any standardized meaning prescribed by IFRS. Therefore, this measure may not be comparable to a similar measure used by other enterprises. This measure should not be considered an alternative to net profit / (loss) cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. Rather, EBITDA is provided as additional information to complement IFRS measures by providing further understanding of the results of operations from management’s perspective. EBITDA is calculated by adding net interest expense / (income), income tax expense / (benefit) and depreciation and amortization to net profit / (loss). For further information refer to “Non-IFRS Performance Measures” in Management’s Discussion and Analysis of the financial condition and results of operations of Talison Lithium Limited as at March 31, 2012 and for the nine months ended March 31, 2012 (which can be found on Talison’s SEDAR profile at www.sedar.com).