Ann: Blue Ocean Equities Initiates Coverage-MNS.AX, page-25

lol...been lazy lately...just reading the report now - it great!

however, i can't see MNS having 958M shares on issue. more like 758M. imo

Given these results, Magnis believes its battery product is a viable alternat ive to synthet ic
graphite in lithium-ion bat tery applicat ions (p11), which can sell for as much as ~US$20,000/t .

There are two key characterist ics of the Nachu deposit which clearly different iate it from other
graphite deposits around the world, which allow Magnis to produce high-value graphite
concent rates:
(1) Ease of removing impurit ies (advantageous metallurgy)
(2) A larger proportion of higher-value, large flake graphite

Magnis is able to produce a much higher purity graphite concent rate than most peers, using a
very convent ional crush, grind, screen and flotat ion process because the impurit ies are relat ively
easy to remove. This is driven by:
- Lack of interstitial impurities (i.e. impurit es within the crystal lat t ice of the graphite flake)
- Most impurities left behind during flotation (i.e. they don’t float )

The company has also undertaken addit ional metallurgical test ing on its two larger flake products
(Super Jumbo (+500μ) and Jumbo (+300μ)) which confirmed these products can also be
upgraded to 99.6% TGC without the use of chemical or thermal purificat ion, albeit at the expense
of flake size.

Thus, the different iated characterist ics of the Nachu deposit mean Magnis has the flexibil ity to
upgrade 100% of i ts product to a >99% graphi te concent rate. i.e. If the demand and pricing
was acceptable, Magnis could potent ially sell 100% of its product ion into the bat tery market .

The testwork to date (announced 6 April 2016) confirms Magnis is able to produce a 99.99%
coated spherical graphite product without chemical purificat ion. This outcome has a number of
very meaningful knock-on benefits:
• A material cost saving
• Avoiding the use of hydrof luoric acid in chemical purificat ion (which is almost exclusively
undertaken in China), which we believe is likely to be att ract ive for end users
• Removing Chinese counterparty risk f rom the logistics chain, which we believe some
end users may find appealing
At present , close to 100% of uncoated spherical graphite product ion occurs in China, and the
spherical coat ing process occurs predominately in China, Japan, Korea and Taiwan.