J CAP RESEARCH PAPER REBUTTAL

Hi guys/gals,

Just thought I would offer some of my research rebutting Jcap’s claims.

As an introduction and a general overview of DLE operations worldwide, please read the following article-

https://www.nrel.gov/docs/fy21osti/79178.pdf

NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency & Renewable Energy Operated by the Alliance for Sustainable Energy, LLC

This work was authored by the National Renewable EnergyLaboratory, operated by Alliance for Sustainable Energy, LLC, for the U.S.Department of Energy (DOE) under Contract No. DE-AC36-08GO28308. Fundingprovided by the U.S. Department of Energy Office of Energy Efficiency andRenewable Energy Geothermal Technologies Office.

This is US government OFFICIALLY researched and published document.

It compares DLE from brine from various projects around the world, INCLUDING VULCAN.

It gives a great overview of DLE specifics worldwide. The table includes flow rates, concentrations, capex, IRR etc…etc…

Note: Vulcan/DuPont have not detailed its extraction technique because it is proprietary. Just like all other advanced projects around the world and is tailored to the local brine.

Proprietary processes are also kept undisclosed by Livent, NeoLith, LiSTR, Dow Chemical, Lilac solutions etc…etc…

The extract from this document in reference to Vulcan.

A.4 Vulcan Energy Resources Vulcan Energy Resources proposes to develop hybrid geothermal power generation and lithium extraction in the Upper Rhine Valley of southwest Germany.

The potential for geothermal power generation is known from existing power plants and exploration, while the potential for lithium extraction is indicated by lithium concentration in geothermal brine up to 210 mg/kg lithium (Sanjuan et al., 2016).

Bench-scale DLE studies with two commercially available sorbents using Upper Rhine Valley geothermal brine showed Li recovery rates of more than 90%. Upper Rhine Valley brines most amenable to lithium extraction have chemistries approximately 150–200 mg/kg lithium, 30,000 mg/kg sodium, 2,000 mg/kg potassium, 6,000 mg/kg calcium, and 400 mg/kg magnesium from reservoirs measured up to 200°C and with geothermometry indicating 225°C (Sanjuan et al. 2016).

The DLE process comprises brine pre-treatment, brine purification, extraction of lithium via a sorbent, and concentration of lithium chloride solution using renewable heat from the geothermal plant before it is sent to the conversion plant.

Barren brine is treated and directed to wells for reinjection into the geothermal reservoir. At the conversion plant, the LiCl concentrated solution is further purified before electrolytic conversion of the LiCl solution to lithium hydroxide (LiOH) solution, chlorine, and hydrogen gas. Hydrogen and chlorine gas are used to HCl, and the lithium hydroxide solution is further purified before crystallization of LHM from the LiOH solution.

Figure A-2 shows a schematic of Vulcan Energy Resources proposed process. Figure A-2. Vulcan Energy Resources’ proposed hybrid geothermal and lithium extraction project

Future Considerations

Future techno-economic analysis will benefit from detailed performance and cost data, ideally from pilot- and commercial-scale demonstrations. Additionally, robust modeling oflithium extraction from geothermal brines requires explicit process details, many of which are proprietary. There are detailed patent documents (e.g., EnergySource Minerals) available such that it might be possible to create a robust publicly availableprocess model to understand performance and cost in greater detail; however, there is no single model to apply to all geothermal brines or even to different brine and power plant operations in the Salton Sea KGRA. Each will be unique to the specific physicaland chemical conditions of brine and lithium extraction ± power generation operations. Despite that, the range of brine types and lithium extraction processes reviewed herein suggest an OPEX near $4,000/mt LCE is achievable with modeled prices assumedto be >$11,000/mt Li2CO3 and >$12,267/mt LiOH·H2O (Table 3). These prices are within the range of spot market prices since mid-2018, and increased lithium demand is expected in the future (Chao 2020). Future potential process

improvements involve increasing lithium selectivity relative to competing ions, increasing operating cycles between regeneration and replacement, lowering costs of sorbent and solvent manufacturing, and reducing energy and material requirements. The most important information related to economics and commercialization will likely be coming from demonstrations planned or underway at the Salton Sea. Beyond demonstrations at Salton Sea, there is important research ongoing at laboratory scale. The most recent review of lithium extraction techniques is by Stringfellow and Dobson (2021), which provides descriptions and extensive documentation of methods being investigated by researchers (Table 8). Several of the techniques they review are discussed here to provide details of some of the more promising research completed and underway that is applicable to lithium extraction from geothermal brines. Stringfellow and Dobson (2021) report that lithium extraction with inorganic molecular sieve ion-exchange sorbents is the most developed technology and note that sorbent selectivity, sorbent tolerance for interfering ions, and purity of extracted lithium are the main cost drivers. They also note that large-scale, expensive demonstration projects are necessary to advance lithium extraction from geothermal brines toward commercialization, highlighting the importance of planned demonstrations at the Salton Sea and the data that will be generated from those projects.

I have also found Jcap have selectively used pieces of information and omitted others.

From the research paper Jcap used, the omitted the second paragraph in yellow, stating significantly

higher flow rates are possible

Before hydraulic well testing, it is not possible to assess the flow rate that could ultimately be achieved for a specific project. Existing geothermal projects in the Upper Rhine Graben operate with a flow rate between 20 l/s (Riehen) and approx. 70 l/s (Insheim, Rittershoffen).

SIGNIFICANTLYHIGHER flow rates can be achieved if some of these existing producing or injecting wells would be enhanced by drilling a lateral well into the productive fault zone. For economic hydrothermal utilization, a PI value of >2 l/(s·bar) assuming a maximum drawdown of 50 bar (feasible with a lineshaft pump installation depth of 600 m) is needed to gain sufficient flow rates. Beyond the primary achievable flow rate by just intersecting a fault zone with one well, production and injection may be enhanced through different (stimulation) operations

6.3. Geothermal Installations in the Upper Rhine Graben The geological formations of the Upper Muschelkalk and the Bunter show the highest potential for hydrogeothermal utilisation in the Upper Rhine Graben. In addition, the Hauptrogenstein (Middle Jurassic) located in the southern part of the graben and a Tertiary sequence in the northern part provide suitable conditions for geothermal exploitation. A relatively high temperature gradient indicates the upwelling of deep waters (with high salinity) along fault zones and fissures. This advantageous condition allows the generation of power at all of the larger geothermal facilities located in the Upper Rhine Graben (Bruchsal, Insheim, and Landau (Palatinate); compare Table 1).

The Landau power plant was inaugurated in November 2007 and since then has been running continuously, except for some maintenance work. It is able to deliver about 3 MWel and about 4 MWth of heat. In the future, reservoirs consisting of one fault zone are thinkable and the concept is under testing in the geothermal project in Insheim, close to Landau. Stimulation techniques will again be adapted to this reservoir.
Stimulation with low rate flow, helps Landau achieve around 110L/mHigh rate stimulation can push the well to 130-140 L/m. So, this proves the upper Rhine wells can produce flow rates in line, and can exceed Vulcans published figures.

Please be aware this is NOTfracking. It is hydraulic stimulation.

And as for current Lithium DLE-

In Argentina, (Livent) lithium has been extractedusing DLE at commercial scale for decades, but somehow not very many peopleknow this. It is a shocking revelation to some that DLE is actuallyalready commercial, and proven to operate economically by a major lithiumproducer. This article presents an overview of fiveDLE projects currently constructed at commercial scale: one mature, and four recently commissioned. The fact that these projects already exist and produce meaningful quantities of lithium chemicals demonstrates that DLE technologies are not mysterious “black boxes” that investors won’t ever be able to understand, but instead operate using physical and chemical principles consistent with the laws of physics, and which some people already do understand quite well. The projects described in this article areresponsible for producing ~12% of 2019 lithium supply using DLE.

Somecurrent lithium producing concentrations.

Vulcan’soriginal test at 181mg/L is not the best, but competitive. Later tests have recovered214Mg/L, which is extremely good.

Vulcan Energy Resources (ASX:VUL ) has receivedpromising sample results from a recently drilled geothermal well in the UpperRhine Valley within 6 kilometres of Vulcan’s Ortenau Resource area.

The bulk brine sample returned a high grade of 214 mg/L lithium and willbe used in Direct Lithium Extraction (DLE) piloting test work.

This builds on historical brine data going as far back as 1980 thatshows extremely consistent lithium values in Upper Rhine Valley brine.

The brine analysis also showed exceptionally low impurities (includingSi, Mn, Fe) relative to other high-lithium geothermal brines worldwide, animportant factor in terms of direct lithium extraction performance.

SeeTable 3 for developing projects, and below for current Chinese producers.

LIVENT: The Fénix Project

Owner: Minera del Altiplano S.A. (Livent Corporation)

Location: Catamarca, Argentina

Commissioning: 1998

Capacity: Near 20,000 tonnes of Li2CO3 equivalent per yearas of 2020

Livent’s adsorbent was developed in-house in the1990s based on intellectual property adapted from Dow Chemical. Their sorbentis used to extract LiCl from brine which has been slightly pre-concentratedusing small evaporation ponds. These ponds do not produce potash at meaningfulscales like SQM’s ponds in the Salar de Atacama, and are not fundamentallynecessary. Different evaporation ponds are used to remove water from thelithium concentrate produced by the DLE process (note: this solution isdifferent from the brine) before the lithium is shipped to Livent’s chemicalplant at lower elevation for conversion into other lithium chemicals.

Li2CO3 and LiCl is shipped to North Carolina forprocessing into LiOH٠H2O, lithium metal, butyllithium, and otherspecialty lithium salts. (2) Livent is one of the world’s highest quality suppliers of LiOH٠H2O partly because theiroperation is less subject to weather than in Argentina, which is typicallyrainier than the Atacama. For over two decades, Livent has been a leader in “the technology behind the technology”, and it will be interesting to see how they usethis reputation to expand their operations at Hombre Muerto and into otherresources.

From their 2019/2020 financial report.

Our Argentine operations rely on a steady source of energy. In 2015, we completed construction of a 135 kilometer natural gas pipeline from Pocitos, within the Salta province, to our Fénix facilities atSalar del Hombre Muerto, which eliminated our reliance on natural gas shipments by truck. This pipeline is governed by various agreements between MdA and Recursos Energeticos y Mineros Salta,S.A., or REMSA, a local natural gas sub-distributor, including a subdistribution agreement providing for contracted capacity through 2027. We are in discussions to increase our contracted capacity inadvance of our needs for all phases of our expansion plans and may need to invest in additional infrastructure to support this expansion. REMSA or Gasnor S.A., another local natural gas distributor thatoperates in the northeast of Argentina, have no obligation to provide us the additional capacity on a timely basis or at all. If we cannot obtain such additional capacity, we would need to securealternative arrangements to meet the increased energy needs of the planned expansion and such alternative arrangements may be less cost effective.MdA also has a natural gas supply contract with Pluspetrol providing for the supply of natural gas for our Fénix manufacturing facility. This supply agreement expires in April 2020 and is typicallyrenewed on an annual basis. We also have a purchase agreement with YPF SA for the supply of diesel

fuel and gasoline to our Fénix and Güemes manufacturing facilities, pursuant to which we submitmonthly purchase orders.

Our operations in Argentina are seasonally impacted by weather, including varying evaporation rates and amounts of rainfall during different seasons. These changes impact the concentration in largeevaporation ponds and can have an impact on the downstream processes to produce lithium carbonate and lithium chloride. Our operations team continuously measures pond concentrations and modelshow they will change based on operating decisions. Our processes use proprietary and traditional technologies to minimize the variation of concentrations at the inlet to our plants. In the first quarter of2019, there was an abnormally large rain event, resulting in an approximate 1,000 MT reduction in lithium carbonate production in 2019.

AND

The CO2 e footprint for our Lithium Hydroxideproduced via the China route (i.e., Argentina to Rugao, China) is higher thanthat of our Lithium Hydroxide produced via our USA route (i.e., Argentina toNorth Carolina, USA) largely due to the profile of the electricity and steam wepurchase from the municipal energy producer for the Rugao industrial chemicalpark.

AND from the 2020 sustainability report. Energy and waste requirements (total)

So Livent uses evaporation ponds to concentrate their brine, then use the DLE process, which they use GRID electricity and a 135km gas pipeline from Positos to achieve. They then ship their product from Argentina to North Carolina/China to convert to LiOH. They also had to build an airstrip to transport personnel…

We have no energy requirement (self-generated), are centrally located, lower impurities, have a state of the art plant, receive Carbon Tax credits, will probably receive funding/grants, have minimal transportation between facilities…etc…etc…

And JCAP can’t figure out why Livent’s profit margin is lower??? Wow….theymust have some great analysts on board.

Insummary and rebutting JCaps claims

FLOW RATE- PROVEN to 130/L/min ( see figure 11a and 11b)

DLE- DuPont proprietary process, as are most other current lithium extraction processes ( Livent, NeoLith, LiSTR, Dow Chemical, Lilac solutions etc…etc…)

RECOVERY RATE- PROVEN in the Upper Rhine, , and on par with SRI international, Salton Sea 90%, Standard lithium Lanxess 90%, E3 metals Clearwater greater than 90%, Pure Energy minerals Clayton Valley 90% and Lake Resources Kachi 83%

LITHIUM CONCENTRATION- Proven on multiple occasions- on par, if not better than most current commercial operations, including the aforementioned companies, see table 3

PROTESTS- I have previously covered this, and as with the brown coal/lignite mining process, the federal government will trump local opposition and advance these projects all over Germany. The local governing bodies DO NOT have jurisdiction in these matters. They are essentially consultative committees.

BOARD- I have faith in our board, I did post about the GeCo and GeoT acquisitions a few months ago, as a little self-serving and on the nose. But now, having then in house to solely concentrate on our project is a distinct advantage in keeping and advancing the timeline.

Otherwise, I am happy with their ambition, and their drive to deliver.

And with a growing 80 strong technical team, continually puts us in a great position to rapidly advance the project.

Additionally, it puts us in a strong position to continue our existing plan, and advance our brownfield acquisition/expansion projects.

BTW- I have stated previously, due to the current and possible offtakes, and our proposed brownfield expansion falling into line with this, our production rate will need to be around 60KTA to fulfill our commitments. This is my speculation only. The official figure has always been and is currently 40KTA.

So, guys/gals, have a read.

Try and digest our past announcements and have a good read of the JCap paper. Do some independent research and make up your own mind of which way you would like to head with Vulcan.

My opinion remains unchanged.

This is just my research, whose sources are publicly available on the net. Please do your own research and do not take this as financial advice.

But as I have previously stated, I believe this company will be a MONSTER.

Good luck everyone…