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TAWANA RESOURCES NL - Tawana Fully Funded after Securing $25 Million for Bald Hill Lithium Mine and Lifting of Trading Halt

Release Date: 20/10/2017 08:17:00      Code(s): TAW       PDF(s):  
Tawana Fully Funded after Securing $25 Million for Bald Hill Lithium Mine and Lifting of Trading Halt

Tawana Resources NL
(Incorporated in Australia)
(Registration number ACN 085 166 721)
Share code on the JSE Limited: TAW
JSE ISIN: AU0000TAWDA9
Share code on the Australian Securities Exchange Limited: TAW
ASX ISIN: AU000000TAW7
(“the Company” or “Tawana”)


Tawana Fully Funded after Securing $25 Million for Bald Hill Lithium Mine and Lifting of Trading Halt

PLEASE NOTE: ALL GRAPHICS HAVE BEEN REMOVED FOR SENS PURPOSES. PLEASE REFER TO TAWANA WEBSITE FOR THE COMPLETE ANNOUNCEMENT.

     Highlights

     - Tawana fully funded to start production in Q1 2018 at the Bald Hill Lithium and Tantalum Mine, and
       through to first product sales.
     - A$20 million equity investment at a premium to 10-day VWAP at favourable terms from new strategic
       lithium industry specialist involved in the production of lithium battery cathode materials and electric
       vehicles, and $5 million loan at favourable terms from its nominee.
     - Amendments to offtake agreement with Burwill Commodity Limited (Burwill), including repayment of
       prepayment at a rate of 15% from the value of each lithium concentrate shipment (down from 20%)
       reflects long term support for Bald Hill and the Joint Venture1.
     - Lithium processing facility currently in construction, first lithium shipment targeted for Q1 2018.
     - Canaccord Genuity acted as lead manager and arranger of the funding package.
     
     Tawana Resources NL (ASX:TAW) (Tawana) is pleased to announce it is fully funded to start production at
     the Bald Hill Lithium and Tantalum Mine, located in the Eastern Goldfields, Western Australia, after securing
     a $25 million funding package.
     The package comprises equity and debt from German company Weier Antriebe und Energietechnik GmbH
     (Weier) which is a 100% owned subsidiary of lithium industry specialist Jiangte Special Electric Motor Co.
     Ltd (JSMC), a company listed on the Shenzhen Stock Exchange.
     The issue price of the placement was completed at $0.35 cents per share which represents a 2.7% discount
     to the last traded price of $0.36 and a premium of 5.4% to the volume weighted average price of Tawana
     shares traded on the ASX during the 10 days up to and including 17 October 2017.
     Commenting on the funding package, Tawana’s Managing Director, Mark Calderwood said: “We are very
     pleased to complete the funding for our share of the development and construction costs of the Bald Hill
     Lithium Mine.
     We are exceptionally placed to benefit from the favourable long term demand dynamics for the lithium
     sector based on electric vehicles. The raw materials required for Li-ion and other next generation batteries
     have become a critical focus for the global automotive sector who wish to secure these materials from high
     quality, clean, reliable and low-risk supply chains.
     We are delighted by the ongoing support of our offtake partner Burwill and the involvement of an
     established, profitable electric motor company of Weier’s calibre. The backing from Burwill and Weier is a
     very strong endorsement of the potential at Bald Hill. We look forward to being one of the next Australian
     lithium producers with production commencing in the first quarter of 2018.”

Equity Funding

The placement to Weier will be completed in two tranches:
    -   The first tranche will consist of 14,285,714 shares at an issue price of $0.35, to be settled on 25 October
        2017; and
    -   The second tranche will consist of 42,857,143 shares at an issue price of $0.35, to be settled on 15
        November 2017.
The placement is all within the Company’s 15% placement capacity and Weier will hold approximately 11.5% of
the issued capital of Tawana. Weier also has the right to appoint a nominee to the Board of Directors of Tawana.

Financing

The financing is A$5 million3 with the following material terms:
    -   Interest of 11% per annum payable quarterly in arrears;
    -   Maturity date of 31 December 2019;
    -   Tawana may repay the debt at any time before maturity without penalty; and
    -   Security over the DMS plant only.

Use of Funds

The Company will use the funds for development and exploration at the Bald Hill Project and working capital.

Offtake Amendments

Tawana has received a $12,500,000 prepayment from Burwill Commodity Limited (Burwill), a 100%-owned
subsidiary of Burwill Holdings Ltd., a company listed on the main Board of The Stock Exchange of Hong Kong
Limited (stock code 0024).

The terms of the prepayment are that no interest is payable in respect of the prepayment and is to be repaid
from 20% of the value of each shipment of lithium concentrate until such time as Burwill has been reimbursed
in full for the aggregate amount of the Advance Payments.
Tawana has re-negotiated some terms of the prepayment, with the most material item being that the repayment
of the prepayment has reduced to 15% of the value of each shipment of lithium concentrate. Given the rapid
payback of the Project, this enhances the cash flow in the first year of production.

About Weier Antriebe Und Energietechnik Gmbh
Weier Antriebe und Energietechnik GmbH (Weier) was founded in Germany in 1945. The Company was initially
focused on electric motor manufacturing, and at the beginning of the 1980s, Weier supplemented its classic
electromotor product range by manufacturing generators for wind power plants, therefore becoming one of the
first German companies involved in the production of renewable energy equipment. Today, Weier covers
primarily three segments: renewable energy, shipbuilding, and mechanical engineering. Weier is a 100%
subsidiary of Jiangte Special Electric Motor Co., Ltd.

About Jiangte Special Motor Co., Ltd.

Jiangxi Jiangte Mining Development Co., Ltd (Jiangte Mining) is a wholly-owned subsidiary of Jiangxi Special
Electric Motor Co., Ltd. (JSMC), a company listed on the Shenzhen Stock Exchange (stock code 002176) with a
market capitalisation of 20.6 billion CYN (A$3.9 billion). JSMC is a veteran special electric motor manufacturing
company and a national high-tech enterprise, and has been actively participating in the development of the new
energy - lithium battery industry in recent years. The industry chain of lithium battery includes mining and
processing of lepidolite, and production of lithium battery cathode materials and electric vehicles. JSMC
currently possesses a lithium carbonate production line of 5,000 tons per year, and another production line of
10,000 tons per year for production of lithium carbonate will soon be established.
In 2016, sales of vehicles of JSMC reached a sales revenue of over 1.8 billion CYN (A$347 million). In the first half
of 2017, Zhuhai Granton Automobile Co., Ltd. contracted with JSMC for the purchase of business electric vehicles
and logistics vehicles with a single contract sum of over 2.6 billion CYN (A$501 million), and Shenzhen National
Transport Capacity Transportation Services Co., Ltd had purchased business vehicles of pure electric coaster
models etc. from JSMC.

Relationship between Jiangte and Burwill

Weier’s parent entity Jiangte has a downstream lithium joint venture with Tawana’s offtake partner Burwill.
Burwill Commodity Limited (a subsidiary of Burwill Holdings Limited) in July 2017, formed a joint venture with
Jiangte Mining (a subsidiary of JSMC). The 50:50 joint venture will principally engage in the processing of lithium
concentrates at Yichun, Jiangxi Province, China and sales of lithium carbonate and lithium hydroxide. The JV
Company Jiangxi Bao Jiang Lithium Industrial Limited, plans to establish production lines with annual production
scale of up to 10,000 tons of lithium carbonate and 5,000 tons of lithium hydroxide utilising Bald Hill spodumene
concentrates.

About the Bald Hill Project

The Bald Hill Lithium and Tantalum Mine (Bald Hill Mine or the Project) is owned by Singapore Exchange-listed
Alliance Mineral Assets Limited (AMAL), with ASX-listed Tawana Resources NL (Tawana) holding 50% of the
lithium rights. The project is subject to a 50% earn-in to existing infrastructure and tantalum rights by Tawana
through the expenditure of A$12.5m on development costs.
A Pre-Feasibility Study (PFS)4 finalised in July 2017 confirmed the technical and financial viability of a low capital
cost 1.2Mtpa lithium Dense Media Separation circuit (DMS) adjacent to the existing tantalum processing facility
(TPF) at Bald Hill. Key findings from the study included initial annual production of 155,000tpa of spodumene
concentrate from the DMS, and 260,000Lbs of tantalum pentoxide from the TPF. Further feasibility work is being
undertaken on a lithium fines circuit (LFC) to treat stockpiled fines and middlings which has potential to add
significantly to production and reduce costs.

The first shipment of lithium concentrate is scheduled for March 2018.

EPC Group Primero mobilised to the Bald Hill Mine in July 2017 and construction work commenced, with bulk
earthworks completed and initial cement foundations being poured.

Each of Tawana and AMAL executed an offtake agreement in April 2017 for the supply of lithium concentrate
from Bald Hill over a five-year term with pricing for 2018 and 2019 of US$880/t (FOB Esperance) for 6% Li2O. The
prepayments from the aforesaid offtake agreement will be used towards the capital costs of the Project.
The Project is located 50km south east of Kambalda in the Eastern Goldfields of Western Australia. It is located
approximately 75km south east of the Mt Marion Lithium project. Refer Figure 1.

The Project comprises four mining leases, one mining lease application, twelve exploration licenses, eight
prospecting licenses and one general purpose lease totalling 790.1km.

A current Indicated and Inferred lithium Mineral Resource of 18.9 million tonnes at 1.18% Li2O, and 149ppm
Ta205 at a 0.5% Li20 cut-off for the Project was calculated by CSA Global Pty Ltd.2

Forward Looking Statement

This report may contain certain forward looking statements and projections regarding estimated, resources and reserves; planned production
and operating costs profiles; planned capital requirements; and planned strategies and corporate objectives. Such forward looking
statements/projections are estimates for discussion purposes only and should not be relied upon as representation or warranty, express or
implied, of Tawana Resources NL and/or Alliance Mineral Assets Limited. They are not guarantees of future performance and involve known and
unknown risks, uncertainties and other factors many of which are beyond the control of Tawana Resources NL and/or Alliance Mineral Assets
Limited. The forward looking statements/projections are inherently uncertain and may therefore differ materially from results ultimately
achieved.

Tawana Resources NL and/or Alliance Mineral Assets Limited does not make any representations and provides no warranties concerning the
accuracy of the projections, and disclaims any obligation to update or revise any forward looking statements/projects based on new information,
future events or otherwise except to the extent required by applicable laws. While the information contained in this report has been prepared
in good faith, neither Tawana Resources NL and/or Alliance Mineral Assets Limited or any of their directors, officers, agents, employees or
advisors give any representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information,
opinions and conclusions contained in this presentation. Accordingly, to the maximum extent permitted by law, none of Tawana Resources NL
and/or Alliance Mineral Assets Limited, their directors, employees or agents, advisers, nor any other person accepts any liability whether direct
or indirect, express or limited, contractual, tortuous, statutory or otherwise, in respect of, the accuracy or completeness of the information or
for any of the opinions contained in this announcement or for any errors, omissions or misstatements or for any loss, howsoever arising, from
the use of this announcement.

End Notes
     1.   Through Tawana’s 100% owned subsidiary Lithco No. 2 Pty Ltd (Lithco), Tawana entered into a Farm-In Agreement on 23
          February 2017 with AMAL with respect to the Bald Hill Project for the purpose of joint exploration and exploitation of lithium
          and other minerals. In May 2017, Tawana earned its 50% rights to all lithium minerals from the tenements comprising the
          Project, and Tawana and AMAL are now governed by the Lithium Rights Joint Venture Agreement which was entered into on
          10 April 2017.
          Tawana is required to spend $12.5 million in capital expenditure for upgrading and converting the existing plant on the Bald
          Hill tenements for processing ore derived from the Project, infrastructure costs, pre-stripping activities and other expenditures
          including operating costs (Capital Expenditure) by 31 December 2019.
          Upon completion of the Capital Expenditure, Tawana (through Lithco) will be entitled to a 50% interest in the Project (being all
          minerals from the tenements and the processing plant and infrastructure at Bald Hill). The portfolio of mineral tenements,
          comprising mining leases, exploration licences, prospecting licences, miscellaneous licences, a general-purpose lease, and a
          retention lease are in good standing.
          AMAL and Lithco entered into the Bald Hill Joint Venture Agreement (“Bald Hill JVA”) on 18 April 2017. The Bald Hill JVA has
          not come into effect as at the date of this announcement, but will take effect upon completion of the Capital Expenditure.
     2.   All material assumptions and technical parameters underpinning the Mineral Resource estimates in the ASX announcement
          dated 11 October 2017 continue to apply and have not materially changed since it was last reported. The Indicated Resource
          is 8.0Mt @ 1.18% and the Inferred Resource is 10.9Mt @1.18%.
     3.   The loan is currently non-binding and subject to formal documentation. The loan agreement is referenced in the Weier
          subscription agreement and to be signed on or around the subscription agreement date.
     4.   Refer ASX announcement dated 11 July 2017. All material assumptions underpinning the Production Targets detailed in this
          report (including all financial information derived from those production targets) are detailed in the ASX announcement dated
          11 July 2017 and Tawana confirms those assumptions continue to apply and have not materially changed.



20 October 2017

Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd

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