Ann: Change of Company Name, page-11

Hi Longskew

Thankyou for the comprehensive and polite response to my post.

I guess it comes down to whether you are a graphite pessimist like myself who believes that China has won the geopolitical battle over the supply of battery minerals and that is not going to change or an optimist who believes everything is going to change for the better sometime in the future.

While my comment regarding Syratogan was somewhat exaggerated, they will never use all the reserves they have found, but my broader point is that graphite is not a material in short supply and the established world reserves as defined by USGS are more than ample for future needs

(https://pubs.usgs.gov/periodicals/mcs2024/mcs2024-graphite.pdf)

According to them there is 800 million tonnes of recoverable graphite to service a current annual usage of less than 2 million tonnes. The hard part is not finding it, many companies have succeeded there but being capable of developing what you find.

I think the graphite market has to be assessed in three separate segments - large flake for industrial usage, fine flake for battery usage and synthetic graphite used in both markets. China has ample supply of battery grade material and is developing it at record rates driving down prices. They are undersupplied in large flake and have expanded into Mozambique, Madagascar and Tanzania to fill that gap. Large flake industrial grade graphite (as typically found in Tanzania) prices are currently relatively buoyant but the huge quantities coming online soon from Chinese projects may drive down prices.

The supply / demand graphs as historically published by Benchmark and Fastmarkets have shown a looming supply deficit since about 2016 when Syrah commenced operations. They were probably reasonable assumptions at the time but no one could have predicted how China would keep filling the gap while Western projects have been left floundering. I can see no reason why anything is going to change in this regard any time soon. As well no one could have foreseen the extent to which synthetic graphite production has become cheaper and swamped the market.

Your point that the US wants to move off Chinese materials where it can so will continue funding these projects is in my view overly optimistic.

The US government may have this ambition but vehicle manufacturers and battery suppliers (whatever they may say to the contrary) are fighting as hard as they can to delay tariffs and developing local supply chains so they can continue their addiction to cheap Chinese materials. There are many battery anode material projects in the pipeline but none are being financed.

Syrah has the only producing operation and cannot sell their product, Westwater Resources has a half finished plant which it is unable to complete, POSCO in South Korea has downsized and delayed their expansion plans, Talga in Sweden has been on the verge of commencement for years but for lack of funds. Novonix and Anovion however seem to be able to get financing for their synthetic anode projects.

However Chinese company BTR has a BAM plant in Indonesia and another planned in Morocco to circumvent any US tariffs and FEOC laws. They are so far ahead of the game they are not leaving any space for anyone else.

As for connecting with US government funding sources that is open to anyone, some companies are getting loans and grants from DOE and DFC but many more are not. It is an incredibly demanding, difficult and expensive process to qualify, and I don’t think having contacts counts for much.

I note that the Axon Graphite IPO (an offshoot of Novonix and Lithium Energy) which was due last year seems to have been delayed so in my view this is a brave move to get into the picture at this time for Invert Graphite.

So inevitably this is a discussion where we will agree to disagree and in five or ten years time one of us will be proved correct. I really hope that your optimism comes to fruition and personally I am watching things closely with the view to invest in graphite if things do change but as time progresses I get more and more pessimistic.