Talga's Current NPV, page-159

Talga'sCurrent NPV (Updated April 2022)

If you add the NPV's in the Vittangi DSF and theNiska SS they have a combined NPV with an 8% discount rate of between US$3.5Band US$5.7B.

DFS_TimingUpdate_v2 (talgagroup.eu-central-1.linodeobjects.com)

MicrosoftWord - Final_01_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)

The range is due to the Talnode-C sale price range of $7,500 to $11,250/t usedin the Niska SS.

In the Vittangi DFS, a 24 years LOM isUS$12,312/t anode and is forecast as a flat price of US$11,875/t anode from2030. As this is a more detail document and has been completed since the NiskaSS I think we can use the upper range of Talnode-C sales price of US$11,250/tin calculating the Niska NPV.

		NPV 8% Discount	Calculation
1		Vittangi DFS	$1,054,000,000
2		Niska SS	$4,650,000,000
3		Total	$5,704,000,000
4		Share On Issue	304,700,000
5		US$/SP	$18.72
6		A$/SP	$24.96	Ex Rate	0.75

So even at an annual 100kt Talnode-C productionrate we get a current NPV SP of $25.00.

With a current SP of $1.675 the market isvaluing Talga at less than 10% of the combined NVP's.

Even allowing for a 33% dilution via an EquityStake and/or Capital Raising this would still give us an NPV SP of over $15.

So what will move the SP closer to the $15?

1. Mitsui JV and Project Funding which we shouldknow by the 31/08/22.

MicrosoftWord - 20211213MOU_ASX.docx (talgagroup.eu-central-1.linodeobjects.com)

2. Permits. Talga’s Swedish Chairman state atthe opening of the EVA Plant:

"Our assessment is that we areso far advanced in this process that we should be able to get approval fairlysoon, hopefully in the summer or early autumn.”

So, this would mean sometime between June andSeptember this year, which aligns with Company’s previous time frame of mid-2022.

https://hotcopper.com.au/posts/60597834/single

3. Off Take Agreements. Now that the EVA Plantis operational, the final stage of qualification and testing by the AutomotiveOEM’s and Battery Manufacture can commence.

In the EVA Commissioned and Operatingannouncement it said:

“Large scale commercial testing is a critical stage in the EV customer procurement process for active anode material.”

“More than 20 battery manufacturers and automotive customers engaged to receive Talnode®-C samples for large-scale EV battery qualification and procurement processes”

This being the case I would expect we may havesome binding purchase agreements in the next 3-6 month, conditional on Permitsbeing granted.

The longer Talga can hold out the moredesperate the Auto OEM's and Battery Manufactures are going to become and morewilling to pay the price that Talga wants.

So, it is now a game of Musical Chairswith the Auto OEM's and Battery Manufactures dancing around Talga waiting forone of them to make the first move. That is when the music stops and everyoneelse will scramble to get a seat on the very limited chairs. They all know thatthere is going to be a shortage of anode material and none of them can affordto be left standing without a seat at the Talnode-C & Si banquet table.

MicrosoftWord - 20220331EVA_CommissioningCompleted_FINAL.docx(talgagroup.eu-central-1.linodeobjects.com)

4. Resource Upgrade. In the “Drill results to upgrade Europe's largest graphite resource” announcement the company stated:

A revision of Talga's Vittangi graphite resources (Table 4) is now underway to support and optimize future expansion plans. This Mineral Resource upgrade is planned for completion in late Q2 2022 and aims to expand what is currently Europe's largest JORC or NI43-101 defined graphite mineral resource (see Table 7). “

Information received from completed geotechnical and water bore drilling will be compiled and used to optimize aspects of the Nunasvaara South DFS mining plan over the first few years of operation.

Building on the latest drill results and SkyTEM survey (ASX:TLG 26 October 2021) a new 26 hole drill program will commence at Vittangi in coming weeks. The new program will test the JORC exploration target linking the Niska South and Niska North resources (see Figure 5), with a view to revise resources further in the second half of 2022.

I expect after the next drilling program is completed theresource upgrade due in the second half of 2022 will be a combined total of around50Mt at @>25% Cg. This would equate to ~ 12.5Mt of Cg which would be enoughto produce 500Kt of anode for the next 25 year. Which is still only half theamount Europe will require by 2030.

MicrosoftWord - 20220303FinalDrillResults_ASX.docx(talgagroup.eu-central-1.linodeobjects.com)

It is likely that we may have all four of theabove before the end of the September or by the end of this year at the latest.If that was the case, I could see the SP well north of $10. Which would giveTalga an MC of ~A$3B. If VUL can be valued at ~A$1.4B and NVX at ~A$3.1B attheir stages of development then I think A$3B for Talga with all four boxesticked is not unreasonable, as it would still be less than 50% of the combinednon diluted NVP's.

Also remember that all the calculations are onlyon 100kt of Talnode per annum. I'm sure that once resource upgrade drilling is completed,we will see production increase 5-10 times this amount over the next 10 yrs.Giving Talga a further 5-10 times increase in MC.

There is no such thing as a sure thing, as wefound out at the end of November last year, but I'm confident that there isminimal downside risk at the current SP.

As always do you own research.

Gero