Vanadium Market Outlook

April 2013

TTP Squared Inc • Metals Industry Consultants

Disclaimer:

The information presented in the slideshow has been compiled by Terry Perles, President of TTP Squared Inc. TTP Squared Inc and Mr Perles provide information and advice to vanadium producers and consumers around the world. Mr Perles has worked in the vanadium industry for over 25 years and is considered an expert in the industry. Mr Perles is a full time employee of Atlantic Ltd.

Mr Perles and TPP Squared Inc provided Atlantic Ltd with the information in this presentation as part of Mr Perles’ employment agreement. Atlantic has permission to use the information as it sees fit and all facts and forecasts have been checked for accuracy with Mr Perles. Further updates to all or part of this presentation will come as new information arises.

TTP Squared Inc Disclaimer:

This presentation only reflects the personal views and opinions of the Author regarding vanadium market. Such opinions are prospective because they are subject to factors of risk and uncertainty, and real future results may diverge considerably from those expressed or suggested in the aforementioned statements made herewith. Any analysis carried out on the basis of this presentation is the exclusive responsibility of the person executing said analysis. Given the above, the Author, under no circumstances, may be held responsible for direct, indirect, incidental, special, punitive or other kinds of consequential damages derived from any use made of the Author’s opinions.

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Terry Perles – President TTP Squared Inc

Mr Perles is the founder and President of TTP Squared Inc., who offer consulting services to thevanadium industry.

Mr Perles has more than 25 years of vanadium industry experience, having previously held the roleof VP Sales and Marketing at Stratcor, as well as being a consultant to vanadium producers andconsumers.

He is recognised globally as an expert in the vanadium industry and brings that valuable knowledgeand experience with him to the Company.

TTP Squared Inc

Global Vanadium Supply and Demand Forecast

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• Tight vanadium supply/demand balance forecast over the next five years – expected to be driven by continued increase in intensity of vanadium use and substitution of low strength carbon steel with high strength steel.

• Potential demand for energy storage could further add to the supply deficit significantly in the coming years.

Source: TTP Squared, Inc

Ferrovanadium Price Forecast – Short Term

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• Limited production and growing demand should lead to further tightening in global inventory levels and resulting higher prices in the coming months.

Source: TTP Squared, Inc

Ferrovanadium Price Forecast – Long Term

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• Over the long term, balanced supply/demand projections combined with current tight global inventory levels leads to increasing upward pressure on prices.

• Future Chinese supply demand dynamic seen to drive global pricing with low excess Chinese supply foreseen over forecasting period.

Source: TTP Squared, Inc

Price Forecast Assumptions

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• Excess global stocks accumulated between 2005-2010 have been depleted in 2011 and 2012.

• This has led to a relatively tight market and rising prices in late 2012.• Opportunity for a short term price spike similar to 1989, 2005 and 2008 when

ferrovanadium prices surpassed US$80/KgV in inflated terms.• Forecast tight supply/demand balance and depleted inventory levels expected over

2013-2017 (assumes all planned capacity expansions come on line, see next slide).• Growing dependence on Chinese exports is a long term trend that will continue leaving

markets outside of China vulnerable to price upsets based on availability of Chinese exports.

Source: TTP Squared, Inc

New Vanadium Supply

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• Windimurra expected to reach in excess of 80% of the full production run rate of 6,300 metric tonnes of vanadium (tonnes) in June 2013.

• Expansion of Chinese steel mills processing vanadium bearing magnetite planned to add 20,000 tonnes by 2016.

• Of which 7,000 tonnes expected by 2016 largely from restart of stone coal in 2014. • Maracas project in Brazil expected to reach full production of 8,600 tonnes in 2017. • Expansion of Highveld Steel in South Africa planned to add 500 tonnes by 2017.

Source: TTP Squared, Inc

• Expansion of vanadium supply from steel mills in China and South Africa are highly dependent upon global steel market developments in the coming 2 years.

Graph: EU vanadium price.

Vanadium Inventory

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Source: TTP Squared, Inc

• Excess global inventories accumulated 2005-2009 will reach a critically low level in 2013.

Surplus Deficit London Metal Bulletin Ferrovanadium Price

Vanadium Steel Market Share

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• Vanadium containing steel sub-sector has been steadily growing and is seen to continue to rise due to a shift from low to high strength steels ie substitution and intensity in use.

Source: TTP Squared, Inc

Graph assumes average vanadium content in vanadium steel 0.05%

Vanadium Consumption in Steel Industry

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• Vanadium containing steel sub-sector has been steadily growing and is seen to continue to rise due to a shift from low to high strength steels ie substitution and intensity in use.

Source: TTP Squared, Inc

Steel Production: China vs Rest of World

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• Growth in global steel production has been driven by China in the past 10 years.

Source: TTP Squared, Inc

Crude Steel Production Growth

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Source: TTP Squared, Inc

Specific Vanadium Consumption Rates in Steel Industry

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• China’s currently low specific vanadium consumption rates are rising substantially driven by increased intensity in use of steel rebar. Grade 2 rebar (no vanadium) is being phased out following the new Grade 3 rebar standard (typical V content 0.35KgV/tonne steel) coming into effect from July 2012.

Source: TTP Squared, Inc

Chinese Vanadium Supply and Demand

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• The Chinese supply surplus is declining due to:• Increased demand driven by intensity and substitution in use;• The majority of stone coal processors halting production in 2012, facing market prices

below cash costs; and,• Increasing Chinese exports.

Source: TTP Squared, Inc

Intermediate products(Vanadium oxides)

PRODUCT

FEED-STOCK

END-USE

Steel alloying(Ferrovanadium-80, Ferrovanadium-50, Nitrovan)

High performance alloys Vanadium chemicals

Steel(HSLA steel, tool steel, full alloy steel, stainless steel, carbon steel)

Aerospace(Ti-Al-V alloys)

Chemicals(eg Catalysts)

% of Total Vanadium Supplies% of Vanadium Ore Supply% of Global Vanadium demand

~85–90% ~5–10% ~3%

Secondary sources(Oil residues, power station f ly ash, spent catalysts)

Primary vanadium(Mining)

~13%

~19%

Vanadium slag(Steel by-product)

Vanadium-bearing ores(Magnetite, uranium ore, phosphate, bauxite)

~67%

~81%

New Windimurra

supply

Current industry segmentation Long term demand growth profile

Batteries(Redox, LithVan)

Broadly in line with global growthAbove global growth trendSubstantially above global growth trend

FINANCE Producer and end user inventories Trading activity Govt strategic stockpiling

Vanadium production capacity structure

Source: CPM Group Vanadium Market Outlook (2010), Atlantic Ltd

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Chinese Vanadium Demand – Industry Structural Change

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CHINESE REBAR• In 2012, 166 million tonnes of Chinese rebar were

produced, comprising:• 86 million tonnes of Grade 2 rebar (no vanadium

content)• 66 million tonnes of Grade 3 rebar (0.35KgV/tonne

steel vanadium content)• 13.5 million tonnes of Grade 4 rebar (1.0KgV/tonne

steel vanadium content)

• Once fully implemented, new China Grade 3 rebar standard in construction will substantially increase global vanadium demand, driven by regulation (upgrading of Grade 2 to Grade 3 rebar).

Steel rebarSource: TTP Squared, Inc

Chinese Vanadium Demand – Industry Structural Change

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CHINESE 12th FIVE-YEAR PLAN• Strictly control the production of steel from vanadium bearing magnetite ores in an effort

to conserve the vanadium bearing natural resources.• Promotion of construction of industrial base to allow further industrialization of the

economy leading to ongoing strong demand for steel in construction projects which will lead to demand for vanadium.

• Strengthen energy conservation and environmental protection by eliminating small environmentally damaging vanadium producers.

• Develop markets for high end steel products including Grade 4 rebar (1.0 KgV/tonne steel).

• China will continue to move towards more efficient use of vanadium resources and development of higher strength steels (requiring vanadium) to support ongoing infrastructure development, and control vanadium production to support domestic economic development.

Source: TTP Squared, Inc

Chinese Vanadium Supply from Co-product Slag

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• China is positioning two large vanadium producers (Pangang and Chengde) as national champions as its industry undergoes restructure towards economic and environmental efficiency.

• Previously anticipated growth in coproduct vanadium supply for new steel mills could be effected by the current steel market in China.

Source: TTP Squared, Inc

Titanium Alloy Demand for Vanadium

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• In 2011 approximately 3,000 tonnes of vanadium was consumed in titanium alloy production.

• Vanadium consumption in titanium alloys is expected to reach 6,000 tonnes in 2016.

• Air traffic is forecast to double over the next 15 years, increasing demand for vanadium in titanium alloys used in aircraft.

• Military demand for titanium alloys will increase by 40% in the period 2010-2015.

Titanium alloy use in modern aircraft

• Titanium alloy demand will represent a fast-growing sector in future global vanadium demand.

Source: TTP Squared, Inc

Vanadium Demand in Energy Storage Applications

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VANADIUM BATTERIES• Extremely large capacities make vanadium redox batteries

(VRBs) well suited to use in large power storage applications having an extremely rapid discharge capability – ideal for use in wind or solar energy storage. Vanadium demand in VRB applications conservatively projected to grow from 1,100 tonnes in 2012 to 8,500 tonnes in 2017.

• Lithium vanadium phosphate batteries produce higher voltages and improved energy for weight characteristics –ideal for use in electric cars. Vanadium demand in lithium batteries conservatively expected to grow from 200 tonnes in 2012 to 1,700 tonnes in 2017.

• Actual growth in demand for vanadium in energy storage applications could be significantly higher than these conservative projections over the next few years.

Vanadium redox battery

• Vanadium demand in energy storage could impact global vanadium demand substantially.

Source: TTP Squared, Inc

Vanadium Industry Cash Cost Curve 2012

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• Costs associated with processing co-product vanadium slag into FeV have increased.

Source: TTP Squared, Inc

Co-product Slag

Secondary

Primary Ore

Vanadium Supply by Region

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• Chinese vanadium production in 1H2012 decreased by 13% compared to 2011 production levels due to closure of the majority of stone coal based production and slower than expected expansion of co-product vanadium slag from steel production.

• Outside of China, Windimurra is the only potential source for significant expansion of vanadium production in the next 2 years.

Source: TTP Squared, IncIncludes processing of raw material sourced internationally by China, Korea, Japan, Taiwan and USA.

Vanadium Raw Material Supply by Country

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• China is the largest producer of vanadium, most of which is sourced from processing of vanadium bearing slag from the steelmaking process and is also consumed in the steel making process.

Source: TTP Squared, Inc

Total vanadium production 71,508

tonnes in 2012

Vanadium Supply by Raw Material

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• 67% of current vanadium production sourced from processing of vanadium bearing slag from the steelmaking process using vanadium rich iron ores (China, Russia, South Africa).

• 22% of vanadium production from primary ore mines (Windimurra is one of only three globally). • Primary vanadium production economics are not influenced by iron ore prices, unlike production

from by-product steelmaking slag which is influenced by the steel mill being profitable.

Total vanadium production 71,508

tonnes in 2012

Source: TTP Squared, Inc

Vanadium Demand by Region

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• China’s vanadium demand has been steadily increasing.• North America’s vanadium market has been impacted by a reduction in historically available

supply coming from the oil industry following switching of some power stations’ fuel source from oil to shale gas thereby needing to rely more on imports.

Source: TTP Squared, Inc

Vanadium Demand by Application in 2012

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• 90% of global vanadium demand comes from steel applications.• 4% of vanadium demand comes from titanium and super alloy products – a strong growth

market.• Potential strong growth of vanadium usage in energy storage applications in the coming

years could alter this situation.

Total vanadium consumption 80,733

tonnes in 2012

Source: TTP Squared, Inc

Contact:Glen ZurcherInvestor Relations ManagerAtlantic Ltd

T +61 8 61 41 7215E gzurcher@atlanticltd.com.au

Contact:Terry PerlesPresidentTTP Squared, Inc

T +1 412 897 3066E terry@ttpsquared.com

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