AMERICAN PACIFIC BORATE & LITHIUM LTD ACN 615 606 114

PROSPECTUS

For an offer of 60,000,000 Shares at issue price of $0.20 per Share to raise $12,000,000, with the right to accept oversubscriptions of up to a further 15,000,000 Shares at an issue price of $0.20 per Share to raise up to a further $3,000,000.

IMPORTANT INFORMATION

This is an important document that should be read in its entirety. If you do not understand it you should consult your professional advisers without delay. The Shares offered by this Prospectus should be considered highly speculative. TABLE OF CONTENTS

CORPORATE DIRECTORY ...... 1 IMPORTANT NOTICE ...... 2 KEY OFFER INFORMATION ...... 5 1. INVESTMENT OVERVIEW ...... 6 2. CHAIRMAN’S LETTER ...... 14 3. DETAILS OF THE OFFER ...... 15 4. COMPANY AND PROJECTS OVERVIEW ...... 20 5. INDUSTRY OVERVIEW ...... 36 6. RISK FACTORS ...... 39 7. INDEPENDENT GEOLOGIST’S REPORT ...... 47 8. INVESTIGATING ACCOUNTANT’S REPORT ...... 123 9. LAND OWNERSHIP REPORT ...... 142 10. BOARD, MANAGEMENT AND INTERESTS...... 146 11. CORPORATE GOVERNANCE ...... 149 12. MATERIAL CONTRACTS ...... 153 13. ADDITIONAL INFORMATION ...... 162 14. DIRECTORS’ AUTHORISATION ...... 175 15. GLOSSARY ...... 176

4467-01/1715392_1 i CORPORATE DIRECTORY

Directors Investigating Accountant

Harold (Roy) Shipes RSM Corporate Australia Pty Ltd Non-Executive Chairman 8 St Georges Terrace Perth WA 6000 Michael Schlumpberger Managing Director Independent Geologist

Anthony Hall Xstract Mining Consultants Executive Director Level 10 50 St Georges Terrace Perth WA 6000 John McKinney Non-Executive Director Auditor

Stephen Hunt RSM Australia Partners Non-Executive Director 8 St Georges Terrace Perth WA 6000 Chief Executive Officer Share Registry Michael Schlumpberger Advanced Share Registry Company Secretary 110 Stirling Highway Nedlands WA 6009 Aaron Bertolatti Telephone: +61 8 9389 8033 Proposed ASX Code Facsimile: +61 8 9262 3723

ABR Solicitors Registered Office Steinepreis Paganin Level 24, Allendale Square Level 4, The Read Buildings 77 St Georges Terrace 16 Milligan Street Perth WA 6000 Perth WA 6000

Telephone: + 61 6141 3145 Facsimile: +61 8 6141 3101

Email: [email protected]

Website: www.americanpacificborate.com

4467-01/1715392_1 1 IMPORTANT NOTICE

This Prospectus is dated 30 May 2017 and was lodged with the ASIC on that date. The ASIC, ASX and their respective officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

No Shares may be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus.

No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus.

It is important that you read this Prospectus in its entirety and seek professional advice where necessary. The Shares the subject of this Prospectus should be considered highly speculative.

Exposure Period

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. You should be aware that this examination may result in the identification of deficiencies in this Prospectus and, in those circumstances, any application that has been received may need to be dealt with in accordance with Section 724 of the Corporations Act. Applications for Shares under this Prospectus will not be processed by the Company until after the expiry of the Exposure Period. No preference will be conferred on applications lodged prior to the expiry of the Exposure Period.

No offering where offering would be illegal

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer. It is important that investors read this Prospectus in its entirety and seek professional advice where necessary.

No action has been taken to register or qualify the Shares or the Offer, or to otherwise permit a public offering of the Shares in any jurisdiction outside Australia. This Prospectus has been prepared for publication in Australia and may not be released or distributed in the United States of America.

Web Site – Electronic Prospectus

A copy of this Prospectus can be downloaded from the website of the Company at www.americanpacificborate.com. If you are accessing the electronic version of this Prospectus for the purpose of making an investment in the Company, you must be an Australian resident and must only access this Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. You may obtain a hard copy of this Prospectus free of charge by contacting the Company by phone on the details in the corporate

4467-01/1715392_1 2 directory during office hours or by emailing the Company at [email protected].

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

Website

No document or information included on our website is incorporated by reference into this Prospectus.

Forward-looking statements

This Prospectus contains forward-looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties.

These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Prospectus, are expected to take place.

Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of our Company, the Directors and our management.

We cannot and do not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this prospectus will actually occur and investors are cautioned not to place undue reliance on these forward- looking statements.

We have no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this prospectus, except where required by law.

These forward looking statements are subject to various risk factors that could cause our actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 6.

Photographs and Diagrams

Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person shown endorses the Prospectus or its contents or that the assets shown in them are owned by the Company. Diagrams used in this prospectus are illustrative only and may not be drawn to scale.

Cautionary Note Regarding Mineral Estimates

The mineral estimates reported in this Prospectus are historical estimates and are not reported as Mineral Resources or Ore Reserves in accordance with the guidelines of the JORC Code (2012). A competent person has not completed sufficient work to classify these mineral estimates as Mineral Resources or Ore Reserves in accordance with the guidelines of the JORC Code (2012). It is uncertain that following evaluation and/or further exploration work that the mineral estimates will be able to be reported as Mineral Resources or Ore Reserves in accordance with JORC Code (2012).

4467-01/1715392_1 3 Competent Persons statement

The information in this Prospectus which relates to exploration targets, exploration results and historical mineral estimates is based on, and fairly represents, information and supporting documentation compiled by Lachlan Rutherford (PhD, MBA) the Company’s Head of Strategy & Corporate Development. Dr Rutherford is a competent person who is a member of the Australian Institute of Mining & Metallurgy, and a full time employee of the Company. Dr Rutherford has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a competent person as defined in the 2012 edition of the JORC Code. Dr Rutherford consents to the inclusion of the matters based in this Prospectus on his information noted in the form and context in which it appears.

The information in the attached Independent Geologist’s Report, included at section 7 of the Prospectus, which relates to exploration targets, exploration results, and historical mineral estimates is based on, and fairly represents, information and supporting documentation supplied by Dr Rutherford (PhD, MBA) - Head of Strategy & Corporate Development for the Company. A technical review of supplied information and site visit has been completed by Xstract Mining Consultants. Xstract is a privately owned and operated resource industry consultancy providing independent, strategic and tactical advice, and personalised professional services, to exploration and mining companies, engineering firms, financial institutions and investors. Both Xstract and Dr Rutherford consent to the inclusion of the matters in the Independent Geologist’s Report based on their information noted in the form and context in which it appears.

Definitions

Terms used in this Prospectus are defined in the Glossary in section 15.

4467-01/1715392_1 4 KEY OFFER INFORMATION

KEY DATES - Indicative timetable*

Lodgement of Prospectus with the ASIC 30 May 2017

Opening Date 7 June 2017

Closing Date 3 July 2017

Despatch of holding statements 10 July 2017

Expected date for quotation on ASX 17 July 2017

* The above dates are indicative only and may change without notice. The Exposure Period may be extended by the ASIC by not more than 7 days pursuant to Section 727(3) of the Corporations Act. The Company reserves the right to extend the Closing Date or close the Offer early without prior notice. The Company also reserves the right not to proceed with the Offer at any time before the issue of Shares to Applicants.

KEY OFFER DETAILS

Minimum Maximum Subscription Subscription Offer Price per Share $0.20 $0.20 Shares currently on issue 94,600,002 94,600,002 Shares to be issued under the Offer 60,000,000 75,000,000 Total number of Shares on issue following the Offer 154,600,002 169,000,002 Gross Proceeds of the Offer $12,000,000 $15,000,000

Notes: 1. Maximum Subscription assumes all oversubscriptions are accepted. 2. The above figures are on an undiluted basis. The Company will also have a total of 14,000,000 options on issue, the terms of which are contained in Sections 13.3, 13.4, 13.5 and 13.6.

4467-01/1715392_1 5 1. INVESTMENT OVERVIEW

Further Item Summary information A. Company Who is the American Pacific Borate & Lithium Ltd (ACN 615 606 114) Section 4.1 issuer of this (Company or APBL). Prospectus? Who is the The Company was incorporated as an unlisted public Sections Company? company limited by shares on 28 October 2016, for the 4.1 and purpose of acquiring the Project 4.8.1 On 2 May 2017 the Company entered into the Share Purchase Agreement (Acquisition Agreement) and acquired on certain terms and conditions: (a) all of the issued share capital of Fort Cady California Corporation (FCCC), and (b) the rights to the Permits and all other Project related assets from FCMC. The Company’s focus is now on the exploration and development of the Project. What is the The Project is a rare high quality borate/lithium project Sections Project and located in south eastern California, which covers 3.4, 4.1, 7 what is the approximately 26km2 of the west central portion of the and 9 Company’s Hector evaporative basin located in the Mojave Desert interest in the region of San Bernardino County, California. Project? To date, the Project’s previous owners have spent a considerable amount of capital on the Project, encompassing permit acquisition, drilling and (Non-JORC) resource estimation, field well testing, metallurgical testing, feasibility studies and pilot plant infrastructure and operations. The Company has the exclusive rights to mine the Project Area through its rights to the Permits and Land Titles totalling 4,409 acres. These Land Titles are located in and around the Project Area. The Company’s Land Titles extend to approximately 1,386 acres or 21% of the acreage located within the Project Area and, subject to completion of the Offer, allow the Company to undergo its intended expenditure program as set out in the Use of Funds table. What is the A detailed explanation of the Company’s business model is Sections Company’s provided at Section 4.8. 4.8 and 7 business model? B. Business Model What are the The Company’s intended management strategy and Sections key business purpose of this Offer is to provide APBL with funding in order 3.4 and objectives of to complete the following over the next 24 months: 4.8.1 the (a) compile a resource in accordance with the JORC Company? Code (2012) (reporting to measured and/or indicated and inferred categories) for either a borate or lithium resource at the Fort Cady Project;

4467-01/1715392_1 6 Further Item Summary information (b) complete a pre-feasibility study for the Company’s Project; (c) progress the permit re-activation process; (d) complete the access and/or lease negotiations with relevant third parties where necessary; and (e) provide working capital for the Company C. Key Advantages and Key Risks What are the The Directors are of the view that an investment in the Section 4 key Company provides the following non-exclusive list of advantages advantages: of an (a) exposure to two fast-growing, high margin commodity investment in markets in both borate and lithium where current the demand is driven by trends in global economic Company? growth, high end modern materials and energy technologies; (b) contingent on the results of the pre-feasibility studies, the exclusive rights to undertake mining and exploration activities on the previously permitted Project in a low risk jurisdiction ideally situated in terms of infrastructure and access to target markets; and (c) a highly credible and experienced team to progress exploration and accelerate potential development of the Project. What are the The business, assets and operations of the Company, are Section 6 key risks of an subject to certain risk factors that have the potential to investment in influence the operating and financial performance of the the Company in the future. These risks can impact on the value Company? of an investment in the Shares of the Company. The Board aims to manage these risks by carefully planning its activities and implementing risk control measures. Some of the risks are, however, highly unpredictable and the extent to which the Board can effectively manage them is limited. Based on the information available, a non-exhaustive list of the key risk factors affecting the Company are as follows: (a) Limited history

The Company was very recently incorporated (28 October 2016) and has no operating history and limited historical financial performance. Although extensive previous work has been previously conducted on the Fort Cady Project, the Company is yet to conduct its own activities and will not commence these activities until the Company has been admitted to the Official List.

No assurance can be given that the Company will achieve commercial viability through the successful exploration of the Project. Until the Company is able

4467-01/1715392_1 7 Further Item Summary information to realise value from its projects, it is likely to incur ongoing operating losses.

(b) Historical Non JORC Estimates

The Fort Cady Project has had a significant amount of prior drilling and is the subject of at least three separate historic resource estimates, none of which are JORC Code compliant and at this point there is insufficient information to establish whether further exploration will result in the determination of a mineral resource within the meaning of the JORC Code.

Whilst the Company intends to undertake further exploration activities with the aim of defining a JORC Code compliant resource, no assurances can be given that the exploration will result in the determination of such a resource. Even if such a resource is identified, no assurance can be provided that it can be economically extracted.

Resource and reserve estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when initially calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource and reserve estimates are imprecise and depend to some extent on interpretation which may prove to be inaccurate.

(c) Exploration and development

Mineral exploration and development is a speculative and high-risk undertaking that may be impeded by circumstances and factors beyond the control of the Company.

Although a mineralised area of interest has already been identified and there has been previous investment in metallurgical studies and pilot plant operations, at this point, there can be no assurance that further exploration on the Project will result in the confirmation of an economic mineral resource. Even if an apparently viable mineral resource is identified, there is no guarantee that it can be economically exploited.

Further, the future exploration activities of the Company may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, changing

4467-01/1715392_1 8 Further Item Summary information government regulations and many other factors beyond the control of the Company.

There is also a risk that the contemplated metallurgical and process investigations on the known mineralisation at the Project may not lead to a viable processing route. Furthermore, there is a risk that the contemplated development studies may not lead to a project that is economically viable. The Board notes that historical production at Fort Cady utilised a pilot plant that was non-optimal. Further processing studies have highlighted design and processes. These alternate processes were not implemented and are yet to be tested.

(d) Title

The Company only has surface and/or mineral rights to 1,386 acres of the 6,500 acres that comprises the broader approved Project Area. The Directors’ note that the majority of the 6,500 acres defined by the Project Area are superfluous to its needs. Whilst the Company has applied for the surface and/or mineral rights or has previously held lease agreements to what they see as the required areas in the Project Area, there is no guarantee that the Company will be able to obtain them on suitable terms or at all. Any such failure to obtain these rights may impact on the Company’s future plans.

Further, some of the Land Titles held by the Company are not covered by the existing Permits therefore should the Company wish to mine on these areas, it will have to extend the existing Permitted area or obtain new Permits that encompass these areas. There is no guarantee that these permits will be obtained or that such an extension will be granted.

(e) Conditions to Land Titles

The Land Titles comprise a number of different types of land/mineral title rights, depending on the ownership and designation of the land area in question. As such the Company is operating under a number of different sets of conditions for the Land Titles. Please refer to the Land Ownership Report in Section 9 for further details.

In addition, some of the Company’s key Land Titles are or will be held under lease and the Company is reliant to some extent on these parties keeping these Land Titles in good standing as per the terms of any agreement.

4467-01/1715392_1 9 Further Item Summary information (f) Operational and Environmental Permitting

Whilst the Company is not at a stage whereby it can commence production, should the Company reach production, the Company’s rights to mine the Fort Cady Project Area are to some extent secured via ownership of previously granted operating permits and the Company believes the permitting history may assist with any future permit application and re- issuance process.

The primary permits that secure the exploitation rights to the Fort Cady Project are the approved Plan of Operation from the US Federal Bureau of Land Management (1994) and the approved Mining/Reclamation Plan issued jointly by the State of California and the County of San Bernardino (1994), both issued to Fort Cady Minerals Corporation. However, there can be no assurance that any potential modification to these approved plans, if ever required, (such as a significant variation in process design or any proposed expansion of operation) would be granted, or if granted, how long this would take.

The primary environmental permits required to operate in California are the Water Quality Permit and Air Quality Permit. These permits were also previously granted to Fort Cady Minerals Corporation to permit full scale commercial operations, but have since been rescinded. While pilot plant operations are still permitted subject to procedural updates as mentioned in the Land Ownership Report, there is no guarantee that these permits will be re-issued for full scale commercial operations, or if re-issued, on what terms and conditions.

A detailed explanation of each of the key risks are provided at Section 6. D. Directors and Key Management Personnel Directors The current directors are not anticipated to change upon Section listing, therefore the Board shall comprise: 10.1 (a) Mr Harold (Roy) Shipes; (b) Mr Michael Schlumpberger; (c) Mr Anthony Hall; (d) Mr Stephen Hunt; and (e) Mr John McKinney. Mr Schlumpberger’s appointment as Managing Director and Chief Executive Officer is effective from 1 June 2017. Other Key The Company’s Chief Executive Officer will be Mr Section Management Schlumpberger. 10.1 Personnel

4467-01/1715392_1 10 Further Item Summary information Other than the Directors listed above, Aaron Bertolatti and Lachlan Rutherford, the Company does not have any other Key Management Personnel. What are the Each Director’s interest in the Company is set out at Sections Section Director’s 10.2 and 10.3, however it is noted that pursuant to the Share 10.2, 10.3 interests in the Purchase Agreement: and 12.1 Company? (a) Atlas has received 49,220,000 Shares. Atlas is an entity controlled by Mr Shipes, a Director; (b) an entity associated with Mr Hall, a Director, has received 4,720,000 Shares. Please see Section 4.16 for further information on Atlas. E. Financial Information How has the The Company was only recently incorporated (28 October Section 8 Company 2016) and has no operating history and limited historical performed financial performance. over the past However, please see the Investigating Accountant’s Report 12 months? for further financial information in relation to FCCC, a wholly owned subsidiary of the Company. As a result, the Company is not in a position to disclose any key financial ratios other than its statement of profit and loss, statement of cash flows and pro-forma balance sheet which is set out in Section 8. What is the Given the current status of Company operations, the Section 8 financial Directors do not consider it appropriate to forecast future outlook for earnings. the Any forecast or projection information would contain such a Company? broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection on a reasonable basis. F. Offer What is being The Offer is an offer of 60,000,000 Shares at an issue price of Section 3 offered? $0.20 per Share to raise $12,000,000 (before costs). The Offer is not underwritten. The minimum amount to be raised under the Offer is $12,000,000. The Company may accept oversubscriptions for up to a further 15,000,000 Shares at an issue price of $0.20 per Share to raise a further $3,000,000, being $15,000,000 in total. The purpose of the Offer is to facilitate an application by the Company for admission of the Company to the Official List of the ASX and to seek to achieve the objectives stated at section B above. The Board believes that on completion of the Offer, the Company will have sufficient working capital to achieve its objectives. What will the The Company’s capital structure on a post-Offer basis is set Section Company’s out in Section 4.14. 4.14. capital structure look

4467-01/1715392_1 11 Further Item Summary information like after completion of the Offer? What are the A summary of the material rights and liabilities attaching to Section terms of the the Shares offered under the Offer is set out in Section 13.2. 13.2 Shares offered under the Offer? Will any of the No, none of the Shares issued under the Offer will be subject Section 3.7 Shares issued to escrow. under the Offer be subject to escrow? Will the Shares The Company will make an application to ASX for quotation Section 3.7 issued under of all Shares to be issued under the Offer. the Offer be quoted? What are the The key dates of the Offer are set out in the indicative Key Offer key dates of timetable in the Key Offer Information Section. Information the Offer? Section What is the Applications under the Offer must be for a minimum of Section 3.6 minimum $2,000 worth of Shares (10,000 Shares) and thereafter, in investment multiples of $500 worth of Shares (2,500 Shares). size under the Offer? Are there any No, other than the Minimum Subscription, the Offer is Section 3.3 conditions to unconditional. the Offer? G. Use of proceeds How will the The Offer proceeds and the Company’s existing cash Section 3.4 proceeds of reserves will be used for: the Offer be (a) resource drilling; used? (b) assaying; (c) exploration drilling; (d) metallurgical testing; (e) pilot well drilling and testing; (f) re-activation of operating permits and environmental approvals; (g) salaries and general working capital; and (h) pre-feasibility studies, further details of which are set out in Section 3.4. H. Additional information Is there any No brokerage, commission or duty is payable by Applicants Sections brokerage, on the acquisition of Shares under the Offer. 3.5 and commission or The Company may pay a fee to introducers of 5% (ex GST) 3.11 stamp duty of the total amount raised under the Prospectus.

4467-01/1715392_1 12 Further Item Summary information payable by applicants? What are the Shares may be subject to Australian tax on dividends and Section 3.5 tax possibly capital gains tax on a future disposal of Shares implications issued under this Prospectus. of investing in The tax consequences of any investment in Shares will Shares? depend upon an investor’s particular circumstances. Applicants should obtain their own tax advice prior to deciding whether to subscribe for Shares offered under this Prospectus. What are the To the extent applicable, in light of the Company’s size and Section 11 corporate nature, the Company has adopted The Corporate governance Governance Principles and Recommendations (3rd Edition) principles and as published by ASX Corporate Governance Council policies of the (Recommendations). Company? The Company’s main corporate governance policies and practices as at the date of this Prospectus are outlined in Section 11. In addition, the Company’s full Corporate Governance Plan is available from the Company’s website (www.americanpacificborate.com). Prior to listing on the ASX, the Company will announce its main corporate governance policies and practices and the Company’s compliance and departures from the Recommendations. Where can I (a) By speaking to your sharebroker, solicitor, accountant find more or other independent professional adviser. information? (b) By contacting the Company Secretary on +61 8 6141 3145. (c) By contacting the Share Registry on +61 8 9389 8033.

This section is a summary only and not intended to provide full information for investors intending to apply for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety.

4467-01/1715392_1 13 2. CHAIRMAN’S LETTER

Dear Investor

On behalf of the Directors, it gives me great pleasure to invite you to become a Shareholder in American Pacific Borate & Lithium Ltd (APBL or Company).

I believe that the Fort Cady Project is one of the most exciting projects I have been involved with in over fifty years of working in the mining industry. Salient points include: - The Fort Cady Project has the potential to be a globally significant borate project and one of the largest not currently owned by a major mining company; - The borate mineralisation is hosted in colemanite which is tried and tested in commercial operations thereby limiting processing risk and making the project more fundable; - The borate market is driven by clean technologies such as fibreglass (including insulation and circuit boards), borosilicate glass, ceramics, soaps and detergents and fertilisers, all of which appear to have a very secure long term future; and - Previous non-JORC borate-lithium historical estimates at Fort Cady have provided the Board with the necessary encouragement to undertake further project development activities.

- The operating and environmental permits required for commercial operations and to conduct pilot plant testing and operations have been previously obtained for the Project

On 2 May 2017, the Company entered into a share purchase agreement with Atlas Precious Metals, Inc (a company incorporated in Canada) (Atlas), Fort Cady California Corporation (a company incorporated in Maryland, USA) (FCCC) and Fort Cady Minerals Corporation (a company incorporated in Canada) (FCMC) for the purpose of acquiring the Fort Cady borate-lithium project through acquisition of the associated plant infrastructure, mining and environmental permits and the Land Titles (Acquisition).

The Project has a long history of exploration and pre-development activities including two phases of pilot-scale testing. The Company plans to capitalise on the expansive historical records with the aim to fast-track a maiden JORC Code (2012) compliant Mineral Resource Estimate, metallurgical studies, pre-feasibility studies, pilot-scale test work and ultimately optimisation of development plans for possible production. Critically, the Project has already secured all material approvals for a pilot plant and the two key land use permits for commercial-scale production.

APBL has assembled an experienced management and exploration team which is well qualified to carry out the Company’s stated objectives. The Board has significant experience covering capital markets, metals and mining exploration management and project development.

This Prospectus is seeking to raise a minimum of $12,000,000 with the right to accept oversubscriptions of up to a further 15,000,000 Shares to raise up to a further $3,000,000, being a maximum of $15,000,000. Our focus is on turning the deposit into a leading global borate and lithium mine.

I look forward to you joining us as a Shareholder and sharing in what we believe are exciting and prospective times ahead for the Company. Before you make your investment decision, I urge you to read this Prospectus in its entirety, in particular Section 6 which identifies circumstances that the Board regards as the major risks associated with an investment in the Company and seek professional advice if required.

Yours sincerely

Harold (Roy) Shipes Non-Executive Chairman AMERICAN PACIFIC BORATE & LITHIUM LTD

4467-01/1715392_1 14 3. DETAILS OF THE OFFER

3.1 The Offer

Pursuant to this Prospectus, the Company invites applications for 60,000,000 Shares at an issue price of $0.20 per Share to raise $12,000,000. The Shares offered under this Prospectus will rank equally with the existing Shares on issue.

3.2 Oversubscriptions

The Company also reserves the right to accept oversubscriptions of up to a further 15,000,000 Shares at an issue price of $0.20 per Share to raise up to a further $3,000,000. The maximum amount which may be raised under the Offer is accordingly $15,000,000 (Maximum Subscription).

3.3 Minimum subscription

The minimum amount which must be raised under this Prospectus is $12,000,000 (Minimum Subscription). If the Minimum Subscription has not been raised within 4 months after the date of this Prospectus, the Company will not issue any Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest.

3.4 Use of Funds

The Company intends to apply funds raised from the Offer, together with existing cash reserves, over the first two years following admission of the Company to the official list of ASX as follows:

4467-01/1715392_1 15 A$12m A$15m Year 1 Year 2 Total Year 1 Year 2 Total Fort Cady Borate-

Lithium Project Mobilisation & 61,333 - 61,333 76,667 - 76,667 demobilisation costs Drill access & site 57,960 - 57,960 72,450 - 72,450 preparation Drilling programmes 1,966,347 - 1,966,347 2,457,933 - 2,457,933 Assay 343,467 - 343,467 429,333 - 429,333 Hector Lithium

Project Mobilisation & 15,333 - 15,333 19,167 - 19,167 demobilisation costs Drill access & site 9,200 - 9,200 11,500 - 11,500 preparation Drilling programmes 621,920 - 621,920 777,400 - 777,400 Assay 36,800 - 36,800 46,000 - 46,000 Pre-Feasibility

Studies Mobilisation & 15,333 - 15,333 19,167 - 19,167 demobilisation costs Reaming & casing 52,747 - 52,747 65,933 - 65,933 Well install & engineering, pilot 2,003,971 23,000 2,026,971 2,504,964 28,750 2,533,714 plant & test work Well assay 106,375 11,500 117,875 132,969 14,375 147,344 Subcontractors & 471,500 92,000 563,500 589,375 115,000 704,375 technicians Metallurgical Test work & 690,000 651,667 1,341,667 862,500 814,583 1,677,083 engineering Land Title & Permit

Application Permitting, Bonding 306,667 222,333 529,000 383,333 277,917 661,250 & Claim Fees External Consulting

& Resource Report Consultants 437,000 705,333 1,142,333 546,250 881,667 1,427,917 Resource Report 207,000 - 207,000 258,750 - 258,750 SUB-TOTAL 7,402,953 1,705,833 9,108,786 9,253,691 2,132,292 11,385,982 Working Capital1 1,445,607 1,445,607 2,891,214 1,807,009 1,807,009 3,614,018 TOTAL 8,848,560 3,151,440 12,000,000 11,060,699 3,939,301 15,000,000

Notes: 1. These include the costs of the offer (refer to Section 13.11 for further details) and general costs associated with the management and operation of the business including administration expenses, management salaries, directors’ fees, rent and other associated costs. 2. Refer to the Independent Geologist’s Report for further details on the Company’s proposed expenditure program.

In the event the Company accepts oversubscriptions and raises more than the Minimum Subscription of $12,000,000 but less than the Maximum Subscription of $15,000,000, the additional funds raised will be proportionately applied towards additional resource drilling, pilot scale test work and pre-feasibility studies.

It should be noted that the Company’s budget will be subject to modification on an ongoing basis depending on the results obtained from exploration and evaluation work carried out and will involve an ongoing assessment. The results

4467-01/1715392_1 16 obtained from exploration and evaluation programs may lead to increased or decreased levels of expenditure on certain projects reflecting a change in emphasis.

The above table is a statement of current intentions as of the date of this Prospectus. As with any budget, intervening events (including exploration success or failure) and new circumstances have the potential to affect the manner in which the funds are ultimately applied. The Board reserves the right to alter the way funds are applied on this basis.

The Directors consider that following completion of the Offer, the Company will have sufficient working capital to carry out its stated objectives. It should however be noted that an investment in the Company is speculative and investors are encouraged to read the risk factors outlined in Section 6.

3.5 Taxation The acquisition and disposal of Shares will have tax consequences, which will differ depending on the individual financial affairs of each investor.

It is not possible to provide a comprehensive summary of the possible taxation positions of all potential applicants. As such, all potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Shares from a taxation viewpoint and generally.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisors accept no liability and responsibility with respect to the taxation consequences of subscribing for Shares under this Prospectus.

No brokerage, commission or duty is payable by Applicants on the acquisition of Shares under the Offer.

3.6 Applications Applications for Shares under the Offer must be made using the Application Form.

By completing an Application Form, each Applicant under the Offer will be taken to have declared that all details and statements made by you are complete and accurate and that you have personally received the Application Form together with a complete and unaltered copy of the Prospectus.

Applications for Shares must be for a minimum of 10,000 Shares and thereafter in multiples of 2,500 Shares and payment for the Shares must be made in full at the issue price of $0.20 per Share.

Completed Application Forms and accompanying cheques, made payable to “American Pacific Borate & Lithium Ltd” and crossed “Not Negotiable”, must be mailed or delivered to the address set out on the Application Form by no later than 5:00pm (WST) on the Closing Date.

The Company reserves the right to close the Offer early.

If you require assistance in completing an Application Form, please contact the Share Registry on +61 8 9389 8033.

3.7 ASX listing Application for Official Quotation by ASX of the Shares offered pursuant to this Prospectus will be made within 7 days after the date of this Prospectus.

4467-01/1715392_1 17 If the Shares are not admitted to Official Quotation by ASX before the expiration of 3 months after the date of issue of this Prospectus, or such period as varied by the ASIC, the Company will not issue any Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest.

The fact that ASX may grant Official Quotation to the Shares is not to be taken in any way as an indication of the merits of the Company or the Shares now offered for subscription.

Subject to the Company being admitted to the Official List, certain Shares and Options on issue prior to the Offer will be classified by ASX as restricted securities and will be required to be held in escrow for up to 24 months from the date of Official Quotation. The Board does not expect that any Shares issued under the Offer will be subject to escrow under the ASX Listing Rules.

The Company will announce to the ASX full details (quantity and duration) of the Shares and Options required to be held in escrow prior to the Shares commencing trading on ASX.

3.8 Issue Subject to the Minimum Subscription to the Offer being reached and ASX granting conditional approval for the Company to be admitted to the Official List, issue of Shares offered by this Prospectus will take place as soon as practicable after the Closing Date.

Pending the issue of the Shares or payment of refunds pursuant to this Prospectus, all application monies will be held by the Company in trust for the Applicants in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and each Applicant waives the right to claim interest.

The Directors will determine the recipients of the issued Shares in their sole discretion. The Directors reserve the right to reject any application or to allocate any applicant fewer Shares than the number applied for. Where the number of Shares issued is less than the number applied for, or where no issue is made, surplus application monies will be refunded without any interest to the Applicant as soon as practicable after the Closing Date.

3.9 Applicants outside Australia This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

No action has been taken to register or qualify the Shares or otherwise permit a public offering of the Shares the subject of this Prospectus in any jurisdiction outside Australia. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

If you are outside Australia it is your responsibility to obtain all necessary approvals for the issue of the Shares pursuant to this Prospectus. The return of a completed

4467-01/1715392_1 18 Application Form will be taken by the Company to constitute a representation and warranty by you that all relevant approvals have been obtained.

3.10 Not underwritten

The Offer is not underwritten.

3.11 Commissions payable

The Company reserves the right to pay a commission of up to 5% (exclusive of goods and services tax) of amounts subscribed through any licensed securities dealers or Australian financial services licensee in respect of any valid applications lodged and accepted by the Company and bearing the stamp of the licensed securities dealer or Australian financial services licensee. Payments will be subject to the receipt of a proper tax invoice from the licensed securities dealer or Australian financial services licensee.

4467-01/1715392_1 19 4. COMPANY AND PROJECTS OVERVIEW

4.1 Company Background

The Company was incorporated as an unlisted public company limited by shares on 28 October 2016 for the purpose of acquiring the Project. Other than as disclosed in this Prospectus, the Company has not undertaken any other activities since incorporation.

The Acquisition of the mining rights to the Project and the Land Titles occurred pursuant to a share purchase agreement entered into by the Company, its wholly owned subsidiary Fort Cady Holdings Pty Ltd (ACN 617 760 746) (Fort Cady Holdings), Fort Cady California Corporation (a company incorporated in Maryland, USA) (FCCC), Fort Cady Minerals Corporation (a company incorporated in Canada) (FCMC) and Atlas Precious Metals, Inc (a company incorporated in Canada) (Share Purchase Agreement) on 2 May 2017.

Pursuant to the Share Purchase Agreement, the Company has rights to the relevant Permits and Land Titles as follows:

(a) FCCC is a wholly owned subsidiary of the Company and FCCC owns the Land Titles;

(b) FCMC is a wholly owned subsidiary of Atlas and FCMC holds the permits as well as the Mining Information associated with the Project and various other physical assets located at the Project; and

(c) pursuant to the Share Purchase Agreement, FCMC has agreed to transfer the necessary Project Assets (which include the Permits) to FCCC, and until such transfer has occurred, FCMC has granted to Fort Cady Holdings a licence to use these assets. Further, Atlas has granted an option to Fort Cady Holdings to acquire all of the issued share capital of FCMC which is exercisable should the transfer of the necessary project assets not occur within 6 months of execution of the Share Purchase Agreement.

Fort Cady Holdings Pty Ltd is a special purpose vehicle set up specifically to hold FCCC and the Permits.

The Company’s current corporate structure is therefore as follows:

In consideration for the Acquisition, a total of 80,000,000 Shares were issued (Consideration Shares). Of these Consideration Shares, Atlas, an entity controlled by Mr Shipes, a Director, was issued with 49,220,000 Shares and 30,780,000 Shares were issued to other parties, including an entity associated with Mr Hall, a Director.

4467-01/1715392_1 20 In addition 1,600,000 Shares were issued to an unrelated third party, Dundee Corporation pursuant to the Settlement Agreement and Release Deed summarised in Section 12.5.

For further details on the Share Purchase Agreement and recipients of the Shares please see Sections 10.2, 10.3 and 12.1.

4.2 Overview of the Fort Cady Project

The Project is a borate-lithium project located in south eastern California, which covers approximately 26km2 of the west central portion of the Hector evaporate basin located in the Mojave Desert region of San Bernardino County, California, USA (Fig. 1).

Figure 1. Location of the Fort Cady Project

The approved project area as defined in the land use operating permits (Project Area) covers an area of approximately 6,500 acres of which 343 acres are permitted as disturbed lands.

FCCC currently holds 4,409 acres in and adjacent to the Project Area under several types of land titles, including 240 acres of fee simple patented or privately held lands owned by FCMC; 269 acres of surface areas owned with mineral rights held by the State of California (under application by FCCC for a Mineral Prospecting Permit); 2,380 acres of unpatented claims held by FCCC on Bureau of Land Management (BLM) managed lands; and 1,520 acres of unpatented claims leased by FCCC from Elementis Specialties Inc. (Elementis).

FCCC holds land titles to 1,386 acres within the Project Area with the remaining acreage held by Elementis and third parties. Within this area, approximately 100 acres is designated as freshwater well mill sites which can be used by the Company for accessing water for the Project. Refer to the Land Ownership Report in Section 9 for further information on the ownership of the Project Area.

Borate was first discovered at Fort Cady in 1964, and since then the Project has had a reasonably extensive history with resource drilling carried out by Duval Corporation from 1980-81 (33 drill holes) and metallurgical testing, well field testing

4467-01/1715392_1 21 and feasibility studies carried out from 1986-94. The permitting process for full scale commercial operations was completed in 1994, and although two of the commercial permits have been allowed to lapse, the Project retains the appropriate permits to continue pilot plant operations.

A pilot plant operated on the Project from 1996-2001 which produced a ‘synthetic high-grade colemanite concentrate’ commercial product, which was marketed and sold under the brand name “CadyCal 100”. The pilot plant proved that solution mining can be successfully carried out on this deposit. Pilot plant operations ceased in 2002.

To date, a significant amount of capital has been spent on the development of the Fort Cady Project by its previous owners, encompassing permit acquisition, drilling and resource estimation, field well testing, metallurgical testing, feasibility studies and pilot plant infrastructure and operations.

The Project was acquired by Atlas in 2010 via the acquisition of FCMC (FCCC was a wholly owned subsidiary of FCMC). Prior to Atlas ownership, the Project owners were focussed exclusively on the borate potential of Fort Cady, although high levels of lithium have been recorded in both the formation and the ambient brines at Fort Cady. The Company intends to investigate the potential for both borate and lithium co-products in any potential future operation at the Project.

The Fort Cady mine (Fort Cady Mine) itself has an approved Mining Conditional Use Permit and Reclamation Plan with the County (No. 94M-04), which was approved in April 1994 and has an end date of April 24, 2024, and is also renewable at expiry. The US Federal BLM also approved a Record of Decision for the Plan of Operations (CAMC 20175). The permits allow for surface development to support mining activities over approximately 343 acres, including an ore body well field (273 acres), process water supply network, processing facility, ancillary facilities including a natural gas pipeline, cogeneration facility, bi-product gypsum storage area, railroad spur and access roads.

Operations since the permit approvals were acquired in 1994 have consisted of a small scale pilot production facility, a well field and several solution storage ponds to produce calcium borate for market testing on approximately 20 acres. The facilities onsite consist of a process building, process area, maintenance building, and several lined ponds of approximately 10 acres (about 6 acres of lined ponds), small drying and packaging areas, and several liquid holding tanks. An adjacent well field consists of approximately 17 wells to produce borate fluid. Three fresh water wells are also located approximately one mile south, connected with a 3- inch pipe. Please see Section 4.7 and the Land Ownership Report for further information on the permitting status of the Project.

4467-01/1715392_1 22 4.3 Location of the Project

The Project is located in the Mojave Desert of Southern California approximately 50 kilometres east of Barstow and 27 kilometres east of Newberry Springs in San Bernardino County, California. The Project lies approximately half way between Los Angeles and Las Vegas, Nevada, around 200km from both cities. The Project is directly adjacent to the Elementis hectorite mine.

As shown in the map in Figure 1, the Project is located approximately 120km from Rio Tinto’s Boron open pit mine, which is the world’s largest single source for boron minerals. The Searles Valley Minerals mine at Searles Lake produces borates via solution mining (as is proposed at Fort Cady) and is located approximately 200km north-northwest of the Project. The Silver Peak mine in neighbouring Nevada is currently producing lithium from subsurface brines and there are a number of other early stage lithium brine exploration projects located in both Nevada and the southern California region.

4.4 Mineralised Area and Mineral Tenure

The boundary of the mineralised area, land titles and infrastructure of the Project is set out in the map in Figure 2.

4467-01/1715392_1 23

Figure 2. Land title ownership, operating permit area and significant infrastructure, Fort Cady Project.

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Please see the Land Ownership Report for further information on the status of the Land Titles.

(a) FCCC ground held under Mineral Lease Agreement with Elementis

Elementis Specialities, Inc (a Delaware corporation) (Elementis) currently holds unpatented mining claims in Township 8 North, Range 5 East, SBBM, San Bernardino County in the State of California (the Elementis Property), being land upon which the Project is partially located.

On 1 October 2011, FCCC and Elementis entered into an agreement (the Elementis Mineral Lease Agreement) whereby Elementis granted to FCCC the exclusive right to enter the Elementis Property for the purposes of exploration, development, production, removal and sale of borate and lithium minerals, in consideration for a payment of US$75,000 per annum adjusted for inflation each year, as well as a profit based royalty payment.

The operating permits in relation to the Project are currently held by FCMC and are being transferred to FCCC pursuant to the Share Purchase Agreement. These permits are required in order to mine or otherwise commence production of borates and lithium from the Project and therefore should Elementis terminate the Elementis Mineral Lease Agreement pursuant to its terms, Elementis will be unable to use the land otherwise than to explore.

The Elementis Mineral Lease Agreement expires in October 2021, and if the Project is in production at this date, the agreement automatically extends for as long as the Project is in production. Refer to Section 12.2 for further details of the Elementis Mineral Lease Agreement.

(b) Private Property (Patented Land) with Mineral Rights Owned by FCCC

Two parcels totalling 240 acres are private property held by FCCC (Figure 2). FCCC holds exclusive rights to any surface use and mineral extraction in perpetuity.

(c) Private Property (Patented Land) Surface Ownership Owned by FCCC with Mineral Rights Owned by State of California

One parcel totalling 269 acres is private property with surface title with exclusive rights to any surface use held by FCCC in perpetuity. The exclusive mineral rights are held or reserved by the State of California through the California State Lands Commission (SLC). The SLC may lease State Lands for mineral prospecting permit and/or a mineral extraction lease through an application process. FCCC has submitted a Mineral Prospecting Permit application with the SLC to conduct geologic mapping and geophysical testing to define the resource and to secure its Preferential Rights on this parcel and no other party can obtain these rights without a corresponding waiver from FCCC.

FCCC was granted a Preferential Right to apply for a Mineral Extraction Lease under State Mineral Prospecting Permit (PRC) 5906, originally to FCCC’s predecessor, Duval Corporation, in 1980, and to FCCC on December 17, 1992. This provides FCCC the first right of refusal for the mineral rights and extraction permit with the SLC. FCCC is currently advancing a Mineral Prospecting Permit application with the SLC to

4467-01/1715392_1 25

conduct geologic mapping and geophysical testing to define the resource.

(d) Unpatented Claims Recorded and Maintained by FCCC

FCCC holds the exclusive right of exploration, development and production of any mineral and related surface use and mining privilege to 119 unpatented claims, totalling 2,380 acres. While these claims do not host any known borate or lithium mineralisation, the claims to the northwest of the defined mineralised area are considered prospective for borate-lithium mineralisation similar in style to the Fort Cady mineralisation. Claims to the north, northeast and east of the defined mineralised area are considered prospective for structurally-hosted, lithium-enriched brines which the Company will assess for potential use as make-up solution for solution mining and mineral processing. Claims to the east of the defined mineralised area are also coincident with approved areas for the 10 acre processing facility, 16 acre gypsum storage area, rail spur and access roads.

(e) SCE Land Title

Southern California Edison (SCE), a large power utility, currently holds the surface and mineral rights over approximately 617 acres of the Project Area. FCMC and SCE were previously parties to a lease agreement whereby FCMC was granted the right to access, drill and mine within the area, but due to inactivity, the lease agreement lapsed.

It is the Company’s intention to negotiate a new lease agreement with SCE. In the interim, it is the Company’s opinion that SCE’s holding of the land is not an immediate concern for the following reasons:

(i) Only a party with the necessary operational permits in place may mine the area, and only the Company (via FCMC) holds such permits; and

(ii) based on the size of the Project, the Company believes that this area held by SCE is not essential for the Company’s intended operations as set out in this Prospectus.

Refer to the Land Ownership Report for further information in respect of the mineral tenure of the Project.

4.5 Project Geology

A full description of the Project geology is detailed in the Independent Geologist’s Report (Section 7). Following is a summary of this information.

The Project Area is in the Mojave Desert province of the basin and range terrain of Western North America. The terrain is characterised by high northward trending mountain ranges separated by broad alluvial valleys, all caused by extensional tectonic forces. An extensive network of northwest-southeast strike slip faults has developed across the region, many of which have relative movements in excess of 20 km. An estimated 50% of the area is covered by Quaternary alluvium. Thickness of the Quaternary alluvium and underlying Tertiary volcanic and sedimentary rocks can be as deep as 1 km thick in the deepest basins.

The local geology comprises the west central portion of a Pliocene age dry lake basin (Hector Basin) which has been partially dissected by wrench and block

4467-01/1715392_1 26

faulting related to the San Andreas system. The Hector basin is believed to have once been part of a much larger evaporite basin or perhaps a chain of basins in what has been termed the Barstow – Bristol Trough. This larger basin extended for over 130 km in length, as the name implies, from an area northeast of Barstow, through the Troy Lake area and eastward into the Bristol salt basin. Late Tertiary bimodal volcanism assisted in the separation of the basins into the present topography with emplacement of voluminous flows and domes. These volcanic episodes produced a series of extensive hot spring deposits along the margins of the basin. The basin is hydrologically closed and bounded on all four sides by relatively small and low-lying mountain ranges. A dry playa lake bed called Lavic Lake occupies the southern end of the basin.

The local geology on the surface comprises a mixed sequence of Quaternary basin and plain sediment accumulations with various younger flows of basalt on the surface. These basalt flows indicate volcanism occurring into the late Tertiary and Quaternary, which is also evidenced by cinder cones in various locations in the district, such as the Pisgah Crater that is situated only 2 kms east of the project area.

During a drilling programme by Duval Sulfur & Potash Corp (Duval) in 1980-1981, in which 33 diamond drill holes were completed at nominally 250m spacing, an extensive borate-enriched area occupying an area of approximately 3 km2 was intersected. The thickness of the mineralisation varies between 30m to 75m and is at depths of 350m to 450m below surface. Mineralisation is open to the northwest and the southeast. An additional 17 drill holes were completed for injection tests, solution mining tests and pilot-scale processing tests. FCCC currently holds tenure over approximately 55% of the known spatial extent of the mineralised area.

The deposit comprises a sequence of mudstone and tuff. The borate mineralisation occurs primarily as colemanite (2CaO 3B2O3 5H2O) in thinly laminated silt, clay and gypsum beds containing an average of 9% calcite, 35% anhydrite plus 10% celestite, SrSO4 (Wilkinson P and Krier N, Jan 1985 Geological summary).

As a result of the drilling, three historic resource estimates (not reported according to the 2012 guidelines of the Australasian JORC Code) were calculated. These range in size from 80 Mt at 6.7% B2O3 to 115 Mt at 7.4% B2O3 at a greater than 5% B2O3 cut-off grade. One of the historical estimates identified lithium grades in excess of 300ppm were also present in the deposit (Table 1). The most widely quoted historical estimate for Fort Cady is 133.7 Mt @ 6.4% B2O3 for 8.5Mt contained B2O3. This figure is quoted in the FCMC Revised Mining and Land Reclamation Plan (FCMC, 1993).

Table 1. Historic non-JORC resource estimates for the Fort Cady Project at various cut-off grades1.

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1 The estimates are historical estimates and are not reported in accordance with the guidelines of the JORC Code (2012). A competent person has not completed sufficient work to classify these estimates as Mineral Resources or Ore Reserves in accordance with the guidelines of the JORC Code (2012). It is uncertain that following evaluation and/or further exploration work that the estimates will be able to be reported as Mineral Resources or Ore Reserves in accordance with JORC Code (2012). The full source details of the above estimates are contained in the Bibliography.

The Company notes that approximately 44% of the tonnage of the total Duval historic resource is currently under FCCC tenure or lease agreements. APBL is currently in discussions with third parties to secure access to the mineral rights to an additional 55% of the Duval historic resource tonnage (see Figure 2). It is also noted that approximately 87% of the total Duval historic resource is encapsulated within the commercial-scale operating permits, including the Mining and Reclamation Plan and Environmental Impact Statement, held by FCMC.

4.6 Site infrastructure

The Project is located nearby to other operations and is well served by existing infrastructure, including the following:

(a) Interstate highway: Access to the Project is by a graded road extending approximately 4 km south from the Interstate 40 (I-40) highway at the Hector Mine Road exit.

(b) Rail line: The main BNSF rail line runs alongside the Interstate 40 highway and is located just 2 km to the north of the Project.

(c) Gas line: A major gas pipeline also runs alongside the Interstate 40 highway and the rail line.

(d) Electricity line: A major electricity trunk line owned by Southern California Edison runs directly through the Project area.

(e) Airport access: the Barstow-Daggett county airport is located just 20 km from the Project area.

(f) Port access: The Project has direct access to the Port of Los Angeles.

(g) An existing pilot plant: A pilot plant operated on the Project from 1996- 2001 which produced a ‘synthetic high-grade colemanite concentrate’ commercial product,

4.7 Permitting Status

Mining operations at the Project have previously been permitted and approved by regulatory authorities for commercial operations producing up to 90,000 st per annum (Full Scale Production) of boric acid. The Company believes the permitting history may assist with any future permit application and re-issuance process.

The two key permits, both of which are still active are as follows:

(a) Plan of Operations and combined Environmental Impact Statement and Environmental Impact Report (EIS/EIR); and

(b) Mining Conditional Use Permit and Reclamation Plan (94M-04) and combined EIS/EIR.

The remaining two permits, which were rescinded at the previous owner’s request, are as follows:

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(a) Water Quality Management Permit (Waster Discharge Requirements); and

(b) Air Quality Permit – Authority to Construct and Permit to Operate.

Specialist environmental consultants, Lilburn Corporation Inc., have indicated that the two active permits mentioned above, which are effectively land use permits, are the key permits to have in place for the Company’s operations. With these permits still active, reapplications for the rescinded permits will be viewed favourably by the respective agencies and approval should be relatively straightforward.

The status of each of the permits required for operation of the Project, are as follows:

Permit Issuing Entity/s Status Explanation

Plan of operations (Plan of Department of the In effect. Approval was granted in Operations) and combined Interior, Bureau of December 1994, and remains environmental impact statement Land Management valid until the permit is cancelled. and environmental impact (BLM) report (EIS/EIR)

Mining conditional use permit San Bernardino Land In effect. Approval was granted in June (Mining Conditional Use Permit) Use Services 1994, and expires in April 2024, and approved reclamation plan Department, jointly with the ability to re-new. (Approved Reclamation Plan) with the California Department of Conservation, Office of Mine Reclamation

Water quality management California Regional (a) In effect. Approval was granted in May permit for: Water Quality Control (b) Inactive. 1988. (a) both pilot operations; and Board The permit required for Full Scale (b) full scale operations, Production was cancelled at the owner’s request, and re- (the Water Quality Permit). activation is required.

Authority to construct and permit Mojave Desert Air Inactive. Approval was granted in March to operate (the Air Quality Quality Management 1993. Permit). District The permit was cancelled at the owner’s request, and re- activation is required. Refer to the Land Ownership Report for further detail in relation to the Company’s permitting status.

4.8 Business Model

As noted above, the Project has had a significant amount of prior drilling and is the subject of at least three separate non JORC historic resource estimates, calculated by three different groups.

The Board has considered these historic resource figures in its assessment of the Project merits, despite the fact that none of the resources quoted are 2012 JORC Code compliant, and should not be construed as indicating the existence of a JORC Code compliant mineral resource. At this point there is insufficient information to establish whether further exploration will result in the determination of a mineral resource within the meaning of the JORC Code however the Company aims to undergo expenditure in order to establish a JORC 2012 compliant resource following listing.

The Company will initially focus on the technical advancement of the Project (including confirmatory resource drilling) and advancing the re-permitting process

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to ensure that the Fort Cady Mine moves into the operational phase as swiftly as possible.

4.8.1 Strategy Post Listing

The primary objective of the Company following listing on the ASX will be a continued focus on the Project. The Company’s proposed expenditure program is set out in Section 3.4 and is also contained in the Independent Geologist’s Report in Section 7. The results of the drilling and metallurgical and pilot well testing programs will determine the economic viability and possible timing for the commencement of further testing including pre- feasibility studies and commencement of other mining operations on the Project.

In summary, the Company’s intended management strategy and purpose of this Offer is to provide the Company with funding to:

(a) compile a JORC Code compliant resource (reporting to measured and/or indicated and inferred categories) for either a borate or lithium resource at the Fort Cady Project;

(b) complete a pre-feasibility study for the full scale commercial operations;

(c) progress the permit re-activation process;

(d) complete the access and/or lease negotiations with relevant third parties where necessary; and

(e) provide working capital for the Company.

The Company has sufficient working capital to carry out its stated objectives for the two years following admission to the official list of ASX.

4.8.2 Proposed Expenditure Program

The Company proposes to fund its exploration activities over the first two years, as outlined in Section 3.4.

Further details of the Company’s intended expenditure program are contained in the Independent Geologist’s Report.

The budgeted expenditure program outlined in Section 3.4 is subject to modification on an ongoing basis and is contingent on circumstances, results and other opportunities. Expenditure may be reallocated as a consequence of such changes or new opportunities arising and will always be prioritised in accordance with due regard to geological merit and other business decisions related to the Company’s activities. Ongoing assessment of the Company’s Project may lead to increased or decreased levels of expenditure reflecting a change of emphasis.

4.9 Directors and key personnel

Harold (Roy) Shipes, BSc Non-Executive Chairman

Mr Shipes has over 50 years’ commercial experience in metals & mining – primarily engineering and project development around the world including the USA,

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Canada, Peru, Australia, PNG, Venezuela and Mexico. He served as CEO and General Manager of OK Tedi Mining Ltd, GM Operations for the Southern Peru Copper Corporation and previously for Phelps Dodge Corp. Mr Shipes is Founder and President of a number of North American focused mining companies, including American Pacific Mining, Western States Engineering and Atlas Precious Metals Inc (the owner of the Fort Cady assets). Prior to his mining career, Mr Shipes served as a captain in the US Air Force.

The Directors do not consider that Mr Shipes’ other positions will affect his ability to act as Non-Executive Chairman of the Company.

Michael Schlumpberger, BEng (Mining), MBA Managing Director and Chief Executive Officer

Michael Schlumpberger is a qualified mining engineer with over 30 years’ experience in industrial minerals. His background includes management, operations and maintenance in all aspects of mining, processing, reclamation, and permitting. Mr Schlumpberger has held senior roles with Potash Corporation of Saskatchewan, Passport Potash and ASX listed Highfield Resources, and has worked in the United States, Canada, and Europe. Mr Schlumpberger holds an MBA from East Carolina University.

Anthony Hall, BBus, LLB(Hons), AGIA Non-Executive Director

Mr Hall is a qualified lawyer with 20 years´ commercial experience in venture capital, risk management, strategy and business development. He was Managing Director of ASX listed Highfield Resources Ltd from 2011 to 2016. During his tenure the company´s market cap grew from $10m to over $500m and over $140m was raised to progress potash projects in Spain. Mr Hall holds a Bachelor of Laws (Hons), Bachelor of Business and a Graduate Diploma of Applied Finance and Investment.

The Directors do not consider that Mr Hall’s other positions will affect his ability to act as an Executive Director of the Company.

Stephen Hunt, BBus, MAICD Non Executive Director

Mr Hunt has 25 years’ experience in the marketing mineral products worldwide. His career includes 15 years at BHP Billiton where he spent 5 years in the London office marketing minerals to a global customer base. Mr. Hunt has built his own minerals trading company, which has a strong Chinese focus. He brings 15 years of cumulative board experience with four ASX listed companies. Two of those companies were successful in transitioning from project development to production. Currently Mr. Hunt is Chairman of Volt Resources Ltd (ASX: VRC) and is a Member of the Australian Institute of Company Directors.

The Directors do not consider that Mr Hunt’s other positions will affect his ability to act as a Non Executive Director of the Company.

John McKinney, BScBA Non Executive Director

Mr McKinney, has performed in senior management positions in the mining industry for approximately 25 years. He is experienced in Corporate Operations, Management and Business Development. Mr. McKinney has co-founded a number of mining companies, including Western Gold Resources, American

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International Trading Company and Western States Engineering, an engineering company specializing in mining related engineering projects. His responsibilities have included overseeing operations in the U.S., Mexico and Bolivia, including Arisur, AITCO and Atlas Precious Metals in Bolivia. Mr. McKinney has been Executive Vice President of Atlas Precious Metals, Inc. since May 1994. He received a Bachelor of Science Degree in Business Administration from the University of Arizona.

The Directors do not consider that Mr McKinney’s other positions will affect his ability to act as a Non Executive Director of the Company.

4.10 Other Management

Lachlan Rutherford, Bsc (Hons) PhD MBA, MAusIMM Head of Strategy and Corporate Development

Dr Rutherford is a geologist with 17 years’ experience in project management and geologist roles, working across the commodity spectrum in mining, development and exploration. Lachlan also has experience in the financial markets as a resource analyst, and in both corporate advisory and equity capital raising. Lachlan joined a resource-focused venture capital group in 2015, acting as Business Development Manager and Country Manager for Spain. Lachlan is a Member of the Australasian Institute of Mining and Metallurgy and qualified as a Competent Person under JORC Code (2012).

Aaron Bertolatti BComm, CA, AGIA Company Secretary

Mr Bertolatti is a qualified chartered accountant and company secretary with over 10 years’ experience in the mining industry and accounting profession. Mr Bertolatti has both local and international experience and provides assistance to a number of resource companies with financial accounting and stock exchange compliance. Mr Bertolatti has significant experience in the administration of ASX listed companies, financial accounting, corporate governance and corporate finance.

Mr Bertolatti acts as Company Secretary for numerous ASX listed companies. He is currently company secretary of Red Emperor Resources NL (ASX:RMP) and Orca Energy Ltd (ASX:OGY). Mr Bertolatti is also currently Australian chief financial officer of Highfield Resources Ltd (ASX:HFR).

4.11 Additional Information

Prospective investors are referred to and encouraged to read in its entirety both the:

(a) the Independent Geologist’s Report in Section 7 for further details about the geology, location and mineral potential of the Project in which the Company has an interest; and

(b) the Land Ownership Report for further details in respect to the Land Titles that comprise the Project.

4.12 Dividend Policy

The Board anticipates that significant expenditure will be incurred in the evaluation and development of the Company’s Project. These activities, together with the possible acquisition of interests in other projects, are expected

4467-01/1715392_1 32

to dominate at least, the first two year periods following the date of this Prospectus. Accordingly, the Company does not expect to declare any dividends during that period.

Any future determination as to the payment of dividends by the Company will be at the discretion of the Directors and will depend on the availability of distributable earnings and operating results and financial condition of the Company, future capital requirements and general business and other factors considered relevant by the Directors. No assurance in relation to the payment of dividends or franking credits attaching to dividends can be given by the Company.

4.13 Financial Information

The Company was incorporated on 28 October 2016 and has no operating history and limited historical financial performance and has not generated any revenue or incurred any expenses.

As a result, the Company is not in a position to disclose any key financial ratios other than its statement of profit and loss, statement of cash flows and pro-forma balance sheet which is included in the Investigating Accountant’s Report.

4.14 Capital Structure

The capital structure of the Company following completion of the Offer is summarised below1:

Minimum Maximum Subscription Subscription Offer Price per Share $0.20 $0.20 Shares to be issued under Offer 60,000,000 75,000,000 Total number of Shares on issue 154,600,002 169,600,002 following the Offer Gross Proceeds of the Offer $12,000,000 $15,000,000

Notes:

1. Maximum Subscription assumes all oversubscriptions are accepted. 2. The above figures are on an undiluted basis. The Company will also have a total of 14,000,000 options on issue, the terms of which are contained in Sections 13.3, 13.4, 13.5 and 13.6.

Shares1

Number Number (Minimum (Maximum Subscription) Subscription) Shares on issue 94,600,002 94,600,002 Shares issued pursuant to the Offer 60,000,000 75,000,000 Total Shares on completion of the Offer 154,600,002 169,600,002

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Options

Number Options currently on issue2 10,000,000 Options to be issued3 4,000,000 Options issued pursuant to the Offer 0 Total Options on completion of the Offer 14,000,000

Notes: 1. See Section 13.2 for further information on the rights attaching to the Shares. 2. The Options currently on issue comprise 7,000,000 $0.20 Options exercisable at $0.20 on or before 30 November 2021, 1,000,000 $0.30 Options exercisable at $0.30 on or before 30 November 2021 and 2,000,000 Further Options exercisable at $0.30 on or before 31 May 2022. Terms and conditions of the Options are outlined in Sections 13.3, 13.4 and 13.5.

3. The Options to be issued comprise 4,000,000 Managing Director Options exercisable at $0.30 on or before 31 May 2022. Terms and conditions of the Managing Director Options are outlined in Section 13.6.

4.15 Substantial Shareholders

Those Shareholders holding 5% or more of the Shares on issue both as at the date of this Prospectus and on completion of the Offer (assuming Minimum Subscription) are set out in the respective tables below.

As at the date of this Prospectus

Shareholder Shares Options3 % (undiluted) % (fully diluted) Atlas Precious Metals, Inc1 49,220,000 Nil 52.03 47.06 JAWAF Enterprises Pty Ltd 4,720,000 2,500,000 4.99 6.90 .2

Notes: 1. Entity controlled by Mr Shipes, a director of the Company. 2. Entity associated with Mr Hall, a director of the Company.

3. Terms and conditions of the Options are outlined in Sections 13.3, 13.4 and 13.5.

On completion of the Offer with Minimum Subscription (assuming no existing substantial Shareholder subscribes and receives additional Shares pursuant to the Offer)

Shareholder Shares Options % (undiluted) % (fully diluted) Atlas Precious Metals, Inc1 49,220,000 Nil 31.84 29.192

Notes: 1. Entity controlled by Mr Shipes, a director of the Company.

The Company will announce to the ASX details of its top-20 Shareholders (following completion of the Offer) prior to the Shares commencing trading on ASX.

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4.16 Intentions of Atlas Precious Metals, Inc (A company incorporated in Canada)

As noted in Section 4.15, on completion of the Offer Atlas will be a substantial shareholder in the Company, holding up to 31.84% of the Shares on issue. Atlas is a public unlisted corporation registered in Ontario, Canada. Its business is primarily investing in and developing mineral resource assets around the world.

Given the potential voting power in the Company of Atlas, it is material to provide details of Atlas’ current intentions for the Company.

Atlas has informed the Company that since it is presently supportive of the Company’s current direction, it does not currently intend to make any major changes to the direction, activities or objectives of the Company, including the Company’s management of its existing creditor issues as set out in this Prospectus.

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5. INDUSTRY OVERVIEW

Whilst the Company is not at a stage whereby it can commence production, in the Company’s view it is material to include an overview of the borate and lithium industry to assist investors in making a decision on whether to invest in the Company.

Borate and lithium are used in various end markets, including for a number of new technology applications, as set out later in this section. Some of these technologies have demonstrated energy saving benefits and increasingly underpin a number of environmentally responsible technologies. Because of the unique electrochemical properties of both boron and lithium, these elements and their derived compounds are often difficult to substitute with other commodities, assuring their place in stable and fast growing markets.

5.1 Market review – Borate

(a) General

Borates are a group of boron-bearing minerals containing boric oxide, generally expressed on the basis of B2O3. Borates are sold on the basis of their boric oxide contents, varying by ore and compound and by the absence or presence of calcium and sodium. The four borate minerals – colemanite, kernite, tincal, and ulexite – make up to 90% of borate minerals used by industry.

Deposits of borates are associated with volcanic activity and arid climates, with the largest economically viable deposits located in the Mojave Desert of the United States, the Alpide belt in southern Asia, and the Andean belt of South America. Borates often occur in association with materials including halite, potash, soda ash and lithium.

Borates are used in more than 300 applications with 75% of world consumption going into ceramics, detergents, fertilisers, and glass. Canada, China, India, Malaysia, and the Netherlands are the countries that imported the largest quantities of refined borates from the United States in 2016. China has low-grade boron reserves and consequently demand for boron is anticipated to rise in that country.

Borates are produced largely in Turkey, the USA, Argentina, Chile, Bolivia, Peru, Russia and China. The world’s two largest producers of borate are Eti Maden (Turkey) and Rio Tinto Minerals via the Boron mine (previously US Borax), in California, USA. These two producers provided 70-75% of global borate supply in 2015. This is a market where supply is tightly controlled, the main barrier to entry being the scarcity of large, economic borate deposits around the world.

(b) Supply of Borate:

(i) Turkey holds the largest known resources of borate and is the world’s largest producer, via the government-owned Eti Maden mining company.

(ii) The United States is the world’s second largest producing country. Rio Tinto Minerals (previously US Borax), part of Rio Tinto plc, is responsible for the vast majority of US borate production from its mine in Boron, California. This mine is located less than 100km from the Fort Cady deposit and has been in operation for

4467-01/1715392_1 36

over 140 years. Rio produces borate ores containing the minerals kernite, tincal, and ulexite by open pit methods and operated associated processing plants. Kernite is used to produce boric acid, tincal is used to produce sodium borate, and ulexite is used as a primary ingredient in the manufacture of a variety of specialty glasses and ceramics.

(iii) The Searles Valley mine, also in California, has been producing borate and soda ash from brines since 1926. In 1962 the mine switched from conventional mining to lower cost solution mining, followed by solvent extraction, to produce the higher value boric acid product. This is the same mining and processing technique proposed for the Fort Cady project. The Searles Valley mine was acquired in 2008 by Nirma, a large industrial conglomerate based in India that is one of the world’s largest manufacturers of soaps and detergents.

5.2 Market review – Lithium

(a) General

Lithium is a chemical element with the symbol Li and atomic number 3. It is a soft, silver-white metal belonging to the alkali metal group of chemical elements. Under standard conditions, it is the lightest metal and the least dense solid element. Because of its high reactivity, lithium never occurs freely in nature, and instead, appears only in compounds, which are usually ionic. Lithium occurs in a number of pegmatitic minerals, but due to its solubility as an ion, is present in ocean water and is commonly obtained from brines and clays.

The main commercial lithium product is lithium carbonate and tonnages/grades are often calculated in lithium carbonate equivalent (LCE). Lithium carbonate is stable and can be converted into other lithium compounds relatively easily with the addition of acid. Lithium sales are typically conducted on privately negotiated contracts between producers and consumers. Pricing is, therefore, not always known to the public. Recent published prices for LCE include US$7,400/t for 2016 annual average, battery-grade LCE delivered to continental USA and US$10,211/t (FOB Argentina) average quarterly price for Q1 CY17. The strong demand for lithium use in rechargeable batteries for electric and hybrid electric vehicles has placed upward pressure on lithium prices, and this is expected to continue in the near to medium term.

(b) Lithium Uses

Although lithium markets vary by location, global end-use markets are estimated as follows: batteries, 39%; ceramics and glass, 30%; lubricating greases, 8%; continuous casting mould flux powders and polymer production, 5% each; air treatment, 3%; and other uses, 10%. Lithium consumption for batteries has increased significantly in recent years because rechargeable lithium batteries are used extensively in the growing market for portable electronic devices and increasingly are used in electric tools, electric vehicles, and grid storage applications. Lithium minerals were used directly as ore concentrates in ceramics and glass applications.

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(c) Supply of Lithium

Worldwide lithium production increased by an estimated 12% in 2016 in response to increased lithium demand for battery applications. Production in Argentina increased almost 60%, primarily owing to a new brine operation; the leading Argentine producer also increased production. Worldwide lithium production capacity was reported to be 49,400 tonnes in 2015; capacity utilisation was estimated to be 64% in 2015 and 71% in 2016. Based on average projections by producers and industry analysists of about 14% growth worldwide, consumption of lithium in 2016 is projected to be about 37,800 tonnes, up from 33,300 tons in 2015.

About 50% of the world’s lithium comes from brines such as those found within the Fort Cady host rocks and its associated pore water, with the remainder derived from hard rock mining.

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6. RISK FACTORS

6.1 Introduction

The Shares offered under this Prospectus are considered highly speculative. An investment in our Company is not risk free and the Directors strongly recommend potential investors to consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to apply for Shares and to consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.

There are specific risks which relate directly to our business. In addition, there are other general risks, many of which are largely beyond the control of the Company and the Directors. The risks identified in this section, or other risk factors, may have a material impact on the financial performance of the Company and the market price of the Shares.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

6.2 Company specific

(a) Limited history

The Company was very recently incorporated (28 October 2016) and has no operating history and limited historical financial performance. Although extensive previous work has previously been conducted on the Fort Cady Project, the Company is yet to conduct its own activities and will not commence these activities until the Company has been admitted to the Official List. No assurance can be given that the Company will achieve commercial viability through the successful exploration of the Project. Until the Company is able to realise value from its projects, it is likely to incur ongoing operating losses.

(b) Historical Non JORC Estimates

The Fort Cady Project has had a significant amount of prior drilling and is the subject of at least three separate historic resource estimates, none of which are JORC Code compliant. These historic resource estimates are referenced elsewhere in this document. Please see the Independent Geologist’s Report in Section 7, for the sake of providing thorough background information only. The Board has considered these historic resource figures in its assessment of the Project, despite the fact that none of the resources quoted are JORC Code compliant and should not be construed as indicating the existence of a JORC Code compliant mineral resource. At this point there is insufficient information to establish whether further exploration will result in the determination of a mineral resource within the meaning of the JORC Code.

Whilst the Company intends to undertake further exploration activities with the aim of defining a JORC Code compliant resource, no assurances can be given that the exploration will result in the determination of such a resource. Even if such a resource is identified, no assurance can be provided that it can be economically extracted.

Resource and reserve estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when initially calculated may alter significantly when new

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information or techniques become available. In addition, by their very nature, resource and reserve estimates are imprecise and depend to some extent on interpretation which may prove to be inaccurate.

(c) Exploration and Development

Mineral exploration and development is a speculative and high-risk undertaking that may be impeded by circumstances and factors beyond the control of the Company. Success in this process involves, among other things:

(i) discovery and proving-up, or acquiring, an economically recoverable resource or reserve;

(ii) access to adequate capital throughout the acquisition/discovery and project development phases;

(iii) securing and maintaining title to mineral exploration projects;

(iv) obtaining required development consents and approvals necessary for the acquisition, mineral exploration, development and production phases; and

(v) accessing the necessary experienced operational staff, the applicable financial management and recruiting skilled contractors, consultants and employees.

Although a mineralised area of interest has already been identified and there have been previous investment in metallurgical studies and pilot plant operations, there can be no assurance that further exploration on the Project will result in the confirmation of an economic mineral resource. Even if an apparently viable mineral resource is identified, there is no guarantee that it can be economically exploited.

The future exploration activities of the Company may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, changing government regulations and many other factors beyond the control of the Company.

There is also a risk that the contemplated metallurgical and process investigations on the known mineralisation may not lead to a viable processing route. Furthermore, there is a risk that the contemplated development studies may not lead to a project that is economically viable. The Board notes that historical production at Fort Cady utilised a pilot plant that was non-optimal. Further processing studies have highlighted design and processes. These alternate processes were not implemented and are yet to be tested.

Finally, if a potentially viable deposit and processing route is identified, there is no guarantee that it can be economically exploited. Factors such as commodity prices and currency exchange rate, difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated metallurgical problems which may affect extraction rates and costs, industrial and environmental accidents, industrial disputes, unexpected shortages and increases in the costs of consumables, spare parts, plant, equipment and staff, permitting

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requirements, government regulations and many other factors beyond the control of the Company, may affect whether a deposit can be economically exploited.

(d) Title

The Company only has surface and/or mineral rights to 1,386 acres of the 6,500 acres that comprises the Project Area. Whilst the Company has applied for the surface and/or mineral rights or has previously held lease agreements to these areas, there is no guarantee that the Company will be able to obtain them on suitable terms or at all. Any such failure to obtain these rights may impact on the Company’s future plans.

Southern California Edison

As set out in Section 4.4(e), a significant section (617 acres) of the Project Area is currently held by SCE, a large power utility, and, while the Company holds the operating and mining permits for this area, it does not hold the surface or mineral rights to this area. Whilst FCMC previously had a lease agreement with SCE to access, drill and mine this area, this agreement was allowed to lapse due to inactivity. Whilst the Company believes that this SCE holding is not an immediate concern for the reasons set out in Section 4.4(e) the Company may not be able to negotiate a lease with SCE to allow mining to occur and such a failure will have an impact on the Company’s future plan.

In addition,

(i) As set out in Section 4.4(d), whilst the Company holds the surface rights to land title in the south of the Project Area, the exclusive mineral rights are held by the State of California through the California State Lands Commission.

Whilst the Company has applied for these mineral rights, there is no guarantee that the Company will be able to obtain them on suitable terms or at all.

(ii) As set out in Sections 4.4(a) and 12.2 the Mineral Lease Agreement between Elementis and the Company is only valid until October 2021, although it will be automatically extended should the Project be in commercial production. A lawful termination of this Mineral Lease Agreement or a failure to extend it past October 2021 (in the case that the Project has not yet entered into production by this point) may impact on the Company’s future plans.

(iii) Further, some of the Land Titles held by the Company are not covered by the existing Permits therefore should the Company wish to mine on these areas, it will have to extend the existing or obtain new Permits. There is no guarantee that these permits will be obtained or that such an extension will be granted.

(e) Conditions to Land Titles

Tenure to the Project area is held via the Land Titles, within which are a number of different types of land/mineral title rights, depending on the ownership and designation of the land area in question. As such the Company is operating under a number of different sets of conditions for

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the Land Titles. Please refer to the Land Ownership Report in Section 9 for details.

In addition, some of the Company’s key Land Titles are or will be held under lease and the Company is reliant to some extent on these parties keeping these Land Titles in good standing as per the terms of any agreement.

It is also noted that Elementis also has the first right of refusal to purchase any materials produced as a by-product or waste rock of the borate and lithium mining operations in the Project Area.

(f) Operational and Environmental Permitting

Whilst the Company is not at a stage whereby it can commence production, should the Company reach production the Company’s rights to mine the Fort Cady deposit area are to some extent secured via ownership of previously granted operating permits and the Company believes the permitting history may assist with any future permit application and re-issuance process.

The primary permits that secure the exploitation rights to the Fort Cady Project are the approved Plan of Operation from the US Federal Bureau of Land Management (1994) and the approved Mining/Reclamation Plan issued jointly by the State of California and the County of San Bernardino (1994), both issued to Fort Cady Minerals Corporation. However, there can be no assurance that any potential modification to these approved plans, if ever required, (such as a significant variation in process design or any proposed expansion of operation) would be granted, or if granted, how long this would take.

The primary environmental permits required to operate in California are the Water Quality Permit and Air Quality Permit. These permits were also previously granted to Fort Cady Minerals Corporation to permit full scale commercial operations, but have since been allowed to lapse. While pilot plant operations are still permitted subject to procedural updates as mentioned in the Land Ownership Report, and typically it is easier to re- issue previously granted permits than to apply for new ones, there is no guarantee that these permits will be re-issued for full scale commercial operations, or if re-issued, how long this will take.

The Company has received professional advice on these permitting matters from an environmental consultancy in California. Please refer to the Land Ownership Report for further details.

(g) Royalties

Mined production by the Company on some of the Land Titles are subject to royalties currently payable to Elementis and other royalties may be payable in the future as a result of negotiations with SCE, the State of California or other parties. These may affect the Company’s possible future mining operations that are subject to these royalties. See Section 12.2 for further details.

(h) Future Funding

The funds raised under the Offer are considered sufficient to meet the immediate objectives of the Company. Further funding may be required

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by the Company to support its ongoing operations and implement its future strategies. For example, funding may be needed undertake further exploration activities, or acquire complementary assets.

Accordingly, the Company may need to engage in equity or debt financings to secure additional funds. Any additional equity financing may be dilutive to Shareholders, and/or may be undertaken at lower prices than the Offer price. Debt financing, if available, may involve granting of security over the Company’s assets, restrictions on other forms of financing and operating activities and/or may involve restrictive covenants that limit the Company’s operations and impinge on its business strategy.

There can be no assurance that such funding will be available on satisfactory terms or at all at the relevant time. Any inability to obtain sufficient financing for the Company’s activities and future projects may result in the delay or cancellation of certain activities or projects, which would likely adversely affect the potential growth of the Company.

(i) Expiry of Escrow

In the likely event that ASX imposes mandatory escrow on the Company’s securities, a high proportion of Shares will be subject to escrow following completion of the Offer. This would reduce liquidity in the market for the Company’s Shares, and may affect the ability of a Shareholder to sell some or all of its Shares due to the effect less liquidity may have on demand. An illiquid market for the Company’s Shares is likely to have an adverse impact on the Share price.

Following the end of any escrow periods, a significant number of Shares will become tradable on ASX. This may result in an increase in the number of Shares being offered for sale on market which may in turn put downward pressure on the Company’s Share price.

(j) No Profit to Date

Since the Company intends to invest in the development of the Project, the Directors anticipate that the Company will make losses in the foreseeable future.

Although the Directors have between them significant operational experience, the Company’s ability to meet its objectives will be largely reliant upon the Company’s ability to implement its current operational plans and take appropriate action to amend those plans in respect of any unforeseen circumstances that may arise. Investors should consider the Company’s prospects in light of its limited financial history.

(k) Reliance on key personnel

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its Board, its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these persons cease their employment or terminate their relationship with the Company.

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6.3 General risks

(a) Commodity Price and Exchange Rate Risks

The price for lithium products and borate (in particular boric acid) will depend on available markets at acceptable prices and transmission and distribution costs. Any substantial decline in the price of these products or an increase in transmission or distribution costs could have a material adverse effect on the Company.

The market prices for the Company’s potential future products are set in global markets and is affected by numerous industry and market factors beyond the Company’s control including expectations with respect to the rate of inflation, interest rates, currency exchange rates, demand for products containing borates and lithium, production levels, inventories, cost of substitutes and changes in global or regional investment or consumption patterns.

For example, a decline in the market price of boric acid and/or lithium carbonate below the Company’s future production costs for any sustained period would have a material adverse impact on the profit, cash flow and results of operations of the Company’s possible future operations. Such a decline could also have a material adverse impact on the ability of the Company to finance the exploration and development of its existing and future projects. A decline in the market price of these commodities may also require the Company to write-down any Reserves that may be declared in the future which would have a material adverse effect on the value of the Company’s securities. The Company will also have to assess the economic impact of any sustained lower prices on recoverability and therefore, on cut-off grades and the level of its Mineral Resources and any Reserves it may estimate in the future.

Furthermore, international prices of various commodities are denominated in United States dollars, whereas the income and expenditure of the Company are and will be stated and reported in Australian currency, exposing the Company to the fluctuations and volatility of the rate of exchange between the United States dollar and the Australian dollar as determined in international markets.

(b) Market conditions

Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

 General economic outlook.

 Introduction of tax reform or other new legislation.

 Interest rates and inflation rates.

 Changes in investor sentiment toward particular market sectors.

 The demand for, and supply of, capital.

 Terrorism or other hostilities.

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The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

Applicants should be aware that there are risks associated with any securities investment. Securities listed on the stock market, and in particular securities of exploration companies experience extreme price and volume fluctuations that have often been unrelated to the operating performance of such companies. These factors may materially affect the market price of the Shares regardless of the Company’s performance.

(c) Force majeure

The Company’s projects now or in the future may be adversely affected by risks outside the control of the Company including labour unrest, civil disorder, war, subversive activities or sabotage, fires, floods, explosions or other catastrophes, epidemics or quarantine restrictions.

(d) Regulatory risks

The Company’s exploration and development activities are subject to extensive laws and regulations relating to numerous matters including resource licence consent, conditions including environmental compliance and rehabilitation, taxation, employee relations, health and worker safety, waste disposal, protection of the environment, native title and heritage matters, protection of endangered and protected species and other matters. The Company requires permits from regulatory authorities to authorise the Company’s operations. These permits relate to exploration, development, production and rehabilitation activities.

Obtaining necessary permits can be a time consuming process and there is a risk that the Company will not obtain these permits on acceptable terms, in a timely manner or at all. The costs and delays associated with obtaining necessary permits and complying with these permits and applicable laws and regulations could materially delay or restrict the Company from proceeding with the development of a project or the operation or development of a mine. Any failure to comply with applicable laws and regulations or permits, even if inadvertent, could result in material fines, penalties or other liabilities. In extreme cases, failure could result in suspension of the Company’s activities or forfeiture of one or more of the Land Titles.

6.4 Investment speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus.

Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares.

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Potential investors should consider that an investment in the Company is highly speculative and should consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.

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7. INDEPENDENT GEOLOGIST’S REPORT

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Independent Geologist’s Report

Fort Cady Borate and Lithium Project

Prepared for: American Pacific Borate and Lithium Ltd Effective Date: May 2017

XstractGroup.com Xstract - Excellence from the outset

GEOLOGY GEOTECHNICAL MINING PROCESSING VALUATION/RISK TECHNOLOGIES ENVIRONMENT TRAINING

Project Manager:

Justin Watson BAppSc (Honours) MAusIMM (CP Geo), MAIG Manager Technical Excellence, Geology Xstract Mining Consultants, Brisbane Office

Contributing authors:

J Watson1

K Irving2

Peer review of technical work by:

S Mujdrica3

Xstract Mining Consultants Pty Ltd has prepared this report on behalf of American Pacific Borate and Lithium Ltd for inclusion in a Prospectus to be lodged with the Australian Securities and Investments Commission (“ASIC”) for the proposed listing of APBL on the Australian Securities Exchange (“ASX”). The resource estimates mentioned herein are historical estimates and are not reported in accordance with the guidelines of the JORC Code (2012). A competent person has not completed sufficient work to classify these estimates as Mineral Resources or Ore Reserves in accordance with the guidelines of the JORC Code (2012). It is uncertain that following evaluation and/or further exploration work that the estimates will be able to be reported as Mineral Resources or Ore Reserves in accordance with guidelines of the JORC Code (2012). Public disclosure, publication, or presentation of any information contained in this document must be accompanied by written consent from Xstract Mining Consultants Pty Ltd.

© Xstract Mining Consultants Pty Ltd 4/05/2017

Document information:

Project reference: P17001 4 Reporting standard/s: JORC Code 2012 Effective date: 4/05/2017 Status: Published File: Xstract_P17001_APBL_FortCady_IGR_20170504_Final.docx

1 Manager of Technical Excellence / Principal Consultant, Xstract Mining Consultants, Brisbane 2 General Manager Mining, Xstract Mining Consultants, Brisbane 3 General Manager Geology, Xstract Mining Consultants, Brisbane 4 Refer to above disclaimer regarding historic resources Xstract Mining Consultants Pty Ltd XstractGroup.com ABN: 62 129 791 279 Xstract - Excellence from the outset Brisbane, Australia Perth, Australia Ground Level, 545 Queen Street Level 10, 50 St Georges Terrace BRSBANE QLD 4000 PERTH WA 6000 PO Box 10312 PO Box Z5426 BRISBANE ADELAIDE STREET QLD 4000 PERTH WA 6831 T +61 7 3221 2366 | F +61 7 3221 2235 T +61 8 9327 9500 | F +61 8 9481 8700

Final Report Independent Geologist’s Report | Contents

Contents

1 Executive Summary ______1

2 Introduction ______7

3 Exploration and Mining History ______11

4 Geological Setting ______12

4.1 Regional Geological Setting 12

4.2 Local Geology and Mineralisation 13

5 Mining, Metallurgical and Processing ______24

5.1 Mining 24

5.2 Metallurgy 25

5.3 Processing 26

6 Proposed Work Programme and Expenditure ______28

7 Declarations ______31

7.1 Independence 31

7.2 Qualifications 31

7.3 Reporting Standard 32

7.4 Terms of Reference 33

7.5 Data Sources 33

7.6 Warranties and Indemnities 33

7.7 Consent 34

8 Bibliography ______35

Tables

Table 1.1: Historic resource estimates for the Fort Cady Project at various B2O3 cut-off grades 3

Table 1.2: Summary of APBL’s planned exploration expenditure and work commitments 6

Table 4.1: Drill hole assays for B2O3% and Li ppm for a portion of drill hole DHB16 showing grade variability within deposit 18

Table 5.1: Base metallurgical assumptions used in the resource estimate 26

Table 6.1: Table of Estimated Exploration Costs 29

Fort Cady Borate and Lithium Project i

American Pacific Borate and Lithium Ltd | Contents Final Report

Figures

Figure 2.1: Fort Cady Project location 7

Figure 2.2: Fort Cady Project showing nearby infrastructure 8

Figure 2.3: Typical landscape at the project area (showing pilot plant and powerlines) 9

Figure 2.4: Map showing current tenement holdings relative to currently known extents of deposit 9

Figure 4.1: Regional geological map of the Hector Basin – from USGS maps I-461 & I-462 12

Figure 4.2: Fort Cady lithological section column 14

Figure 4.3: Plan view showing trends and currently interpreted limits to mineralisation at the Fort Cady deposit (Grid system is the US State Plane Coordinate System (1927), California 0405, Zone V is in feet) 15

Figure 4.4: Northwest – southeast vertical cross section along the strike of the deposit 16

Figure 4.5: Northeast – southwest vertical cross section perpendicular to the strike of the deposit 17

Figure 4.6: Sectional view of drill hole sample traces showing B2O3 assays through the centre of the deposit for drill holes DHB18, DHB16 and DHB24 19

Figure 4.7: Sectional view of drill hole sample traces showing Li assays for drill holes DHB18, DHB16 and DHB24 21

Figure 4.8: USGS Classification Guide for Li prospectivity (Vine, 1980) 22

Figure 4.9: Conceptual east-west cross section of the Hector Basin showing Li brine genesis and exploration targets 23

Figure 5.1: Diagram showing proposed in-situ solution extraction mining process 24

Appendices

Appendix A: The JORC Code (2012) Table 1

Appendix B: Fort Cady drill hole listing

Appendix C: Drill hole listing – significant intercepts

Appendix D: Drill hole location map

Appendix E: Photos from site visit

ii May 2017

Final Report Independent Geologist’s Report | Key Abbreviations

Key Abbreviations

% Percent, percentage

° Degrees

°C Degrees Celsius

A$ Currency, Australian dollar

AIG Australian Institute of Geoscientists

Alluvium Sediment deposited by flowing water, as in a riverbed, flood plain or delta

APBL American Pacific Borate and Lithium Ltd

Arsenopyrite Iron arsenic sulphide – a mineral

ASA Asset Sale Agreement

ASIC Australian Securities and Investments Commission

ASX Australian Securities Exchange

AusIMM Australasian Institute of Mining and Metallurgy

Basalt A dark, fine grained mafic extrusive igneous rock

Bismuth A heavy brittle metallic element (resembles arsenic and antimony chemically); usually recovered as a by-product from ores of other metals

Breccia A rock composed of angular fragments of minerals or rocks in a matrix (cementing material)

Capex Capital expenditure

Carbonate Mineral containing calcium and/or magnesium carbonate

Clastic Sediments derived from erosion of pre-existing rocks

Company American Pacific Borate and Lithium Ltd

Conglomerate Coarse grained sedimentary rock

CY Calendar Year

Diabase (or A common basic igneous rock usually occurring as dykes or sills dolerite)

EIS / EIR Environmental Impact Statement / Environmental Impact Report

F Fahrenheit

Feldspar A rock-forming silicate mineral in which calcium, sodium and potassium combined with aluminium

Felsic Igneous rocks composed dominantly of silicate minerals

Ferruginised Material enriched in iron minerals

ft Feet

g/t Grams per tonne

GIS Geographical Information System

Greenfields Early stage exploration exploration

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American Pacific Borate and Lithium Ltd | Key Abbreviations Final Report

Indicated Mineral That part of a Mineral Resource for which tonnage, densities, shape, physical Resource characteristics, and quality can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed

Inferred Mineral That part of a Mineral Resource for which tonnage, grade and mineral content can Resource be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or uncertain quality and reliability

Intrusive A body of igneous rock formed from a magma which has been emplaced into other rocks

IPO Initial Public Offering

ISR In-situ Solution Recovery

JORC Code 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012)

km Kilometre(s)

km2 Square kilometre(s)

Li The element Lithium

m Metre(s)

M Million

m3 Cubic metre(s)

Mafic Igneous rocks composed dominantly of iron and magnesium minerals

Measured Mineral That part of a Mineral Resource for which tonnage, densities, shape, physical Resource characteristics, and quality can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity

Microns or μm One millionth of a metre or equivalently one thousandth of a millimetre

Mineral Resource A concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction

mm Millimetre(s)

mRL Meters Relative Level; typically units to describe elevation

Mt Million tonne(s)

Mtpa Million tonnes per annum

MW Megawatt(s)

Opex Operational expenditure

Ordinary kriging A geostatistical method of interpolation which predicts unknown values from data observed at known locations and is used to determine Mineral Resources and Ore Reserves

Pelite Fine grained sediment such as shale or siltstone

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Final Report Independent Geologist’s Report | Key Abbreviations

Porphyry Igneous rock comprising large crystals within a fine grained groundmass

ppm Parts per million

Proterozoic A geological time period from 2,500 to 542 million years ago

Pyrite Iron disulphide (FeS2), also known as Fool’s Gold

QA Quality Assurance

QC Quality Control

Quartzite A metamorphic rock consisting of essentially quartz

RAB Rotary Air Blast

RC Reverse Circulation

RTO Reverse Take Over

SE South East

Sedimentary Rocks formed by deposition of weathered rock particles carried by air, water or ice

Sericite A member of the mica mineral group

Shear A zone in which shearing has occurred on a large scale

Silicified Original minerals have been replaced by silica

st Short tons (US)

stpy Short tons per year

Stratigraphic Pertaining to the composition, sequence and correlation of layered rocks

Strike-slip fault A fault in which the net slip is practically in the direction of the fault strike

Syncline A downward fold in which strata dip away from one another forming a U-shape

t Tonne(s) metric

Thrust A low-angle fault

UG Underground – usually located 50 m or more below surface, a mine where ore is removed mechanically for transport to surface

Ultramafic Igneous rocks composed of ferromagnesian minerals

USGS United States Geological Survey

Volcanoclastic/ A clastic sediment containing material of volcanic origin Volcanosedimentary

μm Micro metre(s)

VALMIN Code Australian code for public reporting of technical assessments and valuations of mineral assets, the VALMIN Code, 2015 Edition

VHMS Volcanic Hosted Massive Sulphide

Xstract Xstract Mining Consultants Pty Ltd

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vi May 2017

Final Report Independent Geologist’s Report | Executive Summary

1 Executive Summary

Xstract Mining Consultants Pty Ltd (“Xstract”) has been engaged by American Pacific Borate and Lithium Limited (“APBL”, or the “Company”) to prepare an Independent Geologist’s Report on the Fort Cady borate and lithium project located in California, United States. This report will be included in a Prospectus to be lodged with the Australian Securities and Investments Commission (“ASIC”) for the proposed listing of APBL on the Australian Securities Exchange (“ASX”).

Upon achieving admission to the ASX (which is conditional on the successful IPO), APBL intends to create value for its shareholders through the further evaluation and development of the Fort Cady borate and lithium deposit in California, United States.

The purpose of this Independent Geologist’s Report is to provide an impartial overview and assessment of the technical merits that might reasonably be expected to be applied by the market when considering an investment in APBL. This report is based on Xstract’s review of information compiled by APBL and a site visit by Xstract in February 2017.

Xstract has concluded from its review of the Fort Cady borate and lithium project that the deposit is prospective for borate and lithium and is worthy of further exploration and mining/economic studies.

The principal findings of Xstract’s technical review of the Fort Cady borate and lithium deposit are summarised as follows:

The Project

 APBL has acquired the assets of Fort Cady Minerals Corporation (“FCMC”) pursuant to a Share Purchase Agreement it entered into with FCMC, Atlas Precious Metals Inc (incorporated in Canada) and Fort Cady (California) Corporation (“FCCC”). This acquisition gives APBL the rights to mine the Fort Cady borate-lithium project pursuant to the operating permits. FCMC is a Canadian corporation currently owned by Atlas Precious Metals Inc. For further information refer to the Land Use Ownership Report (Section 9) within the prospectus.  An extensive evaporite sequence hosting the borate mineral colemanite has been defined over a strike length of almost 3 kms and a width of ~1 km. The deposit varies in thickness between 30 m and 75 m thick and is situated at an average depth below surface of 400 m. The deposit is open to the northwest and the southeast and additional drilling is likely to identify extensions to the known mineralisation. The currently drilled portion of the deposit covers an area of approximately 3 km2, of which 55% of this area is currently under FCCC tenure or lease agreements. The deposit is also host to lithium-rich clays and brines.  The deposit has been previously mined on a pilot scale basis by in-situ acid brine leaching, firstly by Duval Corporation producing a saleable boric acid product, and later by FCMC, producing a saleable high-purity synthetic colemanite product (CadyCal 100) that was sold to the domestic market in the USA.

Mineral Prospectivity

 The Fort Cady deposit resides in a prospective area for borate and lithium mineralisation. The deposit is situated in the Hector evaporite basin and is in close proximity to Elementis Specialties Inc’s hectorite lithium clay mine and is within a similar geological setting as Rio Tinto’s Boron mine situated 110 kms to the northwest.

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American Pacific Borate and Lithium Ltd | Executive Summary Final Report

Infrastructure

 The Fort Cady project resides in a location that is well supported by nearby infrastructure and services. The deposit is less than 5 kms from a major road system (Interstate 40), a major rail line and natural gas and electricity trunk lines.

Historical Drilling

 A total of 33 HQ diamond drill holes were completed by Duval Sulfur & Potash Corp (“Duval”) for exploration and development purposes in 1980 and 1981. A further 15 injection drill holes (P, S and SMT series drill holes) were drilled for production activities. During the site visit, Xstract was able to verify the location of a number of these drill hole collars and was able to sight the hard copy assay sheets, geological logs and geophysical reports (gamma ray and density logs) for these drill holes. Xstract was unable to find downhole surveys for the majority of vertical exploration drill holes (‘DHB holes’) completed by Duval. Drillholes SMT1, SMT2, SMT6, P5, P6 and P7 have downhole surveys. A review of this data highlights that significant deviation of the drill holes has not occurred and end of drill hole positions compare favourably (within 10 m) with the drill hole collar location. The exception is drillhole P5 where the end of this planned vertical drillhole was situated approximately 40 m laterally from the drill hole collar position.  Xstract was unable to inspect drill hole core samples as the majority of these samples had been discarded by previous owners of the project. Portions of production drill holes S1, S2 and S3, and exploration drill hole DHB16 were observed on site. Drill hole core sample photography of a small number of select core samples was also noted. Drill hole core recovery was reported to be very good (95% to 100%) for the majority of core samples (Wilkinson, 2017).  Sample preparation of drill hole core was completed at Duval’s Tucson office. Drill core samples (¼ core) were then pulverised and split before assaying was carried out at Duval’s laboratories in either Tucson, West Texas (Culberson Mine) or in New Mexico

(Duval Potash mine). Elements analysed were Al, As, Ba, B2O3, CO3, Ca, Fe, K, Li, Pb, Mo, Mg, Na, Rb, S, Si, Sr, Ti, Zn, Zr. Wilkinson (2017) indicates that the analytical procedures employed by Duval were of a high standard and that internal quality control at the laboratory was carried out. Xstract was unable to verify what analytical processes and associated quality controls were in place at the laboratory.

Historical Resources

 Historic resource estimates (not reported according to the 2012 guidelines of the Australasian JORC Code) have been completed by Duval (1982, 1983), Geosolutions (1990) and PT GMT Indonesia (2015). Table 1.1 summarises the historic resource

estimates that range from 80 Mt at 6.7% B2O3 to 115 Mt at 7.4% B2O3 at a greater

than 5% B2O3 cut-off. The PT GMT Indonesia estimate identified Li grades in excess of 300 ppm were present within the deposit.

 The most widely quoted historical estimate for Fort Cady is 133.7 Mt @ 6.4% B2O3 for

8.5 Mt contained B2O3. This figure is quoted in the FCMC Revised Mining and Land Reclamation Plan (FCMC, 1993) although it is not known how it relates to the Duval (1982) historical resource estimate. The FCMC (1993) historical estimate is cited in the USGS Mineral Resource Data System (USGS, 2017) and Mining Geology (Ronald, 2017).  It is important to note that the historic resources quoted in Table 1.1 are unclassified and have not been reported according to the guidelines of the JORC Code (2012). Ongoing work by APBL will be required to substantiate historically applied cut-off

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Final Report Independent Geologist’s Report | Executive Summary

criteria and to determine the proportion of the deposit that is likely to meet reasonable prospects of eventual economic extraction.

1 Table 1.1: Historic resource estimates for the Fort Cady Project at various B2O3 cut-off grades

B2O3 Cut-off Tonnes B2O3 Grade Li Company (%) (Mt)2 (%) (ppm)

Duval (1982)3 3 192 5.7 NA

5 115 7.4 NA

7 69 9.0 NA

Geosolutions (1990) 3 266 5.3 NA

5 115 7.1 NA

7 43 9.4 NA

PT GMT Indonesia (2015) 3 183 5.1 297

5 80 6.7 313

7 30 7.9 328

Notes: 1. The estimates are historical estimates and are not reported in accordance with the guidelines of the JORC Code (2012). A competent person has not completed sufficient work to classify these estimates as Mineral Resources or Ore Reserves in accordance with the guidelines of the JORC Code (2012). It is uncertain that following evaluation and/or further exploration work that the estimates will be able to be reported as Mineral Resources or Ore Reserves in accordance with JORC Code (2012). The full source details of the above estimates are contained in the Bibliography.

2. Metric tonnes.

3. As noted below, APBL currently has mineral rights to 55% of the total tonnage reported in the Duval historic Non-JORC resource.

 Xstract notes that approximately 44% of the total Duval historic resource tonnage is currently under FCCC tenure or lease agreements. APBL is currently in discussions with third parties to secure access to the mineral rights to an additional 55% of the Duval historic resource tonnage.  Xstract notes that approximately 87% of the total Duval historic resource tonnage is encapsulated within the commercial-scale operating permits, including the Mining and Reclamation Plan and Environmental Impact Statement, held by FCMC.  Xstract have completed a high level review of the most recent resource report completed by PT GMT Indonesia in 2015. Interpreted limits and boundaries to mineralisation are supported by drilling and relate well to drill hole assay data. Xstract note however that the reported tonnage estimates are not supported by any records of bulk density test work and the grade estimates are based on assays that are not supported by quality control data. In addition, assays for drill hole DBH3, and assays for a portion of DBH22, were noted to be missing from the dataset used for resource estimation.  Although the historic resource estimates have not been reported according to the guidelines of the JORC Code (2012), Xstract considers the existence of historic resources to be relevant and material to APBL’s business plan and strategy. The historic resource estimates provided enough confidence to previous owners to undertake pilot scale test work and advance commercial scale development plans. The historic resources also objectively confirm the broader prospectivity of the Project area for hosting borate and lithium mineralisation.

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American Pacific Borate and Lithium Ltd | Executive Summary Final Report

Fort Cady Borate-Lithium Project

 The objective of the proposed work programme will be to report a Mineral Resource according to the guidelines of the JORC Code (2012) for the Fort Cady Borate - Lithium Project.  In addition, the work programme will complete metallurgical and well test work that will optimise the process design and substantiate whether the proposed in-situ solution extraction process is economically viable.  Xstract personnel noted in excess of 3 t of synthetic colemanite product (CadyCal 100) was still present on site in bulka bags. The presence of product on site supports that the borate-rich evaporite sequence was successfully mined by in-situ solution extraction techniques in the past by previous owners.

Hector Extension Lithium Project

 The Company’s proposed work programme will also focus on assessing the broader lithium potential of the project area.  APBL has identified prospectivity for lithium within: 1. Minerals associated within and above the borate-bearing formations where average concentrations of greater than 300ppm have been intersected; 2. The ambient brines associated with the borate-bearing formations where borehole monitoring detected concentrations of 91 ppm; 3. Structurally-hosted ground waters towards the interpreted basin centre where lithium-enriched brines may concentrate adjacent to hot spring and subvolcanic hydrothermal systems. These ground waters will be assessed for suitability as make-up solution for in-situ mining and process water.  APBL will conduct metallurgical test work to optimise the process design and assess the potential for production of lithium carbonate as a co-product, and to determine the target markets for these products.

Permitting

 The Fort Cady project is permitted for pilot plant-scale testing with a trial pilot plant and evaporation ponds still present on site. For further details on the pilot plant re- start, see section 4 of the Land Use Ownership Report.  The previous owners also attained the primary permits for commercial-scale solution mining and production of up to 90,000 stpy of boric acid, including the Plan of Operations and combined Environmental Impact Statement and Environmental Impact Report (EIS/EIR); and Mining Conditional Use Permit and Reclamation Plan and combined EIS/EIR.

Synopsis

 Xstract considers that APBL’s exploration strategy for borate and lithium at the Fort Cady project is justified. APBL’s proposed programme of expenditure for the exploration, estimation and metallurgical work program is contained in Table 1.2. The proposed drilling programme will target the northwestern extension of the known mineralised area that represents 44% of the historic Duval resource tonnage. Xstract understand the proposed 14 hole drill programme has been designed to infill current drilling to a drillhole spacing of approximately 125 m. Xstract consider that this drill program will be adequate to verify the historic resource in this area. Land access agreements will need to be finalised to verify the full extent of the historic resource area.

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Final Report Independent Geologist’s Report | Executive Summary

 The deposit is rich in colemanite and low in arsenic and therefore it is likely that a saleable boric acid product could be produced. Further work by APBL is required to define the optimal solution mining parameters for producing a saleable boric acid product and to understand the proportion of the deposit that is likely to meet reasonable prospects of economic extraction.  Xstract has been supplied with APBL’s current cost model and consider that the assigned preliminary costs and revenue assumptions applied by APBL fall within justifiable limits. This preliminary cost model supports that the deposit may meet reasonable prospects for eventual economic extraction, given the borate mineralisation can be adequately recovered via the proposed in-situ solution mining technique.  APBL’s success in developing the Fort Cady borate and lithium deposit will depend in part upon the skills of its exploration and management team. The proposed Chairman, Roy Shipes, and experienced geologist, Harrison Matson, have both had significant experience in the region. They have also actively liaised with previous owners and company personnel to source all historical documentation, data and information associated with the Fort Cady project. To date, the APBL management team have been pro-active and are enthusiastic about the opportunity to develop the Fort Cady project.

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American Pacific Borate and Lithium Ltd | Executive Summary Final Report

Table 1.2: Summary of APBL’s planned exploration expenditure and work commitments1

Activity CY 2017 CY 2018 Total Cost (A$) (A$) (A$)

Fort Cady Borate-Lithium Project

Mobilisation and demobilisation costs 61,333 - 61,333

Drill access and site preparation 57,960 - 57,960

Drilling programmes 1,966,347 - 1,966,347

Assay 343,467 - 343,467

Hector Extension Lithium Project

Mobilisation and demobilisation costs 15,333 - 15,333

Drill access and site preparation 9,200 - 9,200

Drilling programmes 621,920 - 621,920

Assay 36,800 - 36,800

Pre-feasibility Studies

Mobilisation and demobilisation costs 15,333 - 15,333

Reaming and casing 52,747 - 52,747

Well installation, engineering, pilot plant & test work 2,003,971 23,000 2,026,971 requirements

Well Assay 106,375 11,500 117,875

Subcontractors and technicians 471,500 92,000 563,500

Metallurgical

Test work and engineering 690,000 651,667 1,341,667

Land Title & Permit Application Fees

Permitting, Bonding & Claim fees 306,667 222,333 529,000

External Consulting & Resource Report

Consultants 437,000 705,333 1,142,333

Resource Report 207,000 - 207,000

Total A$ 7,402,953 1,705,833 9,108,786

Notes: 1. Budget is for minimum subscription of A$12m; Does not include working capital of A$2.9m

6 May 2017

Final Report Independent Geologist’s Report | Introduction

2 Introduction

APBL is an unlisted Australian public resources company that was incorporated with the objective of identifying underdeveloped borate and lithium projects in North America.

APBL has acquired the assets of Fort Cady Minerals Corporation (“FCMC”) pursuant to a Share Purchase Agreement it entered into with FCMC, Atlas Precious Metals Inc (Incorporated In Canada) and Fort Cady (California) Corporation (“FCCC”). This acquisition gives APBL the rights to mine the Fort Cady borate-lithium project pursuant to the operating permits. FCMC is a Canadian corporation currently owned by Atlas Precious Metals Inc.

The Fort Cady Project is located in the eastern part of the Mojave Desert region in San Bernardino County, California. The project lies approximately 200 km north-east of Los Angeles near the town of Newberry Springs and is approximately 50 km east of the city of Barstow (Figure 2.1). The Fort Cady project resides in a highly prospective area for borate and lithium mineralisation. The deposit is situated in the Hector evaporite basin and is in close proximity to the Elementis Hectorite lithium clay mine and has a similar geological setting as Rio Tinto’s Boron mine and Nirma Limited’s Searles Lake (Trona) operations, situated approximately 120 km to the northwest of the project.

Figure 2.1: Fort Cady Project location

Source: Supplied by L.Rutherford of APBL (April 2017)

The Fort Cady project resides in a location that is supported by nearby infrastructure and services. The deposit lies adjacent to Elementis Specialties Inc’s current mining activities at the Hector Mine and is less than 5 kms from a major road system, Interstate 40, and the National rail line (Figure 2.2). Accommodation is available at Barstow 50 kms to the west and reliable grid electricity is currently available to the project site. Mains gas is available 3 kms from the plant site and fresh water is proposed to be supplied from current water wells or proposed expansion wells on site.

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American Pacific Borate and Lithium Ltd | Introduction Final Report

Figure 2.2: Fort Cady Project showing nearby infrastructure

Source: Google Earth image sampled by Xstract (April 2017)

Current on site facilities include, a pilot plant, access road, settling ponds and a local powerline. Refer to Appendix C for photos showing site facilities.

The Fort Cady project area is characterised by gentle to moderate topographical relief with dry arid vegetation. Strong geological structural disturbances and associated volcanism have modified the landscape with small, mid-basin ridges and hills (Figure 2.3).

The APBL Fort Cady project area consists of approximately 4,409 acres held by FCCC under several types of land titles (tenements) in and adjacent to the Fort Cady Project area. These include 240 acres of fee simple patented or privately held lands owned by FCCC; 269 acres of surface areas owned by FCCC with mineral rights held by the State of California; 2,380 acres of unpatented claims held by FCCC; and 1,520 acres of unpatented claims leased by FCCC from Elementis - the operator of the adjacent Hector Mine (Figure 2.4). In addition to the aforementioned land titles, 100 acres of unpatented mill claims have been designated under the Environmental Impact Statement / Environmental Impact Report for water wells and right-of-ways for water pipes. FCCC are currently negotiating an access agreement with Southern California Edison to cover an additional 464 acres of patented land on the southern part of the deposit. See the Land Use Ownership report in the Prospectus for further details.

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Final Report Independent Geologist’s Report | Introduction

Figure 2.3: Typical landscape at the project area (showing pilot plant and powerlines)

Source: Supplied by L.Rutherford of APBL (April 2017)

Figure 2.4: Map showing current land title holdings relative to currently known extents of deposit

Source: Supplied by L.Rutherford of APBL (April 2017)

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American Pacific Borate and Lithium Ltd | Introduction Final Report

Xstract has not verified as part of the geological review the status of the land title agreements or reviewed any issues regarding ownership, agreements or access pertaining to the land titles, these are being addressed elsewhere in the Prospectus. Further detailed information relating to APBL’s land titles, and currently negotiated agreements, is provided elsewhere in the Prospectus and Xstract recommends investors review the additional legal information on the current status of the land title holdings.

The mean maximum and mean minimum January temperatures are 16 degrees C (60 F) and 2 degrees C (28 F) respectively. The relative humidity during this winter month averages 40%. The mean maximum and minimum July summer temperatures are 38 degrees C (102 F) and 22 degrees C (72 F). The average relative humidity for July is about 25%.

The normal average precipitation for the year is approximately 10 centimetres or 4 inches. The total yearly pan evaporation rate is projected from measurements taken at Mojave to be 283 cm or 111.6 inches. Winter monthly pan evaporation averages 14 cm or 5.53 inches. Summer monthly pan evaporation averages 35.5 cm/month or 14 inches/month.

The prevailing wind direction in this area is northwesterly to westerly. The mean year round wind velocities are 16 to 24 km/hr (10 to 15 mph)) with gusts up to 113 km/hr (70 mph).

10 May 2017

Final Report Independent Geologist’s Report | Exploration and Mining History

3 Exploration and Mining History

The regional areas of Death Valley and Mojave Desert have a long history of mining boron with borax being first produced in 1882 by Greenland Salt and Borax Mining Company. Further exploration in the region identified larger high-grade colemanite deposits which were mined using underground mining methods. In 1925 one of the world’s largest borate deposits was found at Boron in the Mojave desert. In 1927 an underground mine commenced and the Boron Operation was converted to a surface mine in the late 1950s. In 1967 the Boron mine was acquired by Rio Tinto and they continue to mine there today producing around one-third of the world’s borate production. The Boron mine is located approximately 120 km northwest of the Fort Cady deposit in a very similar geological setting.

Commencement of exploration activities in the Hector Basin occurred in the early 1960’s, when exploration companies realised that the Hector Basin had a similar geological setting to the Kramer Basin to the northwest that hosted the massive Boron deposit. Discovery of the Fort Cady borate deposit occurred in 1964 when Congdon and Carey Minerals Exploration Company found several zones of colemanite, at depths of 400 m to 500 m below surface.

During the late 1970’s the Duval Corporation became interested in the project and started land acquisition in 1978 with drilling commencing in February 1979. The first drillhole (DBH1) intersected a 27 m thick sequence of colemanite-rich material at 369 m grading better than 7% B2O3. This drill hole confirmed the wider prospectivity of the region. Exploration drilling, sampling, and assaying continued for a further two years through to February 1981 with a total of 33 exploration drill holes (DBH series of holes) totalling in excess of 18,200 m being drilled.

Drilling at the Fort Cady project by Duval was completed using a combination of rotary air blast (“RAB”) and diamond drilling techniques. Vertically oriented RAB drilling was completed through the overburden and then HQ diamond drilling was undertaken to obtain drill core samples for analysis and test work. Approximately 5,800 m of diamond drill core was obtained. Geological and geophysical logging of each hole was completed. Following a review of logging and geophysical data, prospective zones were ¼ core sampled for chemical analysis. In excess of 3,000 samples were analysed at Duval’s laboratories in in either Tucson, West Texas (Culberson Mine) or in New Mexico (Duval Potash mine).

Elements analysed for were Al, As, Ba, B2O3, CO3, Ca, Fe, K, Li, Pb, Mo, Mg, Na, Rb, S, Si, Sr, Ti, Zn, and Zr.

In February 1981, the first solution mine test hole was drilled and by late 1981 a small scale pilot plant was operational to test in-situ solution mining of the colemanite deposit. Significant processing test work was then completed by Duval with the aim of optimising the in-situ solution mining process and process design. In 1995 the Fort Cady Minerals Corp received all final approvals and permits to operate a commercial scale 90,000 stpy borate production facility. An initial pilot plant began operations in 1996 and was used to test various process parameters. Limited commercial production of calcium borate / colemanite (marketed as CadyCal 100) occurred until 2001 when operations ceased due to owner cashflow problems. A total production tonnage of 1,942 tonnes of CadyCal 100 was reported to have been produced (Ft Cady Plant Production Summary, 1996-2001).

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American Pacific Borate and Lithium Ltd | Geological Setting Final Report

4 Geological Setting

4.1 Regional Geological Setting

The project area is in the Mojave Desert province of the basin and range terrain of Western North America. The terrain is characterized by high northward trending mountain ranges separated by broad alluvial valleys, all caused by extensional tectonic forces. An extensive network of northwest-southeast strike slip faults has developed across the region, many of which have relative movements in excess of 20 km. An estimated 50% of the area is covered by Quaternary alluvium. Thickness of the Quaternary alluvium and underlying Tertiary volcanic and sedimentary rocks can be as deep as 1 km thick in the deepest basins. Refer to Figure 4.1 for a geologic map of the Hector Basin.

Figure 4.1: Regional geological map of the Hector Basin – from USGS maps I-461 & I-462

Source: Dibblee T.W., USGS Maps I-461 & I-462 modified by Xstract (April 2017)

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Final Report Independent Geologist’s Report | Geological Setting

4.2 Local Geology and Mineralisation

The project area comprises the west central portion of a Pliocene age dry lake basin (Hector Basin) which has been partially dissected by wrench and block faulting related to the San Andreas system. The Hector basin is believed to have once been part of a much larger evaporite basin or perhaps a chain of basins in what has been termed the Barstow – Bristol Trough. This larger basin extended for over 130 km in length, as the name implies, from an area northeast of Barstow, through the Troy Lake area and eastward into the Bristol salt basin. Late Tertiary bimodal volcanism assisted in the separation of the basins into the present topography with emplacement of voluminous flows and domes.

These volcanic episodes produced a series of extensive hot spring deposits along the margins of the basin. The basin is hydrologically closed and bounded on all four sides by relatively small and low-lying mountain ranges. A dry playa lake bed called Lavic Lake occupies the southern end of the basin.

The local geology on the surface comprises a mixed sequence of Quaternary basin and plain sediment accumulations with various younger flows of basalt on the surface. These basalt flows indicate volcanism occurring into the late Tertiary and Quaternary, which is also evidenced by cinder cones in various locations in the district, such as the Pisgah Crater that is situated only 2 kms east of the project area.

The main borate deposit area lies between 350 m to 450 m below the current surface. The deposit comprises a sequence of mudstone and tuff. The borate mineralisation occurs primarily as colemanite (2CaO 3B2O3 5H2O) in thinly laminated silt, clay and gypsum beds containing an average of 9% calcite, 35% anhydrite plus 10% celestite, SrSO 4 (Wilkinson P and Krier N, Jan 1985 Geological summary).

Drilling within the deposit has defined the present lithological sequence. Four major units have been identified:

 Unit 1 is characterised by a 150 m to 200 m thick sequence of red-brown mudstones with minor sandstone, zeolitized tuff, limestone, and rarely hectorite clay beds. Unit 1 is intersected immediately below the alluvium and surface basaltic lavas.  Unit 2 is a green-grey mudstone that contains minor anhydrite, limestone, and zeolitized tuffs. Unit 2 has a similar thickness (100 m to 150 m) as the overlying Unit 1. Unit 2 is interpreted as lake beds.  Unit 3 is a 75 m to 150 m thick evaporite section which consists of rhythmic laminations of anhydrite, clay, calcite, and gypsum. Thin beds of air fall tuff were also intercepted which provide time continuous markers for interpretation of the sedimentation history. These tuffs have variably been altered to zeolites or clays. Unit 3 contains the colemanite deposit. Anhydrite is the dominant evaporite mineral, and the ore deposit itself is made up mostly of an intergrowth of anhydrite, colemanite, celestite, and calcite with minor amounts of gypsum and howlite.  Unit 4 is characterised by clastic sediments made up of red and grey-green mudstones and siltstones, with locally abundant anhydrite and limestone. The unit is approximately 50 m thick and rests directly on the irregular surface of andesitic lava flows. Where drill holes intersect this boundary it has been noted that an intervening sandstone or conglomerate composed mostly of coarse volcanic debris is usually present. Most drill holes did not extend to this depth.

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Figure 4.2: Fort Cady lithological section column

Source: Supplied by L.Rutherford of APBL (April 2017)

Beds within the colemanite deposit strike roughly N45W and dip about 10° or less to the southwest. The southwest margin of the deposit is quite sharp and is considered fault controlled. This boundary was considered by Duval geologists to be controlled by a facies change to boron-poor, carbonate-rich lake beds as a result of syndepositional faulting. The northeast and northwest boundaries of the deposit are controlled by facies changes to more clastic material, reducing both the overall evaporite content and the concentration of boron within the evaporites. The southeast end of the deposit is open-ended and additional drilling is necessary to define the southeastern limits of borate deposition (Wilkinson P and Krier N, Jan 1985 Geological summary).

In plan view, the concentration of boron-rich evaporites is roughly ellipsoidal with the long axis trending N40-50W. A zone of >5% B2O3 mineralisation, ranging in thickness from 20 m to 68 m (70 ft to225 ft), is approximately 600 m wide and 2,500 m long (Figure 4.3). The boron is believed to have been sourced from thermal waters that flowed from hot springs in the region during times of active volcanism. These hot springs vented into the Hector Basin that contained a large desert lake. Borates were precipitated as the thermal

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waters entered the lake and cooled or as the lake waters evaporated and became saturated with boron. Colemanite being the least soluble would evaporate on the receding margin of the lake. The evaporite-rich sequence forms a consistent zone in which the borate-rich colemanite zone transgresses higher in the section relative to stratigraphic marker beds. Figure 4.4 shows a cross section along the strike of the deposit. Figure 4.5 shows a cross section perpendicular to the strike of the deposit.

Figure 4.3: Plan view showing trends and currently interpreted limits to mineralisation at the Fort Cady deposit (Grid system is the US State Plane Coordinate System (1927), California 0405, Zone V is in feet)

Source: Supplied by L.Rutherford of APBL (April 2017)

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Figure 4.4: Northwest – southeast vertical cross section along the strike of the deposit

Source: Amended from Western States Engineering (2010)

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Figure 4.5: Northeast – southwest vertical cross section perpendicular to the strike of the deposit

Source: Amended from Western States Engineering (2011)

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A review of individual sample grades within drill holes highlights significant grade variability exists in the deposit. Although a consistent >1% B2O3 grade shell exists, there are notable grade variations within specific layers of the deposit. Some layers can consist of mainly colemanite and grades can exceed 20% B2O3. These layers can be interbedded with colemanite poor material that grade less than 2.0% B2O3 (Table 4.1 and Figure 4.6). The in-situ solution mining method will aim to leach the entire mineralised zone.

Table 4.1: Drill hole assays for B2O3% and Li ppm for a portion of drill hole DHB16 showing grade variability within deposit

FROM TO THICK B2O3 Li BOREID (ft) (ft) (ft) (%) (ppm)

DHB16 1470.30 1473.00 2.70 2.30 245

DHB16 1473.00 1474.70 1.70 3.85 449

DHB16 1474.70 1477.30 2.60 13.98 389

DHB16 1477.30 1480.10 2.80 6.12 441

DHB16 1480.10 1482.30 2.20 20.10 358

DHB16 1482.30 1484.40 2.10 6.29 404

DHB16 1484.40 1485.00 0.60 0.35 358

DHB16 1485.00 1487.40 2.40 0.70 478

DHB16 1487.40 1488.10 0.70 14.33 160

DHB16 1488.10 1489.60 1.50 2.27 510

DHB16 1489.60 1490.10 0.50 1.05 498

DHB16 1490.10 1494.30 4.20 1.22 571

DHB16 1494.30 1496.10 1.80 1.22 595

DHB16 1496.10 1498.10 2.00 5.77 464

DHB16 1498.10 1500.10 2.00 1.57 579

DHB16 1500.10 1501.50 1.40 17.83 266

DHB16 1501.50 1503.70 2.20 4.37 529

DHB16 1503.70 1504.90 1.20 1.57 559

DHB16 1504.90 1506.90 2.00 23.60 510

DHB16 1506.90 1510.00 3.10 6.47 595

DHB16 1510.00 1511.70 1.70 2.97 529

DHB16 1511.70 1512.90 1.20 6.47 522

DHB16 1512.90 1515.60 2.70 33.04 128

DHB16 1515.60 1519.90 4.30 3.50 571

DHB16 1519.90 1523.90 4.00 26.05 213

DHB16 1523.90 1526.00 2.10 26.22 277

DHB16 1526.00 1528.30 2.30 5.94 541

DHB16 1528.30 1532.00 3.70 13.98 419

DHB16 1532.00 1533.50 1.50 7.52 245

DHB16 1533.50 1535.90 2.40 1.05 571

DHB16 1535.90 1537.00 1.10 1.22 571

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Figure 4.6: Sectional view of drill hole sample traces showing B2O3 assays through the centre of the deposit for drill holes DHB18, DHB16 and DHB24

Source: Generated by Xstract (April 2017)

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Associated with, and above the borates, are lithium bearing hectorite clay laminae and intercalated crystalline strontium sulphate. Tuff horizons have been extensively altered to lithium bearing hectorite type clay and or zeolites. The Hector basin is the type locality for the lithium clay mineral hectorite. Deposits of hectorite near the basin margins have been mined intermittently since 1931. Substantial quantities of these clays exist within certain zones in the basin that are traced by hot spring alteration. The clays contain from 0.25% to 1% lithium. A review of Li values within drill holes at the Fort Cady project highlights the high Li contents present (Table 4.1 and Figure 4.7). Planned metallurgical test work by APBL will ascertain whether Li can be economically recovered from the formation.

In addition to Li-rich mineral(s) in the formation, brine fluids rich in lithium have been identified at the Fort Cady project. In 1981, Duval Corporation took a sample of ambient brine from a solution mining test well on site; the reported lithium value was 91 ppm. Lithium grades of this concentration are noteworthy as they are approaching grades of the nearby Silver Peak deposit in Nevada that is reported to economically produce in the region of 6,000 metric tonnes of lithium carbonate from brine fluids grading approximately 160 ppm (Monk, Hynek, Bradley, 2016).

It is worth noting that in a USGS publication on the lithium prospectivity of North America (Vine, 1980), Li/Cl ratios in ground water and brines were used to classify the potential of an area for hosting lithium deposits. The Li/Cl ratio for the tested brine on the western margin of the Hector basin was calculated to be 0.023 which ranks the area as highly favorable for exploration. Figure 4.8 illustrates the USGS Classification Guide used in prioritising Li exploration targets.

Potential exists for Li grades within brine fluids to increase at the Fort Cady project as the fluids progress toward pre-existing zones of hot spring activity within deeper portions of the basin (Figure 4.9; Matson, 2017). The exploration programme proposed by APBL aims to test this hypothesis with the completion of six drill holes that target concentrated Li brines at depth near the centre of the Hector basin (approximately 2 kms east of the colemanite deposit). Drill hole locations have been designed to target structurally disrupted zones that could yield favourable commercial quantities of brine to a well field.

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Figure 4.7: Sectional view of drill hole sample traces showing Li assays for drill holes DHB18, DHB16 and DHB24

Source: Generated Xstract (April 2017)

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Figure 4.8: USGS Classification Guide for Li prospectivity (Vine, 1980)

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Figure 4.9: Conceptual east-west cross section of the Hector Basin showing Li brine genesis and exploration targets

Source: Supplied by H.Matson of APBL (April 2017)

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5 Mining, Metallurgical and Processing

5.1 Mining

The proposed method of mining the 400 to 500 m deep deposit is through underground solution mining as previously undertaken on the project site. The proposed facility will use in-situ acid brine leaching of the borate resource followed by solution extraction and crystallization of the boric acid contained in the leach liquor. Lithium salts are planned to be similarly produced. The technical grade products will be bulk packaged and shipped to industrial consumers by rail spur from the property.

The basis of the extraction and recovery process at the Fort Cady Borate Project is established in a Duval Corporation patent for in-situ mining of borates. U.S. Patent 4,475,771 dated October 9 1984, entitled “Cyclic Solution Mining of Borate Ores”, has since lapsed but was subsequently registered for patent in the United Kingdom and the Federal Republic of Germany. In the patented process a solution of weak hydrochloric acid is injected directly into the borate ore beds which react with the colemanite present forming a solution of boric acid and calcium chloride. The solution is recovered to the surface and concentrated past the solubility limits of the boric acid to precipitate a portion as crystalline boric acid (Figure 5.1). The crude crystals are refined and hydrochloric acid is regenerated through the reaction of the calcium chloride with less costly sulphuric acid. This reaction also causes some gypsum to be formed out of solution. The latter could potentially be sold to the local cement industry or to producers of drywall or soil conditioners.

Figure 5.1: Diagram showing proposed in-situ solution extraction mining process

Source: Modified from Western States Engineering (2010)

In-situ mining technology has been developed commercially since the 1970’s and is actively used elsewhere in the commercial recovery of borates, potash, soda ash, salt,

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copper and uranium. Searles Valley Minerals, owned by Nirma Ltd, utilises solution mining at its Searles Lake operation, also in California. Solution mining extracts minerals at depth and then the brine solutions are processed to produce boric acid, sodium carbonate, sodium sulfate, borax and salt.

There was an experiment to recover borax by solution mining from the orebody at Boron California (US Borax and Chemical Corp now Rio Tinto) from around 100 m deep. Three cavities were produced, two were interconnecting, and all were examined by conventional mining entry after removal of the solution. Several hundred tons of borax was extracted and observations made on the behavior of the shale present, shape of cavity produced and effects of joining cavities. Results achieved were thought to be useful in judging probable percentage recovery of mineral and in predicting costs of recovering refined borax from the solutions produced. It was concluded that the solution technique at the time could not be sufficiently controlled to produce high recoveries under the conditions tested (Taylor, 1969).

In-situ solution recovery (“ISR”) mining comes with some technical risk in terms of predicted output beyond what is expected with conventional hard rock mining. However the test at Borax and the pilot plant at Fort Cady, while imperfect, proved that solution mining can be successfully carried out in these types of deposits. A major advantage of ISR mines is that they a have a small visual and environmental impact and that they can be flexible in terms of production dependent on mineral prices and can be increased or decreased by controlling the number of wells in production.

In 2010 Western States Engineering was requested by Atlas Precious Metals Inc to evaluate previous plans for the project and develop a guide for future work in developing a final operations plan. In Western States Engineering’s report they comment on the in-situ solution recovery mining method and discuss both surface well drilling and well drilling from underground tunnels. Xstract is of the opinion that underground mining techniques will need to be considered in more detail in future studies to ensure the best economic outcome for the Fort Cady project.

5.2 Metallurgy

There have been various metallurgical tests and pilot plant operations conducted at the site since the discovery of the Fort Cady borate deposit. The most comprehensive test work was completed by Hazen Research Incorporated in the 1990’s and a large amount of production data was obtained from the operation of the pilot plant during the same period.

Apart from the production of boric acid, it is also thought that additional circuits to recover the high concentration of lithium from the brines and strontium would add valuable by- products from the operation.

The various metallurgical test work phases have delivered an operating plan to produce 90,000 tonnes of boric acid per annum. The key assumptions made for the metallurgical recovery of boric acid from the deposit are outlined within Table 5.1.

Fort Cady Borate and Lithium Project 25 American Pacific Borate and Lithium Ltd | Mining, Metallurgical and Processing Final Report

Table 5.1: Base metallurgical assumptions used in the resource estimate

Boric Acid Parameters Assumptions Made

Contained Boric Acid (Mineral Factor) 1.7756

Total Boric Acid recoverable 60%

Circuit Boric Acid Recovery Year 1 20%

Circuit Boric Acid Recovery Year 2 35%

Circuit Boric Acid Recovery Year 3 35%

Circuit Boric Acid Recovery Year 4 10%

Gallons/ Minute / Well 12

Head Grade (Grams/Litre) 36

Tail Grade (Grams/Litre) 6.5

Recoverable Grade (Grams/Litre) 29.5

Production Tons / Year / Well 776

Source: PT GMT Indonesia Independent Technical Report

It must be noted that the lithium recovery remains untested but there are projections that production of lithium carbonate may be possible and if so a valuable by-product may be developed.

5.3 Processing

The Fort Cady pilot plant was used to produce calcium borate from boric acid solution. APBL are proposing to complete additional metallurgical test work in the aim of developing a more cost effective processing plant to produce boric acid through the introduction of hydrochloric acid as opposed to the sulphuric acid that was used in the pilot plant from 1996-2001.

The pilot plant that was constructed on site was effective in producing synthetic colemanite and continued to operate until 2001. However, laboratory and field testing confirmed that the sulphuric acid leach used by the pilot plant was problematic and furthermore the lack of warming resulted in poor well recoveries and far higher costs than necessary.

APBL intend to significantly improve the process by:

1. Hydrochloric acid leach to provide better borate leaching characteristic, higher recoveries and solve the issue of unwanted gypsum precipitation in the pipes.

2. The use of insulated piping and warmed leach fluid to greatly enhance recoveries and solve freezing issues which occurred sometimes in the pipes during cold winter nights.

3. Producing boric acid (not synthetic colemanite) as it is simpler and cheaper to produce and it is a higher purity and higher value product.

4. Developing a lithium co-product.

5. Improving the drilling of wells and consider directional drilling.

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These improvements are planned to be tested during the proposed two year exploration work programme and will then be optimised during subsequent Pre-feasibility and Feasibility studies.

5.3.1 Market for Borates

Xstract understands that the future market forecast for borates is still good based on information sourced from public documents. The dominant uses of borates are in liquid crystal displays for electronic devices from television to smartphones containing borosilicate glass, fiberglass, textile fiberglass, ceramics, agriculture (use as a fertilizer to improve yields), detergents and personal care products.

Rio Tinto in a document ‘Global outlook for borates’ August 2015 states:

“That demand for borates over time is expected to remain strong and is forecast to increase during the latter stages of global economic development, beginning in the second half of the present decade. As economies develop and per capita gross domestic (GDP) increases, there will be more demand for products containing boron.

The fundamental drivers of the global boron industry are underpinned by growing global economy. China is the biggest consumer of borates and demand is growing as a rate faster that the overall borate industry albeit close to its own GDP growth rate which is currently 7%. The US is the second largest borate –consuming country; demand there is forecast to grow at a rate higher than GDP, primarily driven by continued recovery in the housing market. Rio Tinto Minerals estimates that over time significant growth will come from here strategic markets pillars, urbanisation, energy and global food supply.”

Stormcrow Capital Ltd, a financial and technical /scientific consulting firm based in Toronto Canada, in 2017 was of the opinion that growth in boron demand is best described by global GDP. They used historic and forecast data provided by USGS, ETi Mine Works (a Turkish state owned company with the world’s largest reserves of borates) and Rio Tinto to predict the growth of borates as positive. They believe there are opportunities for junior miners to enter the market especially if they produce high quality and clean (low arsenic) boron mineral concentrates from a high-grade deposit preferably in the form of calcium borates such as colemanite due to its applicability in the manufacturing of E-glass.

It is important to note that the ETI Mine Works Turkish operations, Rio Tinto’s Boron mine in California and Rio Tinto’s planned Jadar mine in Serbia have capacity to increase production as required.

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6 Proposed Work Programme and Expenditure

APBL has prepared a two year exploration programme to assess the prospects over its exploration areas; termed the Fort Cady Borate-Lithium and Hector Extension Lithium Projects (Table 6.1). The Company proposes to fund the exploration programme via an equity capital raising on the ASX. The exploration programme has been compartmentalised to expand on the understanding of both the borate and lithium potential of the Project. Although distinct projects have been specified, they overlap in scope as they are directly aimed at enhancing the commerciality of the project. The main objectives are:

Fort Cady Borate-Lithium Project

 Report a Mineral Resource for the Fort Cady project that has been developed according to the guidelines of the JORC Code (JORC, 2012). The reported Mineral Resource will be supported by a phase of new drilling and assaying which will be completed with quality control and quality assurance procedures in place. The drilling will target the northern half of the Fort Cady deposit with the aim of achieving at least an Indicated Mineral Resource. Xstract considers the proposed 14 hole infill drill programme to be adequate to verify the historic resource in this area taking into account the style of mineralisation and geometry of the deposit. Land access agreements will need to be finalised to verify the full extent of the historic resource area.

Hector Extension Lithium Project

 Test the potential for lithium-enriched brines in permeable structures to the east and north of the borate deposit. Should economic lithium grades, and acceptable flow rates be encountered, these drill holes could be used as make-up solutions for processing. Six drill holes have been proposed by APBL for testing the lithium prospective structures.

Pilot Well Tests

 Rehabilitate two historic wells and convert at least two resource drill holes for solution mining and pilot processing studies. This will primarily focus on optimising a solution composition and physical parameters for the recovery of boric acid.  A primary objective of the well tests will be to assess the recovery of the lithium in the formation pore water and test the leachability of lithium contained within the formation.  Ultimately, the pilot scale tests will target the optimisation of solution mining methods and process flowsheet designs such that commercial grade boric acid and lithium carbonate will be produced.

Pre-Feasibility Study

 Complete a Pre-feasibility Study (PFS) and report Ore Reserves according to the guidelines of the JORC Code (JORC, 2012) based on a new improved geological interpretation and an optimised extraction and recovery process. This will allow refining of Opex and Capex, and the economic metrics for the project.

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Table 6.1: Table of Estimated Exploration Costs1

Activity CY2017 CY 2018 Total Cost (A$) (A$) (A$)

Fort Cady Borate-Lithium Project

Drill rig mobilisation and demobilisation costs 61,333 - 61,333

Drill access and site preparation 57,960 - 57,960

Drilling programmes (14 drillholes, 6,000 metres) 1,966,347 - 1,966,347

Assay (1,120 samples, full geochem analysis) 343,467 - 343,467

Hector Extension Lithium Project

Drill rig mobilisation and demobilisation costs 15,333 - 15,333

Drill access and site preparation 9,200 - 9,200

Drilling programmes (6 drillholes, 2,200 metres) 621,920 - 621,920

Assay (120 samples, full geochem analysis) 36,800 - 36,800

Pre-feasibility Studies

Mobilisation and demobilisation costs 15,333 - 15,333

Reaming and casing (2 drillholes, 244 metres) 52,747 - 52,747

Well installation, engineering, pilot plant & test work 2,003,971 23,000 2,026,971 requirements

Well Assay (continuous) 106,375 11,500 117,875

Subcontractors and technicians 471,500 92,000 563,500

Metallurgical

Test work and engineering (including lithium leachability 690,000 651,667 1,341,667 and solvent extraction)

Land Title & Permit Application

Permitting, Bonding & Claim fees 306,667 222,333 529,000

External Consulting & Resource report

Consultants 437,000 705,333 1,142,333

Resource Report 207,000 0 207,000

Total A$ 7,402,953 1,705,833 9,108,786

Notes: 1. Budget is for minimum subscription of A$12m; Does not include working capital of A$2.9m

In the event that more than the minimum subscription and less than the maximum subscription is raised, APBL intends to allocate the funds proportionately towards additional resource drilling of the Fort Cady Borate-Lithium Project and exploration drilling of the Hector Extension Lithium Project. Additional pilot scale and metallurgical test work would also be undertaken to optimise the process design.

Xstract considers that APBL’s exploration strategy for borate and lithium at the Fort Cady project is justified. APBL’s proposed expenditure for the planned work program is contained in Table 6.1 above. APBL’s objective of the proposed work programme will be to deliver a Mineral Resource estimate according to the guidelines of the JORC Code (2012) for the Fort Cady borate and lithium project. The work programme will include metallurgical and well test work that will optimise the process design, confirm metallurgical recoveries and substantiate whether the proposed in-situ solution extraction process is economically viable and whether a saleable product can be produced.

Fort Cady Borate and Lithium Project 29 American Pacific Borate and Lithium Ltd | Proposed Work Programme and Expenditure Final Report

Xstract consider that exploration drilling for lithium-rich brine material, although potentially important to supplement revenue for the Fort Cady borate project, is not as important as development of the Fort Cady Mineral Resource. Xstract consequently would recommend that only 2 drill holes be drilled to target potentially high grade lithium brines on structures to the east of the Fort Cady project instead of the currently planned 6 drill holes. Xstract recommend an additional 4 infill drill holes or production test wells be drilled to target borate mineralisation at the Fort Cady project.

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7 Declarations

7.1 Independence

Xstract is a privately owned and operated resource industry consultancy providing independent, strategic and tactical advice, and personalised professional services, to exploration and mining companies, engineering firms, financial institutions and investors. Xstract operates through its offices in Brisbane and Perth. Xstract’s services include technical audits, due diligence, project reviews, valuations, mineral specialist reports, project management plans and corporate advice.

Neither Xstract, nor any of the authors of this report, have any current material or contingent interest in the outcome of the report, nor do they have any pecuniary or other interest that could reasonably be regarded as being capable of influencing their independence or that of Xstract. Xstract has no prior association with APBL in regard to the mineral land titles that are the subject of this report. Xstract’s fee for completing this report is based on its normal professional daily rates plus reimbursement of incidental expenses. The payment of that professional fee is not contingent upon the outcome of this report.

7.2 Qualifications

This report has been prepared by Justin Watson (Principal Consultant & Manager Technical Excellence, Geology), and Kevin Irving (Principal Consultant & General Manager, Mining) and has been peer reviewed by Stefan Mujdrica (Principal Consultant & General Manager, Geology). All are permanent employees of Xstract.

Justin Watson (Principal Consultant & Manager Technical Excellence, Geology)

Justin has worked in the mining industry for over 20 years. He has held senior roles in large Australian and International companies and has experience in both open cut and underground operations in a range of commodities and geological settings both in Australia and Internationally.

Justin has extensive experience in Mineral Resource auditing and the evaluation of mineral deposits and his skillset includes experience in exploration, mine geology, sampling, QA/QC, database management, conditional simulation, risk analysis, project management, geometallurgy, mineralogy, due diligence, mineral resource reporting and reconciliation. Justin’s technical skills are supported by a strong practical mining background at Broken Hill, Boddington, Lihir and Mount Isa.

Justin has worked in a consulting role for the last 11 years and in that time has supported his clients around the world in the development of Mineral Resources that meet International reporting standards (JORC 2012, NI-43101). He is a competent person in the evaluation and estimation of gold, base metals, porphyry copper, IOCG, bauxite and nickel laterite deposits and has previous experience with evaporite deposits.

Justin's practical and project management experience is complimented well by his strong software (MineSight/Supervisor/MSOffice/MSProject) and training skills.

Justin holds a Bachelor of Applied Science with Honours in Geology. He is a Chartered Professional Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists.

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Kevin Irving (General Manager Mining & Principal Consultant)

Kevin has some 30 years of mining engineering experience in mine management, corporate roles and consulting. Before joining Xstract, Kevin was Group Manager – Coal for Snowden Mining Industry Consultants, based in Brisbane. Previous to this, he was Vice President of Operations for UK Coal Plc where he had a successful track record of managing a group of coal mines with a combined turnover of circa AUD1.2 billion.

Kevin’s experience includes an in-depth knowledge of leading people, financial management, planning, scheduling and forecasting and consulting. His skills lie in establishing teams of diverse people to conduct concept, pre-feasibility, feasibility studies, mine optimisation, due diligence and technical audits.

Kevin holds a Master of Business Administration and a Bachelor of Science with Honours in Mining. He is a Fellow of the Australasian Institute of Mining, a Fellow of the Institute of Material, Minerals and Mining, a Chartered Engineer and a Member of the Institute of Management.

Stefan Mujdrica (General Manager Geology & Principal Consultant)

With over 30 years’ industry experience, Stefan’s career has spanned from exploration to mining geology in a number of managerial roles and various locations. Stefan’s expertise includes technical reviews, due diligence, sampling and reconciliation, short-term grade control strategies, resource estimation, database/computer management, feasibility studies, geostatistics, risk assessment through conditional simulation, and mentoring and training. His experience covers a range of commodities in a variety of locations and settings.

Stefan holds a Master of Science in Exploration Geology, a Bachelor of Applied Science in Geology, is a Microsoft Certified Systems Engineer and a Chartered Professional Member of the Australasian Institute of Mining and Metallurgy.

Stefan has worked in a consulting role for the last 17 years and during this time has supported clients around the world in the development of Mineral Resources that meet International reporting standards (e.g. The JORC Code of Australasia, NI43-101 of Canada, SAMREC of South Africa, etc). He is a competent person in the evaluation and estimation of a number of commodities and styles of deposits including evaporites, bauxite/nickel laterites, coal, gold, base metals, porphyry-style, IOCG-style, VMS-style, and PGE’s.

7.3 Reporting Standard

This report has been prepared in accordance with the Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (“VALMIN Code, 2015”) and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code, 2012”). Further guidance has been provided by the rules and guidelines issued by such bodies as the ASIC and ASX that pertain to Independent Experts Reports. Of particular importance to the preparation of publicly disclosed Independent Expert reports in Australia are ASIC’s Regulatory Guides 111 (Contents of Expert Reports) and 112 (Independence of Experts).

The report has been prepared to the standard of, and is considered by Xstract, to be an Independent Specialist Report under the Section 5.5 of the VALMIN Code (2015). This report does not express an opinion as to the value of the mineral assets or land titles

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involved, nor to the ‘fairness and reasonableness’ of any transactions between APBL and other third parties.

APBL was provided with a draft version of this report to enable the company to verify the accuracy of statements contained here within or the omission of any material information falling within Xstract’s mandate.

7.4 Terms of Reference

This report has been prepared at the request of APBL to provide an independent opinion on the technical merits of APBL’s Fort Cady boron and lithium project located in California, USA. It is our understanding that this report is to be included in its entirety in APBL’s Prospectus for a potential listing on the ASX.

In the execution of our mandate Xstract has reviewed all relevant technical and corporate information made available to us by the Directors of APBL. Xstract have accepted all supplied information from APBL in good faith as being true, accurate and complete, having made due enquiry. Xstract has supplemented this information where necessary with information from its own data sources.

The conclusions expressed in this report are appropriate as at 4 May 2017. All monetary values outlined in this report are expressed in Australian dollars unless otherwise stated.

7.5 Data Sources

Pursuant to its engagement, Xstract has relied upon information compiled by APBL, as well as information gained from other public sources. Data for this report was provided by APBL’s Directors and consists of internal and open-file project memorandums, technical reports, location plans, drillhole data files and interpreted geological surfaces which were all provided by APBL. Key sources are outlined in bibliography (Section 8) of this report.

For the specific purpose of this report, Mr Justin Watson (Manager of Technical Excellence / Principal Consultant) carried out a site visit to APBL’s project on Tuesday the 7 th February 2017. During the visit, Mr Watson inspected the key exploration targets, reviewed previous exploration results, geological sections and historic resource estimates. Discussions were also held with APBL’s site geologist (Harrison Matson), APBL’s Head of Strategy & Corporate Development (Dr Lachlan Rutherford) and the previous site geologist employed by Duval (Pamela A.K. Wilkinson).

7.6 Warranties and Indemnities

APBL has represented in writing to Xstract that full disclosure has been made of all material information and that to the best of its knowledge and understanding, such information is complete, accurate and true.

As recommended in Section 11.4 of the VALMIN Code (2015), APBL has provided Xstract with an indemnity under which Xstract is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required which:

 results from Xstract’s reliance on information provided by APBL that is materially inaccurate or incomplete, or;  relates to any consequential extension of workload through queries, questions or public hearings arising from this report.

Fort Cady Borate and Lithium Project 33 American Pacific Borate and Lithium Ltd | Declarations Final Report

7.7 Consent

Xstract consents to this report being included in APBL’s Prospectus in the form and context in which it is provided, and not for any other purpose. Xstract provides this consent on the basis that the technical assessments and opinions expressed elsewhere in the Prospectus are considered with, and not independently of, the information set out in Xstract’s complete report.

34 May 2017 Final Report Independent Geologist’s Report | Bibliography

8 Bibliography

Albemarle Corporation, 2015, Annual Report.

American Pacific Borate & Lithium Ltd, December 2016: IPO Seed Capital Raise

American Pacific Borate & Lithium Ltd, 21 February 2017: 24 Month Budget - Exploration & Development_v3

Atlas Precious Metals Inc, 30 October 2009: Conceptual Cross Section of the Hector Basin

Deal, EG, January 1985: Geologic summary of the Fort Cady Colemanite deposit

Dibblee, T, 1967: Areal Geology of the Western Mojave Desert, California; US Department of the Interior Geological Survey Professional Paper 522

Duval, 1982: Fort Cady Borate Reserves. Duval Corporation, dated 10 June 1982

Duval, 1983: Fort Cady Borate Computerized Ore Reserve Calculations. Review for NL Industries, dated 3 November 1983

Fort Cady (California) 2009; ref Ft Cady Plant Production Summary.xls spreadsheet

Fort Cady Minerals Corporation (FCMC) (1993): Revised Mining and Land Reclamation Plan. Fort Cady Project, Newberry Springs, California.

Geosolutions, 1990. Model Construction and Reserves Evaluation for Fort Cady Project. Geosolutions Resources Inc, dated 6 April 1990

JORC, 2012: “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australasian Institute of Geoscientists and Minerals Council of Australia (JORC), 2012 Edition.

Lilburn Corporation, 21 November 2016, - Summary of Permitting Status at Ft. Cady Borate Mine California Mine ID#91-36-0124.

Madsen, B, Geological Survey Bulletin 1296 - Core Logs of Three Test Holes in Cenozoic Lake Deposits Near Hector, California.

Matson, HE, 2017: Lithium Potential in the Hector Basin San Bernardino Co. CA, Private Report to APBL.

PT GMT Indonesia, 2015: 1501 cad.tech.2015.02_technical due diligence - Independent Technical report on the FORT CADY BORAX Deposit, SAN Bernardino County, California

Ronald, E ,2017: Borates in a Nutshell, Mining Geology. Retrieved from http://www.mininggeologyhq.com/borates-in-a-nutshell/

Rutherford, L; Matson, H, dated 21 February 2017: Memorandum - Preliminary exploration programme & budget, Fort Cady project

Rutherford, L, 22 February 2017, Locality Map - Fort Cady Borate-Lithium & Hector Lithium Projects – 1:20 000

Stormcrow, 21 April 2015: Industry report – Borates

Taylor D, 1969: “Experiments on Solution Mining of Borax at Boron California”. US Borax and Chemical Corp. Los Angeles, California.

United States Geological Survey (USGS), 2017: Fort Cady Deposit, Mineral Resources Data System (MRDS). Retrieved from https://mrdata.usgs.gov/mrds/show- mrds.php?dep_id=10023265

Fort Cady Borate and Lithium Project 35 American Pacific Borate and Lithium Ltd | Bibliography Final Report

VALMIN, 2015: “Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports”, prepared by the VALMIN Committee, a joint committee of the Australasian Institute of Mining and Metallurgy, Australasian Institute of Geoscientists and Mineral Industry Consultants Association with the participation of the Australian Securities and Investment Commission, the Australian Stock Exchange Limited, the Minerals Council of Australia the Petroleum Exploration Society of Australia, the Securities Association of Australia and representatives of the Australian financial section, 2015 Edition

Vine, 1980: “Where on Earth is all the Lithium?”, United States Department of the Interior Geological Survey (USGS), Open file report 80-1234

Western States Engineering, 22 January 2015, Pilot Plant Site Plan – 1:720

Western States Engineering, undated: Ft.Cady Minerals Corporation 2010 a Operations Plan

Western States Engineering, 6 August 2010: Ft.Cady Minerals Corporation 2010 b Operations Plan

Wilkinson, P and Krier, N, January 1985; Geological Summary of the Fort Cady Colemanite Deposit (modified by Deal E)

Wilkinson, P. 7 March 2017: Drilling, Geological Logging & Sampling Procedures, Fort Cady Project, Duval Corp. (1979 – 1982)

36 May 2017 Final Report Independent Geologist’s Report | Appendix A

Appendix A: The JORC Code (2012) Table 1

Fort Cady Borate and Lithium Project 37 American Pacific Borate and Lithium Ltd | Appendix A Final Report

The JORC Code, 2012 Edition – Table 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.) Criteria JORC Code explanation Commentary

Sampling  Nature and quality of sampling (eg cut channels, random chips, or  No historic procedures or flow sheets were sighted that techniques specific specialised industry standard measurement tools appropriate to explain the historic drilling and sampling processes completed the minerals under investigation, such as down hole gamma sondes, or at the Fort Cady project. handheld XRF instruments, etc). These examples should not be taken  Discussions held with Pamela A.K. Wilkinson who was an as limiting the broad meaning of sampling. exploration geologist for Duval at the time of drilling and  Include reference to measures taken to ensure sample representivity sampling highlight that drilling through the target zone was and the appropriate calibration of any measurement tools or systems completed via HQ diamond drilling techniques and drill core used. recovery was typically very good (Wilkinson, 2017).  Aspects of the determination of mineralisation that are Material to the  Sampling through the logged evaporate sequence was Public Report. completed based on logged geology and geophysics. Sample  In cases where ‘industry standard’ work has been done this would be intervals vary from 0.1 ft to 15 ft and sample weights varied relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m accordingly. samples from which 3 kg was pulverised to produce a 30 g charge for  Drilling through the overburden material was completed using fire assay’). In other cases more explanation may be required, such as a rotary air blast (RAB) drilling technique with samples taken where there is coarse gold that has inherent sampling problems. from cuttings every 10 ft. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information. Drilling  Drill type (eg core, reverse circulation, open-hole hammer, rotary air  Drilling through the overburden sequence was completed techniques blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or using rotary air blast (RAB) drilling technique. standard tube, depth of diamond tails, face-sampling bit or other type,  Drilling through the evaporate sequence / target zone was whether core is oriented and if so, by what method, etc). completed using HQ diamond core.

Drill sample  Method of recording and assessing core and chip sample recoveries and  Drill core recovery has been reported by Duval geologists to recovery results assessed. be excellent (95%-100%).  Measures taken to maximise sample recovery and ensure  Drill core recovery was not routinely recorded. representative nature of the samples.  Geologists highlighted areas of poor recovery during  Whether a relationship exists between sample recovery and grade and geological logging by making comment within the geological whether sample bias may have occurred due to preferential loss/gain of log at the appropriate drill hole intervals. fine/coarse material.  A review of the limited amount of drill core that is stored at site indicates drill core recovery was good. Refer to Appendix E for pictures of drill core.

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Criteria JORC Code explanation Commentary Logging  Whether core and chip samples have been geologically and  Geological logging was completed on every drillhole. geotechnically logged to a level of detail to support appropriate Mineral  Geological logs for all drill holes have been observed and are Resource estimation, mining studies and metallurgical studies. held by APBL.  Whether logging is qualitative or quantitative in nature. Core (or  Downhole geophysical logs (Gamma Ray Nuetron logs) were costean, channel, etc) photography. completed on each of the Duval exploration drill holes.  The total length and percentage of the relevant intersections logged. Calibration procedures are unknown.  Downhole density logs were completed on select drill holes (DHB1, DHB3, DHB7, DHB8)

Sub-sampling  If core, whether cut or sawn and whether quarter, half or all core  Drill core was transported from site to the Duval office in techniques and taken. Tucson, Arizona. sample  If non-core, whether riffled, tube sampled, rotary split, etc and whether  Following a review of logging and geophysical data, preparation sampled wet or dry. prospective zones were identified and drill core was marked  For all sample types, the nature, quality and appropriateness of the for sampling. sample preparation technique.  Drill core was halved and then one half was halved again.  Quality control procedures adopted for all sub-sampling stages to  The procedure used for obtaining a ¼ core sample is currently maximise representivity of samples. unknown. A review of limited drill core present on site  Measures taken to ensure that the sampling is representative of the in (DBH16) highlights that the core was cut using a diamond situ material collected, including for instance results for field saw. duplicate/second-half sampling.  No evidence to date has been observed that duplicate  Whether sample sizes are appropriate to the grain size of the material samples were taken. being sampled.  The entire ¼ core sample was crushed and split to obtain a sample for analysis. The crushing process, splitting process, size of crushed particles and amount of sample supplied to laboratory for analysis are unknown.

Quality of  The nature, quality and appropriateness of the assaying and laboratory  Historic analytical procedures and associated quality control assay data and procedures used and whether the technique is considered partial or and quality assurance completed by Duval are unknown. laboratory total.  Discussions held with Pamela A.K. Wilkinson, who was an tests  For geophysical tools, spectrometers, handheld XRF instruments, etc, exploration geologist for Duval at the time of drilling and the parameters used in determining the analysis including instrument sampling, indicate that Duval had internal quality control and make and model, reading times, calibrations factors applied and their quality assurance procedures in place to ensure that assay derivation, etc. results were accurate.  Nature of quality control procedures adopted (eg standards, blanks,  In excess of 3,000 samples were analysed by Duval at either duplicates, external laboratory checks) and whether acceptable levels their Tucson, West Texas (Culberson Mine) or New Mexico of accuracy (ie lack of bias) and precision have been established. (Duval Potash mine) laboratories. Elements analysed for were Al, As, Ba, B2O3, CO3, Ca, Fe, K, Li, Pb, Mo, Mg, Na, Rb, S, Si, Sr, Ti, Zn, Zr.  Mineralogy was identified from XRF analysis. XRF results were reportedly checked against logging and assay data (Wilkinson, 2017).

Verification of  The verification of significant intersections by either independent or  Verification of significant intersections by independent or

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American Pacific Borate and Lithium Ltd | Appendix A Final Report

Criteria JORC Code explanation Commentary sampling and alternative company personnel. alternative company personnel has not been completed. assaying  The use of twinned holes.  The majority of drill core has been discarded and verification  Documentation of primary data, data entry procedures, data of results from the remaining drill core is not possible. verification, data storage (physical and electronic) protocols.  Data entry, data verification and data storage processes are  Discuss any adjustment to assay data. unknown.  Hard copy assay reports, geological logs and geophysical logs have been sourced and are stored with APBL.

Location of  Accuracy and quality of surveys used to locate drill holes (collar and  No procedural documentation sighted regarding historic data points down-hole surveys), trenches, mine workings and other locations used surveying procedure of drillhole collars. Surveying procedure in Mineral Resource estimation. used and associated accuracy is unknown. Checks by PT GMT  Specification of the grid system used. Indonesia in 2015 on collar coordinates highlighted  Quality and adequacy of topographic control. differences in excess of 50 ft in easting and northing locations were present for drill holes DBH7, DBH18, DBH20, DBH25, DBH26, DBH31, DBH33 and DBH34.  A total of 21 drill holes do not have surveyed collar elevations (DHB18, DHB19, DHB20, DHB21, DHB22, DHB23, DHB24, DHB25, DHB26, DHB27, DHB28, DHB29, DHB30,DHB31, DHB32, DHB33, DHB34, P2, P3, P4 and P5). These drill holes have been currently assigned an elevation of 2000. Actual drillhole collar elevations for these drill holes maybe up to 40 m different from the assigned value of 2000.  No downhole surveys are present for Duval exploration drill holes (DHB series of drill holes). Downhole surveys for some production / injection drill holes were completed (SMT1, SMT2, SMT6, P5, P6 and P7). A review of this data highlights that significant deviation of the drill holes has not occurred and the end of drill hole position compares favourably (within 10 m) with the drill hole collar location. The exception is drillhole P5 where the end of this planned vertical drill hole is situated approximately 40 m laterally from the drill hole collar position.

Data spacing  Data spacing for reporting of Exploration Results.  Drilling is completed on a 800 ft grid spacing. Drill holes were and  Whether the data spacing and distribution is sufficient to establish the drilled vertically. distribution degree of geological and grade continuity appropriate for the Mineral  Drilling on an 800 ft spacing is appropriate to define the Resource and Ore Reserve estimation procedure(s) and classifications approximate extents and thickness of the evaporite sequence. applied. Infill drilling will be required to accurately define the true  Whether sample compositing has been applied. extents, thickness and grade of mineralisation within the deposit.  Mineralised sections of drill core have a similar thickness in adjacent drill holes and significant variability in thickness is

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Criteria JORC Code explanation Commentary

not expected on a local scale.

Orientation of  Whether the orientation of sampling achieves unbiased sampling of  Exploration drilling was completed on a 800 ft grid spacing. data in relation possible structures and the extent to which this is known, considering Drill holes were drilled vertically and intersect the relative flat to geological the deposit type. lying deposit close to perpendicular to the dip of the deposit. structure  If the relationship between the drilling orientation and the orientation The southwest margin of the deposit is quite sharp and is of key mineralised structures is considered to have introduced a considered fault controlled. sampling bias, this should be assessed and reported if material. Sample  The measures taken to ensure sample security.  Sample security measures during transport and sample security preparation are unknown.

Audits or  The results of any audits or reviews of sampling techniques and data.  No details sighted on any previous sampling reviews or reviews audits.

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Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.) Criteria JORC Code explanation Commentary

Mineral  Type, reference name/number, location and ownership including  The APBL project area consists of approximately 4,409 acres of tenement and agreements or material issues with third parties such as joint ventures, which 240 acres are patented lands owned by Fort Cady land tenure partnerships, overriding royalties, native title interests, historical sites, (California) Corporation; 269 acres of patented property with status wilderness or national park and environmental settings. surface rights held by Fort Cady (California) Corporation and  The security of the tenure held at the time of reporting along with any mineral rights held by the State of California; 2,380 acres of known impediments to obtaining a licence to operate in the area. unpatented mining claims held by Fort Cady (California) Corporation; and 1,520 acres of unpatented mining claims leased by Fort Cady (California) Corporation from Elementis Specialties Inc., owner and operator of the Hector Mine, an adjoining industrial mineral facility. In addition, 100 acres of unpatented mill claims are held by the Company which is designated for water wells. APBL intend to increase its land tenure by 464 acres via negotiations with Southern California Edison. The below table lists the land titles which cover the APBL’s Fort Cady project and surrounding exploration regions:

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Criteria JORC Code explanation Commentary

Exploration  Acknowledgment and appraisal of exploration by other parties.  Commencement of exploration activities in the Hector Basin done by other occurred in the early 1960’s, when exploration companies parties realised that the Hector Basin had a similar geological setting to the Kramer Basin to the northwest that hosted the massive Boron deposit. Discovery of the Fort Cady borate deposit occurred in 1964 when Congdon and Carey Minerals Exploration Company found several zones of colemanite, at depths of 400 m to 500 m below surface.  During the late 1970’s the Duval Corporation became interested in the project and started land acquisition in 1978 with drilling commencing in February 1979. The first drillhole (DBH1) intersected a 27 m thick sequence of colemanite-rich material at 369 m grading better than 7% B2O3. Exploration drilling, sampling, and assaying continued for a further two years through to February 1981 with a total of 33 exploration

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American Pacific Borate and Lithium Ltd | Appendix A Final Report

Criteria JORC Code explanation Commentary drill holes (DBH series of holes) totalling in excess of 18,200 m being drilled. Approximately 5,800 m of diamond drill core was obtained. Geological and geophysical logging of each hole was completed. Following a review of logging and geophysical data, prospective zones were ¼ core sampled for chemical analysis. In excess of 3,000 samples were analysed at Duval’s laboratories in either Tucson, West Texas (Culberson Mine) or in New Mexico (Duval Potash mine). Elements analysed for were Al, As, Ba, B2O3, CO3, Ca, Fe, K, Li, Pb, Mo, Mg, Na, Rb, S, Si, Sr, Ti, Zn, Zr.  In February 1981, the first solution mine test hole was drilled and by late 1981 a small scale pilot plant was operational to test in-situ solution mining of the colemanite deposit. Significant processing test work was then completed by Duval with the aim of optimising the in-situ solution mining process and process design. In 1995 the Fort Cady Minerals Corp received all final approvals and permits to operate a 90,000 stpy pilot borate production facility. The pilot plant began operations in 1996, it remained on site, was modified and used for limited commercial production of calcium borate (marketed as Cady Cal 100) until 2001 when operations ceased due to owner cash flow problems. A total production tonnage of 1,942 tonnes of CadyCal 100 was reported to have been produced.

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Criteria JORC Code explanation Commentary

Geology  Deposit type, geological setting and style of mineralisation.  The project area comprises the west central portion of a Pliocene age dry lake basin (Hector Basin) which has been partially dissected by wrench and block faulting related to the San Andreas system. The Hector Basin is believed to have once been part of a much larger evaporite basin or perhaps a chain of basins in what has been termed the Barstow – Bristol Trough.  The main borate deposit area lies between 350 m to 450 m below the current surface. The deposit comprises a sequence of mudstone and tuff. The borate mineralisation occurs primarily as colemanite (2CaO 3B2O3 5H2O) in thinly laminated silt, clay and gypsum beds.  In plan view, the concentration of boron-rich evaporites is roughly ellipsoidal with the long axis trending N40-50W. A zone of >5% B2O3 mineralisation, ranging in thickness from 20 m to 68 m (70 ft to 225 ft), is approximately 600 m wide and 2,500 m long (Figure 4.3). The boron is believed to have been sourced from thermal waters that flowed from hot springs in the region during times of active volcanism. These hot springs vented into the Hector Basin that contained a large desert lake. Borates were precipitated as the thermal waters entered the lake and cooled or as the lake waters evaporated and became saturated with boron.

Drill hole  A summary of all information material to the understanding of the  Refer to Appendix C for drillhole listing. Information exploration results including a tabulation of the following information  Refer to Appendix D for drillhole location map. for all Material drill holes:  A total of 21 drill holes do not have surveyed collar o easting and northing of the drill hole collar elevations (DHB18, DHB19, DHB20, DHB21, DHB22, DHB23, o elevation or RL (Reduced Level – elevation above sea level in DHB24, DHB25, DHB26, DHB27, DHB28, DHB29, DHB30, metres) of the drill hole collar DHB31, DHB32, DHB33, DHB34, P2, P3, P4 and P5). These o dip and azimuth of the hole drill holes have been currently assigned an elevation of 2000, o down hole length and interception depth which compares favourably with drill holes that have surveyed o hole length. collar elevations. The error in assigned elevations is estimated  If the exclusion of this information is justified on the basis that the to be no greater than 30 m vertically. Survey pickup of all drill information is not Material and this exclusion does not detract from the hole collars is planned. understanding of the report, the Competent Person should clearly explain why this is the case.

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Criteria JORC Code explanation Commentary

Data  In reporting Exploration Results, weighting averaging techniques,  Drill hole data was composited to 10 ft lengths for statistical aggregation maximum and/or minimum grade truncations (eg cutting of high analysis and used in the PT GMT Indonesia 2015 resource methods grades) and cut-off grades are usually Material and should be stated. estimate. No density weighting was applied in the compositing  Where aggregate intercepts incorporate short lengths of high grade process. results and longer lengths of low grade results, the procedure used for  No cutting of high grade values was completed. such aggregation should be stated and some typical examples of such  Statistical analysis of the dataset highlights the distribution is aggregations should be shown in detail. positively skewed.  The assumptions used for any reporting of metal equivalent values should be clearly stated. Relationship  These relationships are particularly important in the reporting of  Exploration drilling was completed on a 800 ft grid spacing. between Exploration Results. Drill holes were drilled vertically and intersect the relative flat mineralisation  If the geometry of the mineralisation with respect to the drill hole angle lying deposit close to perpendicular to the dip of the deposit. widths and is known, its nature should be reported. The southwest margin of the deposit is quite sharp and is intercept  If it is not known and only the down hole lengths are reported, there considered fault controlled. lengths should be a clear statement to this effect (eg ‘down hole length, true  Appendix C lists the downhole thickness of borate width not known’). mineralisation (>1% B2O3) intersected in each drillhole.

Diagrams  Appropriate maps and sections (with scales) and tabulations of  Refer to Appendix D for drill hole collar location map. intercepts should be included for any significant discovery being  Refer also to Figures 4.4, 4.5 and 4.6 within report. reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views. Balanced  Where comprehensive reporting of all Exploration Results is not  Refer to Appendix C for listing of significant intercepts. reporting practicable, representative reporting of both low and high grades  Refer to Table 4.1, Figure 4.6 and Figure 4.7 within report for and/or widths should be practiced to avoid misleading reporting of examples of drill holes that show grade variability throughout Exploration Results. the mineralised evaporite sequence.

Other  Other exploration data, if meaningful and material, should be reported  A number of historic studies have been completed by a variety substantive including (but not limited to): geological observations; geophysical of companies on the Fort Cady project. exploration survey results; geochemical survey results; bulk samples – size and  Duval corporation completed the 33 exploration drill holes and data method of treatment; metallurgical test results; bulk density, associated metallurgical and solution mining test work. groundwater, geotechnical and rock characteristics; potential  Refer to bibliography for listing of references. deleterious or contaminating substances.

Further work  The nature and scale of planned further work (eg tests for lateral  APBL has prepared a two year exploration programme to extensions or depth extensions or large-scale step-out drilling). assess the prospects over its exploration areas, Fort Cady and  Diagrams clearly highlighting the areas of possible extensions, including Hector. The exploration programme has been discussed in the main geological interpretations and future drilling areas, provided Section 6 of the report. this information is not commercially sensitive.

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Final Report Independent Geologist’s Report | Appendix A

Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.) Criteria JORC Code explanation Commentary

Database  Measures taken to ensure that data has not been corrupted by, for  Historic data management and data validation procedures are integrity example, transcription or keying errors, between its initial collection unknown. and its use for Mineral Resource estimation purposes.  Checks of assay data within supplied spreadsheets against  Data validation procedures used. original hard copies from the Duval laboratory indicate that the correct values have been applied to the majority of drill holes. It has been noted that within the assay dataset assays

for B2O3 for drillhole DBH3 are not present within the supplied Excel spreadsheets. Checks on hard copy assay sheets from the laboratory highlight this information is present and needs to be added for use in resource estimation. A review of the Microsoft Access database used by PT GMT Indonesia highlights an applied value of 5.4% B2O3 has been applied to all values between 1359.9 ft to 1557.9 ft. Independent checks by Xstract indicate that 5.4% B2O3 is the length weighted average grade for all intervals between 1359.9 ft to 1557.9 ft for drillhole DBH3.  Drill hole DBH22 has missing assays between 1353.9 ft and 1476.4 ft.

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American Pacific Borate and Lithium Ltd | Appendix A Final Report

Criteria JORC Code explanation Commentary Site visits  Comment on any site visits undertaken by the Competent Person and  Xstract Mining Consultants completed a site visit in February the outcome of those visits. 2017. Xstract can confirm the Fort Cady deposit resides in a  If no site visits have been undertaken indicate why this is the case. prospective area for borate and lithium mineralisation. The deposit is situated in the Hector evaporite basin and is in close proximity to Elementis Specialties Inc’s hectorite lithium clay mine and is within a similar geological setting as Rio Tinto’s Boron mine situated 110 kms to the northwest.  The Fort Cady project resides in a location that is well supported by nearby infrastructure and services. The deposit is less than 5 kms from a major road system (Interstate 40), a major rail line and natural gas and electricity trunk lines.  Hard copies of laboratory assay sheets, geological and geophysical logs were sighted and checks were completed to validate that the assays observed from laboratory assay sheets matched assays within supplied data files.  Xstract was unable to inspect drill hole core samples as the majority of these samples had been discarded by previous owners of the project. Portions of production drill holes S1, S2 and S3, and exploration drill hole DHB16 were observed on site. A review of drill core onsite indicated that relatively good drill core recovery was achieved and drill core had been cut for sampling using a diamond drill saw.  Xstract personnel noted in excess of 3 t of synthetic colemanite product (CadyCal 100) was still present on site in bulka bags. The presence of product on site supports that the borate-rich evaporite sequence was successfully mined by in- situ solution extraction techniques in the past by previous owners.  Mr Casey Bouck (Contract Geologist) visited site in January 2015 on behalf of PT GMT Indonesia and completed checks on drill hole locations using hand held GPS. This work highlighted differences in excess of 50 ft in easting and northing locations were present for drill holes DBH7, DBH18, DBH20, DBH25, DBH26, DBH31, DBH33 and DBH34.

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Criteria JORC Code explanation Commentary

Geological  Confidence in (or conversely, the uncertainty of ) the geological  The main borate deposit area lies between 350 m to 450 m interpretation interpretation of the mineral deposit. below the current surface. The borate mineralisation occurs  Nature of the data used and of any assumptions made. primarily as colemanite (2CaO 3B2O3 5H2O) in thinly  The effect, if any, of alternative interpretations on Mineral Resource laminated silt, clay and gypsum beds. Notable grade variation estimation. exists on a local basis as colemanite-rich beds grading greater  The use of geology in guiding and controlling Mineral Resource than 20% B2O3 can be interbedded with colemanite poor estimation. zones grading <2% B2O3.  The factors affecting continuity both of grade and geology.  The mineralised evaporite zone is characterised by material which typically grades >1% B203. The boundary to mineralisation is not characterised by a distinct lithological change. A gradual change from colemanite-rich bearing horizons to barren waste mudstones and siltstones occurs.  The extent of mineralisation within each drill hole is defined from geological logging, geophysical logging and assaying. Logging of low grade mineralisation is difficult and some drill holes were noted to have assays which either commenced or finished in low grade mineralisation (<2% B2O3). The extent of mineralisation in these drill holes has subsequently not been accurately demarcated by assaying. Additional low grade material is considered possible.  In plan view, the concentration of boron-rich evaporites is roughly ellipsoidal with the long axis trending N40-50W. A high grade zone of >4.5% B2O3 mineralisation, ranging in thickness from 20 m to 60 m has been noted within the drilling. This high grade zone is consistently present in the majority of drill holes and was modelled by PT GMT Indonesia in 2015.

Dimensions  The extent and variability of the Mineral Resource expressed as length  In plan view, the concentration of boron-rich evaporites is (along strike or otherwise), plan width, and depth below surface to the roughly ellipsoidal with the long axis trending N40-50W. A upper and lower limits of the Mineral Resource. zone of >5% B2O3 mineralisation, ranging in thickness from 20 m to 68 m (70 ft to225 ft), is approximately 600 m wide and 2,500 m long. The main borate deposit area lies between 350 m to 450 m below surface.

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American Pacific Borate and Lithium Ltd | Appendix A Final Report

Criteria JORC Code explanation Commentary

Estimation and  The nature and appropriateness of the estimation technique(s) applied  Historic resource estimates have been completed by Duval modelling and key assumptions, including treatment of extreme grade values, (1982, 1983), Geosolutions (1990) and PT GMT Indonesia techniques domaining, interpolation parameters and maximum distance of (2015). extrapolation from data points. If a computer assisted estimation  The historic resource estimates range from 80 Mt at 6.7% method was chosen include a description of computer software and B2O3 to 115 Mt at 7.4% B2O3 at a 5% B2O3 cut-off (Refer to parameters used. Table 1.1 in report).  The availability of check estimates, previous estimates and/or mine  The historic resources quoted have not been reported production records and whether the Mineral Resource estimate takes according to the guidelines of the JORC Code (2012) and are appropriate account of such data. unclassified. It is uncertain that following further evaluation  The assumptions made regarding recovery of by-products. and/or further exploration work that the historic resource  Estimation of deleterious elements or other non-grade variables of estimates will be able to be reported as Mineral Resources in economic significance (eg sulphur for acid mine drainage accordance with JORC Code (2012). characterisation).  It is also important to note that the historic resource  In the case of block model interpolation, the block size in relation to the estimates report the insitu grade and tonnage of average sample spacing and the search employed. mineralisation above an applied cutoff criteria. Ongoing work  Any assumptions behind modelling of selective mining units. by APBL will be required to substantiate historically applied  Any assumptions about correlation between variables. cut-off criteria and understand the proportion of the deposit  Description of how the geological interpretation was used to control the that is likely to meet reasonable prospects of eventual resource estimates. economic extraction.  Discussion of basis for using or not using grade cutting or capping.  Further refinement of historic resource estimates is expected  The process of validation, the checking process used, the comparison of with additional infill drilling, refinement of current geological model data to drill hole data, and use of reconciliation data if available. and structural models and changes in search criteria, estimation parameters and estimation technique.  Duval (1982) resource estimate was limited to interpreted fault locations taken as ½ distance between mineralised and barren drillholes. If no barren drillhole nearby, mineralisation limits were extrapolated ½ the average drillhole spacing. Separate mineralised zones were modelled within the sequence if they were a minimum of 10ft thick and were separated by a minimum of 15ft of waste material. Each mineralised zone was accumulated to obtain an overall tonnage for resource reporting. An overall grade was estimated by tonnage weighting grades for each of the interpreted mineralised zones.  Duval, (1983) resource estimate was developed by estimating grade and thickness of interpreted mineralised zones from each drillhole into 500’ grid cells using a distance weighting approach.  Geosolutions (1990) resource estimate was calculated using Datamine modelling system. Grade composites were made over 10’ intervals. Grade estimates were completed using an inverse distance to the power of 3 estimation approach into

50 May 2017

Final Report Independent Geologist’s Report | Appendix A

Criteria JORC Code explanation Commentary blocks of size 250’ x 250’ x 10’; Horizontal search distance of 1000’ was used. Resource boundary was projected 500’ (1/2 search radius) from the last mineralised drillhole.  PT GMT Indonesia (2015) resource estimate was developed based on using a 1% B2O3 grade shell which was interpreted from drillhole data. PT GMT Indonesia also developed a higher grade (>5%) domain to ensure smoothing of high grades into lower grade regions did not occur during the estimation process. Estimation was completed using an inverse distance to the power of 2 technique

Moisture  Whether the tonnages are estimated on a dry basis or with natural  The 2015 tonnage estimate by PT GMT Indonesia have been moisture, and the method of determination of the moisture content. estimated on a dry basis.

Cut-off  The basis of the adopted cut-off grade(s) or quality parameters applied.  A 5% B2O3 cutoff has been used for historic resource parameters estimates. Ongoing work by APBL will be required to substantiate currently applied cut-off criteria and understand the proportion of the deposit that is likely to meet reasonable prospects of economic extraction.

Mining factors  Assumptions made regarding possible mining methods, minimum  APBL are investigating an in-situ solution mining technique. or assumptions mining dimensions and internal (or, if applicable, external) mining Xstract consider that this may well be a cost effective mining dilution. It is always necessary as part of the process of determining technique however recommend that conventional reasonable prospects for eventual economic extraction to consider underground mining techniques be evaluated during the pre- potential mining methods, but the assumptions made regarding mining feasibility study. methods and parameters when estimating Mineral Resources may not  Doubt currently exists on how much of the deposit can be always be rigorous. Where this is the case, this should be reported with economically extracted using an in-situ solution mining an explanation of the basis of the mining assumptions made. technique. APBL are planning to complete additional studies in this regard prior to announcing a Mineral Resource according to the guidelines of the JORC Code (2012).

Metallurgical  The basis for assumptions or predictions regarding metallurgical  There have been various metallurgical tests and pilot plant factors or amenability. It is always necessary as part of the process of operations conducted at the site since the discovery of the assumptions determining reasonable prospects for eventual economic extraction to Fort Cady borate deposit. The most comprehensive test work consider potential metallurgical methods, but the assumptions was completed by Hazen Research Incorporated in the 1990’s regarding metallurgical treatment processes and parameters made and a large amount of production data was obtained from the when reporting Mineral Resources may not always be rigorous. Where operation of the pilot plant during the same period. this is the case, this should be reported with an explanation of the basis  The deposit has been previously mined on a pilot scale basis of the metallurgical assumptions made. by in-situ acid brine leaching, firstly by Duval Corporation producing a saleable boric acid product, and later by FCMC, producing a saleable high-purity synthetic colemanite product (CadyCal 100) that was sold to the domestic market in the USA.  Apart from the production of boric acid, it is also thought that

Fort Cady Borate and Lithium Project 51

American Pacific Borate and Lithium Ltd | Appendix A Final Report

Criteria JORC Code explanation Commentary additional circuits to recover the high concentration of lithium from the brines, and strontium would add valuable by- products from the operation.

Environmental  Assumptions made regarding possible waste and process residue  Environmental impact statement has been completed and factors or disposal options. It is always necessary as part of the process of signed off by the US Government for commercial-scale mining assumptions determining reasonable prospects for eventual economic extraction to up to 90,000 stpy of boric acid. consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made. Bulk density  Whether assumed or determined. If assumed, the basis for the  Downhole bulk density measurements were noted for drill assumptions. If determined, the method used, whether wet or dry, the holes DHB1 and DHB7. Density results vary from 1.8 g/cm3 to frequency of the measurements, the nature, size and 2.8 g/cm3. Drill hole DHB7 has a well-developed colemanite- representativeness of the samples. rich zone between 1310 ft and 1410 ft. This zone consistently  The bulk density for bulk material must have been measured by had a bulk density of approximately 2.6 g/cm3. This equates methods that adequately account for void spaces (vugs, porosity, etc), well with the bulk density used in the 2015 PT GMT Indonesia moisture and differences between rock and alteration zones within the resource estimate. deposit.  No evidence has been sighted that bulk density test work of  Discuss assumptions for bulk density estimates used in the evaluation drill core was undertaken. process of the different materials. Classification  The basis for the classification of the Mineral Resources into varying  No classification has been applied to the PT GMT Indonesia confidence categories. resource estimate completed in 2015. The Mineral Resource  Whether appropriate account has been taken of all relevant factors (ie has not been reported according to The JORC Code (2012) relative confidence in tonnage/grade estimations, reliability of input guidelines. data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).  Whether the result appropriately reflects the Competent Person’s view of the deposit. Audits or  The results of any audits or reviews of Mineral Resource estimates.  No details of any audits or reviews of Mineral Resources have reviews been sighted by Xstract.

Discussion of  Where appropriate a statement of the relative accuracy and confidence  No classification has been applied to the PT GMT Indonesia relative level in the Mineral Resource estimate using an approach or procedure resource estimate completed in 2015. The resource has not accuracy/ deemed appropriate by the Competent Person. For example, the been reported according to the JORC Code (2012) guidelines. confidence application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

52 May 2017

Final Report Independent Geologist’s Report | Appendix A

Criteria JORC Code explanation Commentary

 The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.  These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

Fort Cady Borate and Lithium Project 53

American Pacific Borate and Lithium Ltd | Appendix B Final Report

Appendix B: Fort Cady drill hole listing

54 May 2017

Final Report Independent Geologist’s Report | Appendix B

Easting Northing RL Depth Mineralised intervals Type Hole (ft) (ft) (ft) (ft) (>1% B2O3)

1224 ft to 1301 ft (77 ft), DHB1 2475653 460875 2004.16 1623 DHB 1338 ft to 1462 ft (124 ft)

Not assayed although DHB10 2472401 462408 1980.77 1655 colemanite noted between DHB 1328 ft to 1500 ft

1308 ft to 1541 ft (233 ft) DHB11 2473229 461625 1976.71 1541 assaying not completed DHB beyond 1541 ft

DHB12 2473965 461674 1992.99 1625 1247 ft to 1454 ft (207 ft) DHB

1330 ft to 1470 ft (140 ft) DHB13 2471586 463208 1978.52 1525.7 Not within 2015 resource DHB estimate

1246 ft to 1494 ft (248 ft) DHB14 2474844 460859 1987.85 1494.4 No assays taken above 1246 ft DHB or below 1494 ft

Not assayed although DHB15 2476456 460896 2012.98 1609 DHB colemanite noted

1368 ft to 1770 ft (402 ft) DHB16 2475433 459038 1985.4 1845 High grade drillhole with thick DHB intersect

1356 ft to 1683 ft (327 ft) DHB17 2474044 460110 1982.78 1683.4 DHB No assays beyond 1683 ft

1442 ft to 1614 ft (172 ft) DHB18 2475356 458499 2000 1882 1635 ft to 1880 ft (245 ft) DHB No assays beyond 1880 ft

DHB19 2478325 458056 2000 1459 1131 ft to 1305 ft (174 ft) DHB

DHB2 2478036 460980 2033.15 1443 No assays DHB

DHB20 2474595 458511 2000 1671 No assays DHB

No assays although colemanite DHB21 2475545 457564 2000 1828 noted between 1663 ft to DHB 1756 ft

1265 ft to 1354 ft (89 ft) DHB22 2475462 460046 2000 1599 No assays 1354 ft to 1476 ft DHB 1476 ft to 1599 ft (123 ft)

DHB23 2476253 457455 2000 1857 1410 ft to 1676 ft (266 ft) DHB

1340 ft to 1695 ft (355 ft) DHB24 2476283 459187 2000 1694.7 High grade drillhole with thick DHB intersect

Fort Cady Borate and Lithium Project 55

American Pacific Borate and Lithium Ltd | Appendix B Final Report

Easting Northing RL Depth Mineralised intervals Type Hole (ft) (ft) (ft) (ft) (>1% B2O3)

1288 ft to 1609 ft (321 ft) DHB25 2476873 458075 2000 1690.5 High grade drillhole with thick DHB intersect

1305 ft to 1337 ft (32 ft) DHB26 2477511 457290 2000 1707 DHB 1359 ft to 1564 ft (205 ft)

DHB27 2476887 456455 2000 1580.7 1360 ft to 1556 ft (196 ft) DHB

1323 ft to 1531 ft (208 ft) DHB28 2477885 456925 2000 1530.7 DHB No assays beyond 1531 ft

1240 ft to 1461 ft (221 ft) DHB29 2478427 455324 2000 1610 DHB No assays beyond 1461 ft

DHB3 2474853 460030 1980.24 1771 1347 ft to 1716 ft (369 ft) DHB

1313 ft to 1535 ft (222 ft) DHB30 2477467 455893 2000 1720 DHB No assays beyond 1535 ft

DHB31 2477449 455075 2000 1625 Not mineralised DHB

DHB33 2478041 454665 2000 1860 Not mineralised DHB

1236 ft to 1524 ft (288 ft) DHB34 2477015 459470 2000 1620 DHB Low grade

DHB4 2474090 459268 1981.09 1708 Not mineralised DHB

DHB5 2474053 460858 1978.23 1730 1318 ft to 1712 ft (394 ft) DHB

DHB6 2474920 461629 2008.7 1595 1165 ft to 1359 ft (194 ft) DHB

DHB7 2476988 458715 2000.58 1735 1260 ft to 1528 ft (268 ft) DHB

DHB8 2473154 461049 1966.53 1809 1380 ft to 1786 ft (416 ft) DHB

DHB9 2472543 461678 1967.12 1750 1395 ft to 1737 ft (352 ft) DHB

1365 ft to 1500 ft (135 ft) P1 2474865 460061 1980.24 2500 Injection No assays beyond 1500 ft

1355 ft to 1510 ft (155 ft) P2 2474865 460261 2000 2500 Injection No assays beyond 1510 ft

1385 ft to 1510 ft (125 ft) P3 2474667 460038 2000 2500 Injection No assays beyond 1510 ft

1355 ft to 1510 ft (155 ft) P4 2474667 460148 2000 2500 Injection No assays beyond 1510 ft

P5 2475421 459920 1983.82 1547 No assays / production hole Injection

P6 2475469 460160 1987.71 1525 No assays / production hole Injection

P7 2475488 460412 2000 1475 No assays / production hole Injection

S1 2473703 461508 1981.49 2500 No assays / production hole Injection

56 May 2017

Final Report Independent Geologist’s Report | Appendix B

Easting Northing RL Depth Mineralised intervals Type Hole (ft) (ft) (ft) (ft) (>1% B2O3)

S2 2474739 459958 1979.28 2500 No assays / production hole Injection

S3 2477899 456914 2051.27 2500 No assays / production hole Injection

1235 ft to 1310 ft (75 ft) SMT-1 2475610 460844 2003 2500 Injection No assays above 1235 ft

1240 ft to 1316 ft (76 ft) SMT-2 2475570 460813 2002.2 2500 Injection No assays beyond 1240 ft

SMT-3 2475253 460030 1982.72 2500 1340 ft to 1447 ft (107 ft) Injection

SMT-6 2475103 460117 1982.43 2500 No depth Injection

SMT-9 2475103 459944 1980.4 2500 No depth Injection

Note that all drill holes have been drilled vertically.

Fort Cady Borate and Lithium Project 57

American Pacific Borate and Lithium Ltd | Appendix C Final Report

Appendix C: Drill hole listing – significant intercepts

58 May 2017

Final Report Independent Geologist’s Report | Appendix C

Mineralised intervals (>1% B 2O3) containing up to 20 ft internal dilution

From To Interval Grade Drillhole Comment (ft) (ft) (ft) (B2O3%)

DHB1 1211.4 1462 250.6 3.5

Assaying not completed beyond DHB11 1300.6 1541 240.4 3.5 1541 ft Includes 124 ft at 4.8%

B2O3 from 1372 ft

Includes 83.8 ft at 6.6% B2O3 from DHB12 1229.1 1472 242.9 3.5 1354.8 ft

Not within currently interpreted PT GMT Indonesia Mineral Resource DHB13 1325 1525.7 200.7 2.1 limits. Includes 102.5 ft at 3.0%

B2O3 from 1334.1 ft

No assays taken above 1246 ft or below 1494 ft. Waste boundary DHB14 1246 1383.2 137.2 4.4 currently not defined by assaying.

Includes 63.3 ft at 7.5% B2O3 from 1265.9 ft

DHB14 1398.3 1494.4 96.1 4.7

Includes 130.2 ft at 9.8% B2O3 from DHB16 1367.7 1770 402.3 5.8 1413.5 ft

No assays beyond 1683 ft. Drillhole DHB17 1353.6 1683.4 329.8 4.4 finishes in 3.7% B2O3 mineralisation

No assays beyond 1880 ft. Includes DHB18 1488.7 1613.9 125.2 4.2 90.3 ft at 5.1% B2O3 from 1490.8 ft

DHB18 1635 1696.2 61.2 5.5

DHB19 1174 1290.2 116.2 4.2

No assays 1354 ft to 1476 ft in middle of mineralised zone. No DHB22 1265 1353.9 88.9 5.2 assays before 1265 ft or beyond 1599 ft

DHB22 1476.4 1599 122.6 2.9

Includes 115.6 ft at 6.6% B2O3 from DHB23 1410 1676.2 266.2 3.9 1486 ft

Includes 93.4 ft at 7.9% B2O3 from DHB24 1339.8 1694.7 354.9 4.2 1365.1 ft

Includes 149.7 ft at 6.0% B2O3 from DHB25 1351.5 1609 257.5 4.5 1366.1 ft

Includes 116 ft at 7.1% B2O3 from DHB26 1305.6 1336.8 31.2 2.9 1371.2 ft

DHB26 1359.3 1568.1 208.8 5.0

Includes 78.6 ft at 8.3% B2O3 from DHB27 1359.6 1555.5 195.9 4.8 1462.8 ft

Fort Cady Borate and Lithium Project 59

American Pacific Borate and Lithium Ltd | Appendix C Final Report

From To Interval Grade Drillhole Comment (ft) (ft) (ft) (B2O3%)

Includes 87.5 ft at 6.6% B2O3 from DHB28 1322.6 1530.7 208.10 4.4 1336.8 ft

No assays beyond 1461 ft. Waste boundary not defined by assaying. DHB29 1240.1 1461.2 221.1 4.3 Includes 113.6 ft at 6.1% B2O3 from 1333.9 ft

Includes 80 ft at 8.8% B2O3 from DHB3 1347 1734 387 3.7 1393 ft

No assays beyond 1531 ft. Waste boundary not defined by assaying. DHB30 1313.2 1535.4 222.2 4.9 Includes 75.9 ft at 9.5% B2O3 from 1394.6 ft

Includes 159.8 ft at 5.0% B2O3 from DHB5 1278.5 1730 451.5 3.6 1318.2 ft

Includes 66.1 ft at 4.0% B2O3 from DHB6 1145.1 1423.8 278.7 2.2 1292.9 ft

Includes 118.8 ft at 6.8% B2O3 from DHB7 1077.7 1735 657.3 2.3 1311 ft

Includes 156.9 ft at 5.0% B2O3 from DHB8 1370.3 1769.3 399 4.1 1422.4 ft

60 May 2017

Final Report Independent Geologist’s Report | Appendix D

Appendix D: Drill hole location map

Fort Cady Borate and Lithium Project 61

American Pacific Borate and Lithium Ltd | Appendix D Final Report

62 May 2017

Final Report Independent Geologist’s Report | Appendix E

Appendix E: Photos from site visit

Fort Cady Borate and Lithium Project 63

Final Report Independent Geologist’s Report | Appendix E

Fort Cady Project Pilot Plant

Evaporite ponds – Fort Cady Project

Fort Cady Borate and Lithium Project 64 Final Report Independent Geologist’s Report | Appendix E

Synthetic colemanite (CadyCal 100) produced by previous owners and still present at the Fort Cady Project

Production drill holes P1 to P4 at the Fort Cady Project site

Fort Cady Borate and Lithium Project 65

Final Report Independent Geologist’s Report | Appendix E

Historic collars for exploration drilling without drillhole identification

Hard copy evidence of downhole drillhole survey and geophysical logs sighted by Xstract

Fort Cady Borate and Lithium Project 66 Final Report Independent Geologist’s Report | Appendix E

Original assay printouts for drillhole DBH3 from Duval’s laboratory

Fort Cady Borate and Lithium Project 67

8. INVESTIGATING ACCOUNTANT’S REPORT

4467-01/1715392_1 123

RSM Corporate Australia Pty Ltd 8 St Georges Terrace Perth WA 6000 GPO Box R 1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9199

29 May 2017 www.rsm.com.au

The Directors American Pacific Borate and Lithium Limited Level 24, Allendale Square 77 St Georges Terrace Perth WA 6000

Dear Directors

Independent Limited Assurance Report (“Report”) on American Pacific Borate and Lithium Limited Historical and Pro Forma Historical Financial Information

Introduction We have been engaged by American Pacific Borate and Lithium Limited (“APBL” or the “Company”) to report on the historical financial information of APBL for the period from incorporation until 31 December 2016 and pro forma financial information of the Company as at 31 December 2016 for inclusion in the prospectus (“Prospectus”) of APBL dated on or about 29 May 2017 in connection with APBL’s proposed initial public offering and listing on the Australian Securities Exchange (“ASX”), pursuant to which the Company is offering 60,000,000 ordinary APBL shares at an issue price of $0.20 per share to raise $12.0 million before costs (the “Offer”). Oversubscriptions of up to 15,000,000 shares may be accepted (to raise an additional $3.0 million before costs).

Expressions and terms defined in the Prospectus have the same meaning in this Report.

The future prospects of the Company, other than the preparation of Pro Forma Historical Financial Information, assuming completion of the transactions summarised in Note 1 of the Appendix of this Report, are not addressed in this Report. This Report also does not address the rights attaching to the shares to be issued pursuant to this Prospectus, nor the risks associated with an investment in shares in the Company.

Background APBL is a public company which was incorporated in Western Australia on 28 October 2016. In May 2017, APBL completed the acquisition (“Acquisition”) of Fort Cady California Corporation (“FCCC”) which has been operating in its current form since 9 March 1990. As a result of the Acquisition, FCCC is now a wholly owned subsidiary of the Company following the Acquisition.

The Company is an exploration company focused on exploring the Fort Cady borate-lithium project in California, United States.

The Company is seeking to raise funds in order to continue exploration of the Fort Cady borate-lithium project.

Scope

Historical financial information You have requested RSM Corporate Australia Pty Ltd (“RSM”) to review the following historical financial information of the Company included in the Prospectus at the Appendix to this Report:

 The consolidated statements of financial performance of the Company for the period from incorporation until 31 December 2016;

 The consolidated statements of financial performance of the FCCC for the three years ended 31 December 2016;

 The consolidated statements of cash flows of the Company for the period from incorporation until 31 December 2016;

 The consolidated statements of cash flows of the FCCC entities for the three years ended 31 December 2016; and

 The notionally consolidated statement of financial position of the Company and its controlled entities as at 31 December 2016.

(together the “Historical Financial Information” attached at the Appendix A to this Report for reference).

The Historical Financial Information has been prepared in accordance with the stated basis of preparation, being the recognition and measurement principles of the International Financial Reporting Standards and the Company’s adopted accounting policies.

The Historical Financial Information represents that of the Company and FCCC and has been extracted from:

 The financial statements of the Company for the period from incorporation until 31 December 2016, which were audited by RSM Australia Partners in accordance with International Auditing Standards. The audit report issued for the period ended 31 December 2016 was an unqualified opinion; and

 The financial statements of FCCC for the three years ended 31 December 2016, which were audited by RSM Australia Partners in accordance with International Auditing Standards. The audit reports issued for the three years ended 31 December 2016 were unqualified opinions.

The Historical Financial Information is presented in the Prospectus in an abbreviated form, insofar as it does not include all of the presentation and disclosures required by International Financial Reporting Standards and other mandatory professional reporting requirements applicable to general purpose financial reports prepared in accordance with the Corporations Act 2001.

Pro forma historical financial information You have requested RSM to review the pro forma historical consolidated statement of financial position as at 31 December 2016, referred to as “the Pro Forma Historical Financial Information”.

The Pro Forma Historical Financial Information has been derived from the Historical Financial Information of the Company after adjusting for the effects of the subsequent events and pro forma adjustments described in Note 1 of the Appendix to this Report. The stated basis of preparation is the recognition and measurement principles of the International Financial Reporting Standards applied to the Historical Financial Information and the events or transactions to which the subsequent events and pro forma adjustments relate, as described in Note 1 of the Appendix to this Report, as if those events or transactions had occurred as at the date of the Historical Financial Information. Due to its nature, the Pro Forma Historical Financial Information does not represent the Company’s actual or prospective financial position or statement of financial performance.

2

Directors’ responsibility The Directors of the Company are responsible for the preparation of the Historical Financial Information and Pro Forma Historical Financial Information, including the selection and determination of pro forma adjustments made to the Historical Financial Information and included in the Pro Forma Historical Financial Information. This includes responsibility for such internal controls as the Directors determine are necessary to enable the preparation of Historical Financial Information and Pro Forma Historical Financial Information that are free from material misstatement, whether due to fraud or error.

Our responsibility Our responsibility is to express a limited assurance conclusion on the Historical Financial Information and Pro Forma Historical Financial Information based on the procedures performed and the evidence we have obtained. We have conducted our engagement in accordance with the Standard on Assurance Engagement ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information.

A review consists of making such enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. Our procedures included:

 A consistency check of the application of the stated basis of preparation, to the Historical and Pro Forma Historical Financial Information;

 A review of the Company’s and its auditors’ work papers, accounting records and other documents;

 Enquiry of directors, management personnel and advisors;

 Consideration of subsequent events and pro forma adjustments described in Note 1 of the Appendix to this Report; and

 Performance of analytical procedures applied to the Pro Forma Historical Financial Information.

A review is substantially less in scope than an audit conducted in accordance with International Auditing Standards and consequently does not enable us to obtain reasonable assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusions Historical Financial Information Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the Historical Financial Information, as described in the Appendix to this Report, and comprising:

 The consolidated statements of financial performance of the Company for the period from incorporation until 31 December 2016;

 The consolidated statements of financial performance of the FCCC for the three years ended 31 December 2016;

 The consolidated statements of cash flows of the Company for the period from incorporation until 31 December 2016;

 The consolidated statements of cash flows of the FCCC entities for the three years ended 31 December 2016; and

 The notionally consolidated statement of financial position of the Company and its controlled entities as at 31 December 2016. are not presented fairly, in all material respects, in accordance with the stated basis of preparation, as described in Note 2 of the Appendix to this Report.

3

Pro Forma Historical Financial Information Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the Pro Forma Historical Financial Information, as described in the Appendix to this Report, and comprising the consolidated statements of financial position as at 31 December 2016 of the Company and its controlled entities are not presented fairly in all material respects, in accordance with the stated basis of preparation, as described in Note 1 of the Appendix of this Report.

Restriction on Use Without modifying our conclusions, we draw attention to the purpose of the financial information, being for inclusion in the Prospectus. As a result, the financial information may not be suitable for use for another purpose.

Responsibility RSM has consented to the inclusion of this assurance report in the Prospectus in the form and context in which it is included. RSM has not authorised the issue of the Prospectus. Accordingly, RSM makes no representation regarding, and takes no responsibility for, any other documents or material in, or omissions from, the Prospectus.

Disclosure of Interest RSM does not have any pecuniary interest that could reasonably be regarded as being capable of affecting its ability to give an unbiased conclusion in this matter. RSM will receive a professional fee for the preparation of this Report.

Yours faithfully

A J GILMOUR Director

4

AMERICAN PACIFIC BORATE AND LITHIUM LIMITED STATEMENT OF FINANCIAL PERFORMANCE FOR THE PERIOD FROM 28 OCTOBER 2016 TO 31 DECEMBER 2016

Period 28-Oct-16 to 31-Dec-16 Audited $

Interest income 196

Bank and finance charges (59) Directors and consultants’ fees (26,000) Travel expenses (17,081) Share based payment expense (27,744) General expenses (1,122)

Loss before income tax (71,810)

Income tax expense -

Loss after income tax (71,810)

Other comprehensive income - Total comprehensive loss attributable to

Investors should note that past results are not a guarantee of future performance.

5

FORT CADY CALIFORNIA CORPORATION STATEMENT OF FINANCIAL PERFORMANCE FOR THE THREE YEARS ENDED 31 DECEMBER 2016

Year ended Year ended Year ended 31-Dec-16 31-Dec-15 31-Dec-14

Audited Audited Audited

$ $ $

Income Land impairment reversal 25,529 37,215 -

Expenses Property and other taxes (3,557) (3,729) (2,932) Audit fees (4,031) - - Mineral exploration expenditure (132,436) (118,842) (97,490) Total expenses (140,024) (122,571) (100,422)

Loss before income tax expense (114,495) (85,356) (100,422)

Income tax expense - - -

Loss after income tax expense (114,495) (85,356) (100,422)

Total comprehensive loss for the year (114,495) (85,356) (100,422)

Investors should note that past results are not a guarantee of future performance.

The statement of financial performance of FCCC has been converted from USD to AUD at the average exchange rate for the relevant years.

6

AMERICAN PACIFIC BORATE AND LITHIUM LIMITED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM 28 OCTOBER 2016 TO 31 DECEMBER 2016

Period 28-Oct-16 to 31-Dec-16 Audited $

Cash Flows from Operating Activities Payments to suppliers and employees (9,167) Interest received 196 Net cash (used in) operating activities (8,971)

Cash Flows from Investing Activities Payment for exploration expenditure (398,708) Net cash (used in) investing activities (398,708)

Cash Flows from Financing Activities Proceeds from issue of shares 1,200,002 Net cash provided by financing activities 1,200,002

Net increase in cash held 792,320

Cash and cash equivalents at the beginning of the financial period -

Cash and cash equivalents at the end of the financial period 792,320

Investors should note that past results are not a guarantee of future performance.

7

FORT CADY CALIFORNIA CORPORATION STATEMENT OF CASH FLOWS FOR THE THREE YEARS ENDED 31 DECEMBER 2016

Year ended Year ended Year ended 31-Dec-16 31-Dec-15 31-Dec-14

Audited Audited Audited

$ $ $

Cash flows from operating activities

Payments to suppliers and employee - - -

Net cash flows used in operating activities - - -

Cash flows from investment activities

Net cash used in Investing activities - - -

Cash flows from financing activities

Net cash from financing activities - - -

Net increase/ (decrease) in cash and cash equivalents - - -

Cash at the beginning of the financial year - - - Cash at the end of the financial year - - -

Investors should note that past results are not a guarantee of future performance.

8

AMERICAN PACIFIC BORATE AND LITHIUM LIMITED CONSOLIDATED PRO FORMA STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016

Subsequent Pro forma APBL FCCC events adjustments Pro forma Audited Audited Unaudited Unaudited Unaudited Note 31-Dec-16 31-Dec-16 31-Dec-16 31-Dec-16 31-Dec-16 $ $ $ $ $ Assets

Current assets

Cash and cash equivalents 3 792,320 - 39,573 10,905,328 11,737,221

Trade and other receivables 812 - - - 812

Total current assets 793,132 - 39,573 10,905,328 11,738,033

Non-current assets

Property, plant & equipment 4 - 686,844 - - 686,844 Exploration and evaluation expenditure 557,064 - - - 557,064 Other non-current assets 5 - - - 138,122 138,122

Total non-current assets 557,064 686,844 - 138,122 1,382,030

Total assets 1,350,196 686,844 39,573 11,043,450 13,120,063

Liabilities

Current liabilities

Trade and other payables 6 196,737 541,215 (400,427) - 337,525

Total current liabilities 196,737 541,215 (400,427) - 337,525

Total liabilities 196,737 541,215 (400,427) - 337,525 Net assets 1,153,459 145,629 440,000 11,043,450 12,782,538

Equity

Issued capital 7 1,197,525 1,129,779 (544,150) 11,043,450 12,826,604

Reserves 8 27,744 - 426,500 - 454,244

Accumulated losses 9 (71,810) (984,150) 557,650 - (498,310)

Total equity 1,153,459 145,629 440,000 11,043,450 12,782,538

The unaudited consolidated pro forma statement of financial position represents the audited statement of financial position of the Company and FCCC as at 31 December 2016 adjusted for the subsequent events and pro forma transactions outlined in Note 1 of this Appendix. It should be read in conjunction with the notes to the historical and pro forma financial information.

The statement of financial position of FCCC as at 31 December 2016 has been converted from USD to AUD at a rate of 1AUD:0.724USD.

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1. Introduction

The financial information set out in this Appendix consists of the Historical Financial Information together the Pro Forma Historical Financial Information.

The Pro Forma Historical Financial Information has been compiled by adjusting the consolidated statements of financial position of the Company, reflecting the Directors’ pro forma adjustments, for the impact of the following subsequent events and pro forma adjustments.

Adjustments adopted in compiling the Pro Forma Historical Financial Information

The Pro Forma Historical Consolidated Information has been prepared by adjusting the Historical Financial Information to reflect the financial effects of the following subsequent events which have occurred in the period since 31 December 2016 and the date of this Report:

(i) The issue of 1,000,000 ordinary APBL shares at $0.12 each to raise $120,000, on 21 April 2017; (ii) The Acquisition of FCCC by the Company being completed whereby the Company acquires FCCC in a common control transaction through the issue of 80,000,000 ordinary shares (“Consideration Shares”) in the Company to Fort Cady Minerals Corporation in accordance with the Acquisition Agreement and 1,600,000 shares were issued to a third party, Dundee Corporation (“Dundee Shares”) with a payment of $400,427 (US$300,000) in order to lift an encumbrance over some of the property held by FCCC; (iii) On 21 April 2017, the Company issued 2,500,000 options exercisable at $0.20 each (“$0.20 Options”) and 1,000,000 options exercisable at $0.30 each (“$0.30 Options”) to directors and consultants. All Options are exercisable on or before 30 November 2021; (iv) On 2 May 2017, the Company issued 2,000,000 $0.20 Options to directors; (v) The issue of 2,000,000 ordinary APBL shares at $0.16 each to raise $320,000, on 22 May 2017; (vi) On 26 May 2017, the Company issued 2,000,000 options to directors and advisors (“Incentive Options”), exercisable at $0.30 each on or before 31 May 2022. The options will vest in two tranches, with 50% vesting on the date which is 15 months after 1 June 2017 and 50% vesting on the date which is 30 months after 1 June 2017; and (vii) On 1 June 2017, the Company will issue 4,000,000 Incentive Options to the incoming Managing Director, Mr Michael Schlumpberger; and the following pro forma transactions which are yet to occur, but are proposed to occur immediately before or following completion of the Offer:

(viii) The issue of 60,000,000 ordinary APBL shares at $0.20 each to raise $12,000,000 before costs pursuant to the Offer; (ix) The payment of cash costs related to the Offer estimated to be $956,550; and (x) The payment of a US$100,000 (A$138,122) bond to Lahontan Regional Water Quality Board in California to guarantee ground water protection.

The Pro Forma Historical Financial Information has been presented in abbreviated form and does not contain all the disclosures usually provided in an Annual Report prepared in accordance with the Corporations Act 2001.

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2. Statement of significant accounting policies

(a) Basis of preparation The Historical Financial Information has been prepared in accordance with the recognition and measurement requirements of the International Financial Reporting Standards (“IFRS”), adopted by the International Accounting Standards Board and the Corporations Act 2001.

The Company was incorporated on 28 October 2016 and has not undertaken any trading activities up until it acquired FCCC on 2 May 2017.

The Pro Forma Financial Information presented in the Prospectus has been notionally consolidated as at 31 December 2016 to reflect the Company's acquisition of FCCC that occurred post 31 December 2016 (together, FCCC and APBL are referred to as the “APBL Group”). The acquisition of FCCC has not resulted in a substantive change to the operations of the APBL Group or its assets and liabilities.

This acquisition of FCCC is considered an asset acquisition with FCCC being considered the accounting acquirer and the transaction accounted for at book value rather than fair value.

The significant accounting policies that have been adopted in the preparation and presentation of the historical and the Pro forma Historical Financial Information are:

(b) Basis of measurement The historical and pro forma financial information has been prepared on the historical cost basis except for financial instruments classified at fair value through profit or loss, which are measured at fair value.

(c) Functional and presentation currency These historical and pro forma financial information has been presented in Australian dollars which is the Group’s functional currency.

(d) Principles of consolidation The historical and pro forma financial information incorporates the assets, liabilities and results of entities controlled by the Company at the end of the pro forma reporting period. A controlled entity is any entity over which the Company has the ability and right to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered.

Where controlled entities have entered or left the consolidated entity during the year, the financial performance of those entities is included only for the period of the year that they were controlled.

In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the consolidated entity have been eliminated in full on consolidation. Accounting policies of subsidiaries have been charged where necessary to ensure consistency with those adopted by the parent entity.

(e) Use of estimates and judgements The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

(f) Going concern The historical and pro forma financial information has been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.

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(g) Revenue recognition Revenue is recognised when it is probable that the economic benefit will flow to the company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other revenue Other revenue is recognised when it is received or when the right to receive payment is established.

(h) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(i) Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment

(j) Plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a diminishing value basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Plant and equipment 5 years Office Equipment 3 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the company. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

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(k) Exploration, evaluation and development expenditure Exploration and evaluation are written off as incurred. The group’s policy is that such costs will only be carried forward when development of the area indicates that recoupment will occur or where activities in the area have reached an advanced stage which permits reasonable assessment of the existence of economically recoverable reserves.

Exploration, evaluation and development costs comprise acquisition costs, direct exploration and evaluation costs and an appropriate portion of related overhead expenditure but do not include general overhead expenditure which has no direct connection with a particular area of interest.

Revenue received from the sale or disposal of product, materials or services during the exploration and evaluation phase of operation is offset against expenditure in respect of the area of interest concerned.

When an area of interest is abandoned or the Directors decide that it is not commercially viable, any accumulated costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future. Restoration costs arising from exploration activities are provided for at the time of the activities which give rise to the need for restoration.

Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. When production commences, carried forward exploration, evaluation and development costs are amortised on a units of production basis over the life of the economically recoverable reserves. (l) Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

(m) Share-based payment transactions The Company provides benefits to employees and other parties in the form of share based payments, whereby the employees and parties provide services in exchange for shares and other securities in the Company. The cost of the equity settled share based payment transactions is determined by reference to the fair value of the equity instruments granted. The fair value of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance/ and or service conditions are fulfilled (“vesting period”). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects: (i) The grant date fair value; (ii) The extent to which the vesting period has expired; and (iii) The number of equity instruments that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at reporting date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for equity instruments that do not ultimately vest, except for equity instruments where vesting is conditional upon a market condition. (n) Goods and services Tax Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. 3. Cash and cash equivalents

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Unaudited Note Audited Pro-forma 31-Dec-16 31-Dec-16 $ $

Cash and cash equivalents 792,320 11,737,221

APBL cash and cash equivalents as at 31 December 2016 792,320

Subsequent events are summarised as follows:

Seed capital raising through the issue of 1,000,000 shares issued at $0.12 per share 1(i) 120,000 Payment to Dundee Corporation 1(ii) (400,427) Seed capital raising through the issue of 2,000,000 shares issued at $0.16 per share 1(v) 320,000 39,573 Adjustments arising in the preparation of the pro forma statement of financial position are summarised as follows:

Proceeds from the Offer pursuant to the Prospectus 1(viii) 12,000,000 Capital raising costs 1(ix) (956,550) Payment of bond 1(x) (138,122) 10,905,328

Pro-forma cash and cash equivalents 11,737,221

The Prospectus has provision for subscriptions of between 60,000,000 and 75,000,000 shares to raise between $12 million and $15 million (before capital raising costs) wherein the pro forma statement of financial position assumes the minimum $12 million is raised. Should the maximum $15 million be raised, the share issue cash costs would increase to $1,139,550 and the cash at bank balance would increase by $2,817,000 to $14,554,221.

4. Property, plant and equipment Unaudited Note Audited Pro-forma 31-Dec-16 31-Dec-16 $ $

Property, plant and equipment 686,844

APBL Property, plant and equipment as at 31 December 2016

Subsequent events are summarised as follows:

FCCC property, plant and equipment as at 31 December 2016 1(ii) 686,844

Pro-forma property, plant and equipment 686,844

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5. Other non-current assets Unaudited Note Audited Pro-forma 31-Dec-16 31-Dec-16 $ $

Other non-current assets - 138,122

APBL other non-current assets as at 31 December 2016 -

Subsequent events are summarised as follows:

Payment of bond 1(x) 138,122

Pro-forma other non-current assets 138,122

6. Trade and other payables Unaudited Note Audited Pro-forma 31-Dec-16 31-Dec-16 $ $

Trade and other payables 196,737 337,525

APBL payables as at 31 December 2016 196,737

Subsequent events are summarised as follows:

FCCC payables as at 31 December 2016 1(ii) 541,215 Payment of amounts payable to Dundee Corporation 1(ii) (400,427) 140,788

Pro-forma trade and other payables 337,525

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7. Issued capital Number of Note shares $

APBL issued share capital as at 31 December 2016 10,000,002 1,197,525

Subsequent events are summarised as follows:

Seed capital raising through the issue of 1,000,000 shares issued at $0.12 per share 1(i) 1,000,000 120,000 Issue of the Consideration Shares and the Dundee Shares 1(ii) 81,600,000 145,629 Seed capital raising through the issue of 2,000,000 shares issued at $0.16 per share 1(v) 2,000,000 320,000 84,600,000 585,629

Adjustments arising in the preparation of the pro forma statement of financial position are summarised as follows:

Fully paid ordinary shares issued at $0.20 pursuant to this Prospectus 1(viii) 60,000,000 12,000,000 Cash costs associated with the share issue pursuant to this Prospectus 1(ix) - (956,550) 60,000,000 11,043,450

Pro-forma issued share capital 154,600,002 12,826,604

The Prospectus has provision for subscriptions of between 60,000,000 and 75,000,000 shares to raise between $12 million and $15 million (before capital raising costs) wherein the pro forma statement of financial position assumes the minimum $12 million is raised. Should the maximum $15 million be raised, the share issue cash costs would increase to $1,139,550 and the issued capital would increase by $2,817,000 to $15,643,604 and the number of shares would increase to 169,600,002.

8. Reserves Unaudited Note Audited Pro-forma 31-Dec-16 31-Dec-16 $ $

Reserves 27,744 454,244

APBL reserves as at 31 December 2016 27,744

Adjustments arising in the preparation of the pro forma statement of financial position are summarised as follows:

Cost of $0.20 Options and $0.30 Options issued to directors and consultants for services provided. 1(iii), 1(iv) 426,500

Pro-forma reserves 454,244

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8. Reserves (cont.)

(a) Options The Company issued 2,500,000 $0.20 Options and 1,000,000 $0.30 Options on 21 April 2017 and 2,000,000 $0.20 Options on 2 May 2017. The pro forma fair value of the $0.20 Options and $0.30 Options is $0.36 million and $0.07 million respectively and the cost of the Options has been recognised at the respective grant dates. The Company issued 2,000,000 Incentive Options on 26 May 2017 and will issue a further 4,000,000 Incentive Options on 1 June 2017. The pro forma fair value of the Incentive Options is $0.45 million and will be recognised over the relevant vesting periods. All options have been valued using a standard binomial pricing model based on the fair value of a Company share at the grant date, using the following assumptions:

Assumptions $0.20 Options $0.30 Options Incentive Options Stock price $ 0.12 $ 0.12 $ 0.12 Exercise price $ 0.20 $ 0.30 $ 0.30 Expiry period 4.6 years 4.6 years 5.0 years Expected future volatility 100% 100% 100% Risk free rate 1.9% 1.9% 1.9% Dividend yield 0% 0% 0%

The terms and conditions for each set of Options are set out in Section 13 of the Prospectus.

9. Accumulated losses Unaudited Note Audited Pro-forma 31-Dec-16 31-Dec-16 $ $

Accumulated losses (71,810) (498,310)

APBL accumulated losses as at 31 December 2016 (71,810)

Adjustments arising in the preparation of the pro forma statement of financial position are summarised as follows:

Cost of $0.20 Options and $0.30 Options issued to directors and consultants for services provided. 1(iii), 1(iv) (426,500)

Pro-forma accumulated losses (498,310)

10. Related party disclosure

Following completion of the Offer and Restructure, the Directors of APBL will be Harold Shipes, Michael Schlumpberger, Anthony Hall, John McKinney and Stephen Hunt. Directors’ holdings of shares, directors’ remuneration and other directors’ interests are set out in Section 10 of the Prospectus. 11. Commitments and contingent liabilities

The company has no commitments and no contingent liabilities as at 31 December 2016.

17

12. Controlled entities

Consolidated Entities Country of Incorporation Pro forma interest held

American Pacific Borate and Lithium Limited Australia Parent Fort Cady California Corporation USA 100% Fort Cady Holdings Pty Ltd Australia 100%

18

9. LAND OWNERSHIP REPORT

The Company has commissioned and received a Land Ownership Report entitled “Land Use Ownership and Entitlement Review” from Lilburn Corporation, Inc (Land Ownership Report).

The Company lodged a copy of the Land Ownership Report with the ASIC on 30 May 2017. The lodged Land Ownership Report is taken to be included in this Prospectus by operation of section 712 of the Corporations Act. The Company will give a copy of the Land Ownership Report to any person who requests a copy of it during the offer period, free of charge.

The Land Ownership Report is a review of publicly available information obtained from searches of the United States Government Department of Interior, Bureau of Land Management; San Bernardino Land Use Services Department; California Department of Conservation, Division of Mine Reclamation; California Regional Water Quality Control Board, Lahontan Region and the Mojave Desert Air Quality Management District.

The Land Ownership Report contains summaries of the permit and land ownership regime affecting the Project. In particular, it identifies that its land ownership gives it the legal right to undertake its intended expenditure as set out in the use of funds table in Section 3.4.

9.1 Land Ownership

The Project covers an area of 6,500 acres and the Company has rights to Land Titles comprising an area of 4,409 acres adjacent to and within the Project Area, through various forms of land titles as set out in the table below:

FCCC Patented Patented Unpatented Elementis Lease Total (no mineral Claims (Unpatented Holdings rights)3 (Active) Claims)

Existing Holdings 240 269 2,380 1,520 4,409 (acres)

Other Potential Land Holdings

SCE Lands1 616.7 (potential future (464.2 minus lease) powerline ROW)

Planned 100 Freshwater Well Mill Sites2

Notes:

1. Southern California Edison owns approximately 616.7 acres in Sections 25 and 30, T8N, R5E that encompass a portion of the outlined ore body. Ft. Cady leased this area from SCE in the 1990s but the lease has since lapsed. 2. The approved 1993 mine plan shows seven (7) freshwater well sites scattered up to five miles to the west. Two sites are existing wells on one active claim owned by FCCC (HEC 184) and on another claim site assumed to be recorded by FCCC under active HEC 182 lode claim. The 1993 FEIS/EIR described the well sites as being on mill claims with pipelines located on right-of-ways (ROWs). Assuming five (5) well sites on 20- acre mill sites to be

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located in future as needed. Note that the wells can also be located on the ROWs obtained from the BLM without mill site claims.

3. Mineral rights are reserved by the State of California through the State Lands Commission. The Commission may lease State lands (or mineral rights) for mineral prospecting permit and/or a mineral extraction lease through an application process. The Commission and the lessee would negotiate the terms and royalties of said lease. FCCC was granted the first rights of refusal to the mineral rights of this permit under the “Approve Assignment of Preferential Right Under State Mineral Prospecting Permit PRC 5906 San Bernardino County” by the State Land Commission on 17 December 1992. The Company has applied for these mineral rights and will make appropriate disclosure once the rights to these mineral rights are received however we have been advised that exclusivity is granted upon application.

Elementis is the holder of Unpatented Placer and Lode Mining Claims over a large portion of the land upon which the Project is located.

The remainder of the relevant holdings in the Project area are held through Unpatented Placer Mining Claims located by FCCC, Patented Property with surface and mineral rights held in Fee Simple Title owned by FCCC and Patented Property with surface rights in Fee Simple Title (FCCC) and mineral rights owned by the State of California filed with San Bernardino County. See Figure 2 for further information.

The Land Titles, the land title types and the rights are also set out in the table below:

Land Title Type Land Titles Rights Patented Property with surface Parcels 0529-251- Owner holds the highest form of and mineral rights in Fee Simple 01; 0529-251-03 title with exclusive rights to any Title owned by FCCC surface use and mineral extraction

Patented Property with surface in Parcel 0529-251-04 Owner holds the highest form of Fee Simple Title owned by FCCC; surface title with exclusive rights Mineral rights owned by State of to any surface use. Exclusive California right to mine grant available only to Owner under State Mining Lease. Unpatented Placer Mining Claims Company 1 held under Lease to FCCC (from Group; Company Elementis) 4; Litigation 1 Group; Litigation 2; Litigation 3; Litigation 4 Group; Litigation 5 Group; Exclusive right for exploration, Litigation 6; development and production Litigation 11; of borate and lithium minerals Geyser View 1 and related surface use and Unpatented Lode Mining Claims HEC #124 - #127; mining privilege (ingress / held under Lease to FCCC (from HEC #129; HEC egress) Elementis) #131; HEC #343; HEC #344; HEC #365; HEC #369; HEC #371; HEC #372; HEC #374 - #376

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Unpatented Placer Mining Claims HEC #19; HEC #21; Exclusive right for exploration, Located by FCCC (Mineral Claim HEC# 23; HEC#25; development and production with U.S. BLM) HEC #34 - #41; of any mineral and related HEC #43 - #67; surface use and mining HEC #70 - #82; privilege (ingress / egress) HEC #85 - #93; HEC #182; HEC #184; HEC #288; HEC #290; HEC #292; HEC #294; HEC #296 - #297; HEC #299 - #350

9.2 Permitting Status

(a) There are 4 primary permits required to operate the Project, being:

(i) Plan of Operations;

(ii) Mine and Reclamation Plan;

(iii) Water Discharge Permit; and

(iv) Air Quality Permit,

(Permits).

(b) In relation to these Permits,

(i) Plan of Operations: The authorised Plan of Operations is valid until cancelled or proven to be in non-compliance and financial assurances to insure reclamation at closure are included with County certificate of deposits. This permit is readily transferrable to a new operator/owner;

(ii) Mine and Reclamation Plan: this has been approved certified by the County Planning Commission on 23 June 1994 with an expiration date of April 2024.

The permit holder is required to submit an annual report and financial cost assurance estimate update and fund financial assurance costs for reclamation.

This permit:

(A) is readily transferrable to a new operator/owner and extendable for an additional period of time with an updated plan based on the available resource that exists onsite; and

(B) grants approval for a mine development on approximately 343 acres with 90,000 st per annum boric acid capacity, including a 273 acre well field, process water supply network, 10-acre processing facility with 43.5 acres of ancillary facilities including a natural gas pipeline, cogeneration facility, bi-product gypsum storage facility and railroad spur.

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The reclamation requirements and projected costs are reviewed annually and $US294,426 in cash bonds are currently in place as security for reclamation.

(iii) Water Discharge Permit: this has been approved (and is in compliance) for a pilot plant with water testing and monitoring wells currently in place, actively monitored and reported quarterly.

The permit required for full scale production (90,000 st per annum) operations was rescinded at the owner’s request in 2009 and a new waste discharge permit application detailing proposed commercial operations and how the project will protect water resources at the site will be required and the application procedure involves a two stage process. The anticipated timeframe for approval is contingent upon development of an updated operating plan and plant design, however optimistically it is hoped that receipt will occur within 1 year.

The fact that this permit has been rescinded has no effect on the Company’s current operations, because as mentioned elsewhere in this Prospectus, the Company is not yet at a stage to commence operations.

(iv) Air quality permit: this provides the authority to construct and permit to operate stationery sources of air pollutant emissions.

The permit required for full scale production (90,000 st per annum) operations was rescinded at the owner’s request in 2008. A new application will be required with details on updated equipment and pollutant controls with calculated air emissions that meet current regulations will be required. It is expected that these permits could be received within eight months of submitting a complete application to the District. Public notice is required but hearings are not expected for the anticipated level of air emissions.

Air quality permits are related to assuring best management practices to control air pollution emissions to meet established standards.

The fact that this permit has been rescinded has no effect on the Company’s current operations, because as mentioned elsewhere in this Prospectus, the Company is not yet at a stage to commence operations.

The information provided in the Land Ownership Report is subject to specified assumptions and qualifications as to the accuracy and completeness of information relating to the Land Titles obtained during searches of records.

Investors and their advisers who wish to review detailed information about the Land Titles may obtain a copy of the Land Ownership Report by contacting the Company.

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10. BOARD, MANAGEMENT AND INTERESTS

10.1 Directors and key personnel

The Board of the Company consists of:

(a) Harold (Roy) Shipes – Non-Executive Chairman – Refer to Section 4.9 of this Prospectus for Mr Shipes’ biography;

(b) Michael Schlumpberger – Managing Director and Chief Executive Officer – Refer to Section 4.9 of this Prospectus for Mr Schlumpberger’s biography;

(c) Anthony Hall – Executive Director – Refer to Section 4.9 of this Prospectus for Mr Hall’s biography; and

(d) Stephen Hunt – Non-Executive Director – Refer to Section 4.9 of this Prospectus for Mr Hunt’s biography.

(e) John McKinney – Non-Executive Director – Refer to Section 4.9 of this Prospectus for Mr McKinney’s biography.

Other senior management positions held by the Company are Dr Rutherford appointed as the Head of Strategy and Corporate Development and Mr Bertolatti as the Company Secretary.

Biographies for Dr Rutherford and Mr Bertolatti are contained in Section 4.10.

The Company is aware of the need to have sufficient management to properly supervise the expenditure and development of the Project in which the Company has, or will in the future have, an interest and the Board will continually monitor the management roles in the Company. Should the Project require an increased level of involvement the Board will look to appoint additional management and/or consultants when and where appropriate to ensure proper management of the Company’s Project.

10.2 Disclosure of Interests

The Company has paid no remuneration to its Board in their capacities as directors since incorporation to the date of this Prospectus and no remuneration will be paid or accrue until such time as the Company is admitted to the Official List.

For each of the Directors, the proposed annual remuneration for the financial year following the Company being admitted to the Official List together with the relevant interest of each of the Directors in the securities of the Company as at the date of this Prospectus is set out in the table below.

Director Remuneration Shares Options Harold (Roy) Shipes $60,000 49,220,0001 1,000,0003 Michael Schlumpberger US$189,000 250,000 4,000,0006 Anthony Hall $120,000 5,020,0014 2,500,0002,3 Stephen Hunt $36,000 100,000 500,0003 John McKinney $36,000 Nil5 500,0003

Notes: 1. Held through Atlas, an entity controlled by Mr Shipes.

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2. Held indirectly through JAWAF Enterprises Pty Ltd . 3. 1,500,000 Options are exercisable at $0.20 on or before 30 November 2021 and 1,000,000 Options are exercisable at $0.30 on or before 31 May 2022. Terms and conditions of the Options including the vesting conditions are outlined in sections 13.3 and 13.5. 4. Comprised of 1 Share issued at incorporation and 5,020,000 Shares held indirectly through JAWAF Enterprises Pty Ltd . 5. Although Mr McKinney has a minority shareholding in Atlas, he is not in a position to control Atlas. 6. Exercisable at $0.30 on or before 31 May 2022. Terms and Conditions of the Managing Director Options including the vesting conditions are outlined in Section 13.6. 10.3 Agreements with Directors and Related Parties

(a) The Company’s policy in respect of related party arrangements is:

(i) a Director with a material personal interest in a matter is required to give notice to the other Directors before such a matter is considered by the Board;

(ii) a Director may be present and may vote on a matter before the Board if and to the extent that they are permitted to do so under the Corporations Act; and

(iii) If there are not enough Directors to form a quorum as a result of a Director having an interest which disqualifies them from voting then one or more of the Directors (including those who have the disqualifying interest in the matter) may call a general meeting of the Company and the general meeting may pass a resolution to deal with the matter.

(b) Certain entities associated with two Directors (and a former director) received consideration for the Acquisition. These interests are summarised below:

(i) Atlas, being an entity controlled by Mr Shipes, a Director, received 49,220,000 Shares. Mr Shipes only became a Director as a result of the Acquisition.

(ii) An entity associated with Mr Hall, a Director, received 4,720,000 Shares.

(iii) An entity associated with Mr Robert Wrixon, a former director, received 4,000,000 Shares.

The terms for the Acquisition were negotiated and agreed on an arms’ length basis.

10.4 Agreements with Management

The Company has entered into an employment agreement with Mr Schlumpberger to provide services as Managing Director and Chief Executive Officer. The agreement is summarised in Section 12.6.

The Company has entered into an Executive Services Agreement with Mr Hall to provide services as an Executive Director to the Company. The agreement between the Company and Mr Hall is summarised in Section 12.7.

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10.5 Deeds of indemnity, insurance and access

The Company will enter into a deed of indemnity, insurance and access with each of its Directors. Under these deeds, the Company will agree to indemnify each officer to the extent permitted by the Corporations Act against any liability arising as a result of the officer acting as an officer of the Company. The Company will also be required to maintain insurance policies for the benefit of the relevant officer and allow the officers to inspect board papers in certain circumstances.

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11. CORPORATE GOVERNANCE

11.1 ASX Corporate Governance Council Principles and Recommendations

The Company has adopted comprehensive systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs.

To the extent applicable, the Company has adopted The Corporate Governance Principles and Recommendations (3rd Edition) as published by ASX Corporate Governance Council (Recommendations).

In light of the Company’s size and nature, the Board considers that the current board is a cost effective and practical method of directing and managing the Company. As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance policies and structures will be reviewed.

The Company’s main corporate governance policies and practices as at the date of this Prospectus are outlined below and the Company’s full Corporate Governance Plan is available in a dedicated corporate governance information section of the Company’s website (www.americanpacificborate.com).

11.2 Board of directors

The Board is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The goals of the corporate governance processes are to:

(a) maintain and increase Shareholder value;

(b) ensure a prudential and ethical basis for the Company’s conduct and activities; and

(c) ensure compliance with the Company’s legal and regulatory objectives.

Consistent with these goals, the Board assumes the following responsibilities:

(a) leading and setting the strategic direction and objectives of the Company;

(b) appointing the Chairman of the Board, Managing Director or Chief Executive Officer and approving the appointment of Executives and the Company Secretary;

(c) overseeing the Executive’s implementation of the Company’s strategic objectives and performance generally;

(d) approving operating budgets, major capital expenditure and significant acquisitions and divestitures;

(e) overseeing the integrity of the Company’s accounting and corporate reporting systems, including the external audit (satisfying itself financial statements released to the market fairly and accurately reflect the Company’s financial position and performance);

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(f) overseeing the Company’s procedures and processes for making timely and balanced disclosure of all material information that a reasonable person would expect to have a material effect on the price or value of the Company’s securities;

(g) reviewing, ratifying and monitoring the effectiveness of the Company’s risk management framework, corporate governance policies and systems designed to ensure legal compliance; and

(h) approving the Company’s remuneration framework.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discussions on a fully-informed basis.

11.3 Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meeting. However, subject thereto:

(a) membership of the Board of Directors will be reviewed regularly to ensure the mix of skills and expertise is appropriate; and

(b) the composition of the Board has been structured so as to provide the Company with an adequate mix of directors with industry knowledge, technical, commercial and financial skills together with integrity and judgment considered necessary to represent shareholders and fulfil the business objectives of the Company.

The Board currently consists of four directors of whom none are considered independent. The Board considers the current balance of skills and expertise is appropriate for the Company for its currently planned level of activity.

The Board undertakes appropriate checks before appointing a person as a Director or putting forward to Shareholders a candidate for election as a Director.

The Board ensures that Shareholders are provided with all material information in the Board’s possession relevant to a decision on whether or not to elect or re-elect a Director.

The Company shall develop and implement a formal induction program for Directors which allows new directors to participate fully and actively in Board decision-making at the earliest opportunity, and enable new Directors to gain an understanding of the Company’s policies and procedures.

11.4 Identification and management of risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

11.5 Ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

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11.6 Independent professional advice

Subject to the Chairman’s approval (not to be unreasonably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties.

11.7 Remuneration arrangements

The remuneration of an executive Director will be decided by the Board, without the affected executive Director participating in that decision-making process.

The total maximum remuneration of non-executive Directors is initially set by the Constitution and subsequent variation is by ordinary resolution of Shareholders in general meeting in accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of non-executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each non-executive Director. The current amount has been set at an amount not to exceed $500,000 per annum.

In addition, a Director may be paid fees or other amounts (i.e. subject to any necessary Shareholder approval, non-cash performance incentives such as Options) as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director.

Directors are also entitled to be paid reasonable travelling, hotel and other expenses incurred by them respectively in or about the performance of their duties as Directors.

The Board reviews and approves the remuneration policy to enable the Company to attract and retain executives and Directors who will create value for Shareholders having consideration to the amount considered to be commensurate for a company of its size and level of activity as well as the relevant Directors’ time, commitment and responsibility. The Board is also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed.

11.8 Trading policy

The Board has adopted a policy that sets out the guidelines on the sale and purchase of securities in the Company by its directors, officers, employees and contractors. The policy generally provides that for directors, the written acknowledgement of the Chair (or the Board in the case of the Chairman) must be obtained prior to trading.

11.9 External audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

11.10 Audit committee

The Company will not have a separate audit committee until such time as the Board is of a sufficient size and structure, and the Company’s operations are of a sufficient magnitude for a separate committee to be of benefit to the Company. In the meantime, the full Board will carry out the duties that would ordinarily be assigned to that committee under the written terms of reference for that

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committee, including but not limited to, monitoring and reviewing any matters of significance affecting financial reporting and compliance, the integrity of the financial reporting of the Company, the Company’s internal financial control system and risk management systems and the external audit function.

11.11 Diversity policy

The Board has adopted a diversity policy which provides a framework for the Company to achieve, amongst other things, a diverse and skilled workforce, a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff, improved employment and career development opportunities for women and a work environment that values and utilises the contributions of employees with diverse backgrounds, experiences and perspectives.

11.12 Departures from Recommendations

Following admission to the Official List of ASX, the Company will be required to report any departures from the Recommendations in its annual financial report.

The Company’s compliance and departures from the Recommendations as at the date of this Prospectus will be provided in pre quotation disclosure and are available on the Company’s website at http://americanpacificborate.com/home/#corporate-governance.

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12. MATERIAL CONTRACTS

Set out below is a brief summary of the certain contracts to which the Company is a party and which the Directors have identified as material to the Company or are of such a nature that an investor may wish to have details of particulars of them when making an assessment of whether to apply for Shares.

To fully understand all rights and obligations of a material contract, it would be necessary to review it in full and these summaries should be read in this light.

12.1 Share Purchase Agreement

On 2 May 2017, the Company, Fort Cady Holdings, FCMC, FCCC and Atlas entered into the Share Purchase Agreement, pursuant to which the Company is seeking to acquire the Project.

A summary of the key terms and conditions of the Share Purchase Agreement is set out below:

(a) (Transaction): Pursuant to the Share Purchase Agreement:

(i) FCMC agreed to transfer the necessary permits and FCMC’s other assets that pertain to the Project (FCMC Project Assets), to FCCC (or its nominee), and until such transfer has occurred, FCMC agreed to grant to Fort Cady Holdings, a licence to use the FCMC Project Assets such that Fort Cady Holdings will have all the rights, privileges and entitlements in relation to the FCMC Project Assets as if the transfer of the FCMC Project Assets had occurred;

(ii) FCMC and Atlas agreed to sell, and Fort Cady Holdings agreed to purchase, all of the shares in the capital of FCCC;

(iii) Atlas agreed to grant to Fort Cady Holdings (or its nominee) an option to acquire 100% of the shares in FCMC on the terms specified in the Share Purchase Agreement; and

(iv) all parties to the Share Purchase Agreement and their respective directors and officers will use their best endeavours to assist in the acquisition of any third party permits or land titles that relate to the Project Area (Third Party Permits or Land Titles) on behalf of Fort Cady Holdings as soon as practicable such that once obtained, such Third Party Permits or Land Titles will be in the name of Fort Cady Holdings.

(b) (Conditions Precedent): Completion is conditional upon the satisfaction (or waiver) of the following conditions precedent:

(i) the Parties obtaining all necessary consents and approvals (including shareholders’ and regulatory approvals) necessary to give effect to the transaction and to allow the parties to complete the matters set out in the Share Purchase Agreement;

(ii) there being no breach of any warranties made by FCMC under the Share Purchase Agreement occurring prior to completion under the Share Purchase Agreement; and

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(iii) no event, occurrence or matter, which individually or when aggregated with all such events, occurrences or matters of a similar kind, taking place at any time prior to the completion date of the Share Purchase Agreement which has a material adverse effect.

(c) (Consideration): In consideration for the transaction, 80,000,000 Shares in the capital of the Company were issued. Of these Shares, Atlas, an entity controlled by Mr Shipes, a Director, was issued 49,220,000 Shares, with the remaining 30,780,000 Shares being issued to other parties, including an entity associated with Mr Hall, a Director.

(d) (Perfection of title): If, following completion of the Share Purchase Agreement, any of the rights of FCMC as legal and beneficial owner of the FCMC Project Assets are not legally capable of being transferred to, conferred upon or exercised by Fort Cady Holdings, FCMC shall transfer these rights to be exercised by Fort Cady Holdings in the name of FCMC and FCMC shall hold these rights in trust for Fort Cady Holdings.

(e) (Termination): The Share Purchase Agreement may be terminated by FCMC at any time before completion by serving a second notice in writing on Fort Cady Holdings, if:

(i) Fort Cady Holdings is in breach of any of its warranties under the Share Purchase Agreement; or

(ii) Fort Cady Holdings is in material default of any term of the Share Purchase Agreement,

and the event was not remedied in a period of not less than ten business days following a first notice being provided.

The Share Purchase Agreement may be terminated by Fort Cady Holdings at any time before completion by serving a second notice of FCMC, if:

(i) FCMC is in breach of any of its warranties under the Share Purchase Agreement; or

(ii) FCMC is in material default of any term of the Share Purchase Agreement,

and the event was not remedied in a period of not less than ten business days following a first notice being provided.

12.2 Elementis Mineral Lease Agreement

On 1 October 2011, FCCC entered into a mineral lease agreement with Elementis (Elementis Mineral Lease Agreement), pursuant to which FCCC is granted the exclusive right and privilege to enter upon the relevant land for the purposes of exploration, development, production, removal and sale of borate and lithium minerals (the Rights).

A summary of the terms and conditions of the Elementis Mineral Lease Agreement is set out below:

(a) (Term): The Elementis Mineral Lease Agreement commenced on 1 October 2011 (Effective Date) and the initial term expires on 1 October

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2021 (Term). Following the initial term, the Elementis Mineral Lease Agreement may continue for so long thereafter as borate and/or lithium minerals are produced from the property or until terminated, extended or cancelled.

(b) (Grant of lease): Elementis grants to FCCC, its successors and assigns the Rights, and the right to use so much of the surface and non-potable water located on the property as may be reasonably needed for such purpose. FCCC, its successors and assigns will have sole and exclusive custody, possession, ownership and control of all borate and lithium ore, waste rock, brines, drill core and other borate and lithium mineral substances extracted or removed from the property, and may sell or otherwise dispose thereof, subject to a first preference right of purchase for certain mineral materials granted to Elementis under the Elementis Mineral Lease Agreement.

(c) (Owner’s preference rights):

(i) Elementis is granted the right to purchase from FCCC, in preference to all other bidders, any mineral materials produced as a by-product or waste rock of FCCC’s borate and lithium mining operates on the property.

(ii) If FCCC establishes to the satisfaction of Elementis that commercially valuable deposits of other ores and minerals are present in the property, FCCC will have a preference right to lease from Elementis such ores and minerals on terms proposed by FCCC and accepted by Elementis.

(d) (Royalty Payments): FCCC will pay to Elementis the following royalty payments under the Elementis Mineral Lease Agreement:

(i) (Advance minimum royalty payment): FCCC will pay to Elementis the annual advance minimum royalty payments in the following amounts:

Date Royalty Payment Effective Date (1 October $50,000 2011) First anniversary of the $50,000 Effective Date (1 October 2012) The anniversary date (1 $75,000 October), each year thereafter (Anniversary Date)

After the third Anniversary Date, and after each Anniversary Date thereafter, the advance minimum royalty payments will be adjusted to proportionately reflect any net increase or decrease in the producer price index for mining and quarrying of non- metallic minerals, except fuels, not seasonably adjusted.

(ii) (Production royalty): When the property and/or the adjacent lands controlled by FCCC are placed into commercial production, FCCC agrees to pay to Elementis a royalty of 3% of the net returns from all ores, minerals or other products produced

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from the property and/or adjacent lands, and sold or processed by FCCC, less allowable deductions.

(e) (Termination by Elementis): After the first 8 years of the Term, Elementis may elect to terminate the Elementis Mineral Lease Agreement by giving FCCC one hundred and eighty (180) days’ written notice if, during any 2 successive years production only equals or is less than the advance minimum royalty.

(f) (Cancellation): The Elementis Mineral Lease Agreement may be cancelled by Elementis and FCCC:

(i) (Cancellation by Elementis): Elementis may cancel the Elementis Mineral Lease Agreement by:

(A) giving FCCC ninety (90) days’ written notice if FCCC fails to comply with any of the covenants, terms or conditions of the Elementis Mineral Lease Agreement. If the default is not remedied within ninety (90) days, then the Elementis Mineral Lease Agreement is deemed to be cancelled and terminated, with effect from the ninetieth (90th) day after FCCC’s receipt of the notice; and

(B) giving FCCC sixty (60) days’ written notice if FCCC fails to pay the minimum payments due under the Elementis Mineral Lease Agreement. If the default is not remedied within sixty (60) days, then the Elementis Mineral Lease Agreement is deemed cancelled and terminated, with effect from the sixtieth (60th) day after FCCC’s receipt of the notice.

(ii) (Cancellation by FCCC): FCCC may cancel the Elementis Mineral Lease Agreement at any time by giving Elementis at least thirty (30) days written notice, provided that all accrued obligations of FCCC under the Elementis Mineral Lease Agreement have been satisfied.

(g) (Data): Upon termination of the Elementis Mineral Lease Agreement, and if requested by Elementis, FCCC will provide to Elementis, within 30 days following termination, a copy of all drilling logs, assays, maps and other factual data which FCCC has prepared in connection with its exploration and development of the property under the Elementis Mineral Lease Agreement.

(h) (Assignment): Elementis and FCCC may, in their sole discretion, sell, dispose of or deal with the Elementis Mineral Lease Agreement on such terms and conditions they see fit, subject to the terms and conditions of the Elementis Mineral Lease Agreement.

12.3 Approval of Assignment of Preferential Right under State Mineral Prospecting Permit

On 17 December 1992, FCCC was assigned a preferential right to apply for a mineral extraction lease under State Mineral Prospecting Permit (PRC) 5906, which was originally granted to FCCC’s predecessor, Duval Corporation, in 1980 (Approval of Assignment of Preferential Right). The Approval of Assignment of Preferential Right establishes FCCC’s preferential right to apply for a mineral lease

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under terms of the Prospecting Permit 5906. As noted earlier in the Prospectus, the Company has applied for these mineral rights.

12.4 Data Purchase and Sharing Agreement

On 16 January 2017, the Company entered into a data purchase and sharing agreement (Data Agreement) with Pamela K. Wilkinson (PKW), who is the owner of a large amount of information pertaining to the historic exploration results and analysis of the Project (Project Information). The purpose of the Data Agreement is to set out the terms whereby PKW agrees to share and make available the entirety of the Project Information to the Company for an agreed cash consideration.

In consideration for sharing the Project Information, the Company will pay the following fees to PKW:

(a) $12,500 on signing of the Data Agreement and prior to the Company obtaining the Project Information (First Payment); and

(b) $12,500 on the successful listing of the Company to the Official List of the ASX, to be paid within 1 month of listing (Second Payment). If the Company does not become admitted to the Official List of the ASX within three years of the date of the Data Agreement, the Second Payment is not payable.

If the Company is not admitted to the Official List by 31 December 2017, PKW may dispose of the Project Information and must give notice to the Company of that intention (Disposal). If PKW gives notice to the Company of the Disposal, the Company has an exclusive option period of 1 month from notification of the Disposal to pay the Second Payment and an additional fee to be determined by the parties, in order to secure ownership of the Project Information.

If the Company has paid the Second Payment and PKW decides to dispose of the Project Information after 31 December 2017, the Company will have a pre- emptive right to obtain ownership of the Project Information, for an additional fee to be determined by the parties.

12.5 Agreement with Dundee Corporation

The Company and Dundee Corporation (Incorporated in Ontario) (Dundee) entered into a Settlement Agreement and Release in relation to a Promissory Note issued to Dundee from the Company. Pursuant to the Settlement Agreement and Release,

(a) Dundee agreed to waive all rights and release all claims it had against the Company pursuant to the Promissory Note (Dundee Releases);

(b) In consideration for the Dundee Releases, the Company has agreed to pay to Dundee the amount of US$300,000 and issue Dundee with 1,600,000 Shares.

This agreement otherwise contains terms considered standard for an agreement of its nature.

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12.6 Managing Director and Chief Executive Officer Employment Agreement – Mr Michael Schlumpberger

The Company and Mr Schlumpberger have entered into an employment agreement whereby Mr Schlumpberger is appointed as Managing Director and Chief Executive Officer of the Company. The key terms of the agreement are as follows:

(a) (Term): The agreement will commence on 1 June 2017 (Commencement Date).

(b) (Fee): Mr Schlumpberger is paid a fee of US$189,000 per annum inclusive of pension contributions. A performance based bonus, to be determined by the Board, may also be payable.

(c) (Managing Director Options): Mr Schlumpberger will be issued with 4,000,000 Managing Director Options, exercisable at $0.30 and expiring on 31 May 2022. The Options are deliverable over two tranches with two separate vesting dates. 2,000,000 Managing Director Options will vest on the date which is 15 months after the Commencement Date and 2,000,000 Managing Director Options will vest on the date which is 30 months after the Commencement Date. The Managing Director Options will immediately vest on a Managing Director Option Change of Control event set out in Section 13.6(d).

(d) (Expenses): The Company will reimburse Mr Schlumpberger for any reasonable travel and accommodation expenses incurred in the performance of his services.

(e) (Termination): The agreement may be terminated by the Company without notice or without cause. The agreement may also be terminated by Mr Schlumpberger by providing six months’ notice in writing.

This agreement otherwise contains terms considered standard for an agreement of its nature.

12.7 Executive Director– Anthony Hall

The Company and Mr Hall have entered into a letter of appointment whereby Mr Hall is appointed as an Executive Director of the Company. The key terms of the agreement are as follows:

(a) (Term): The agreement commenced on 1 March 2017 (Commencement Date). The term of Mr Hall’s appointment is subject to provisions of the Constitution and the ASX Listing Rules relating to retirement by rotation and re-election of directors and will automatically cease at the end of any meeting at which Mr Hall is not re-elected as a director by Shareholders and continues until either side terminates the agreement.

(b) (Fee): Mr Hall is paid a fee of $10,000 per month. A performance based bonus, to be determined by the Board, may also be payable.

(c) (Director Options): Mr Hall was also issued with:

(i) 1,500,000 $0.20 Options, exercisable at $0.20 and vesting on the date that the Company successfully lists on the ASX, on the condition that Mr Hall has not vacated his role prior to that date. The Options expire on the date which is 5 years after the

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Commencement Date. The Options will immediately vest on a Consultant Option Change of Control Event; and

(ii) 1,000,000 Further Options.

(d) (Expenses): The Company will reimburse Mr Hall for any reasonable travel and accommodation expenses incurred in the performance of his services.

This agreement otherwise contains terms considered standard for an agreement of its nature.

12.8 Consultancy Agreement – Lachlan Rutherford

The Company and Dr Rutherford have entered into a consultancy agreement whereby Dr Rutherford is appointed as a consultant for the purpose of providing technical and commercial advisory services. The key terms of the agreement are as follows:

(a) (Term): The agreement commenced on 1 December 2016 (Commencement Date) and continues for 12 months unless terminated or modified by mutual agreement.

(b) (Fee): Dr Rutherford is paid a fee of $10,000 per month. A performance based bonus, to be determined by the Board, may also be payable.

(c) (Consultant Options): Dr Rutherford will be issued 500,000 $0.20 Options, exercisable at $0.20 and vesting on the date that the Company successfully lists on the ASX, on the condition that Dr Rutherford has not vacated his consultancy role prior to that date. The Options expire on the date which is 5 years after the Commencement Date. The Options will immediately vest on a Consultant Option Change of Control Event.

(d) (Expenses): The Company will reimburse Dr Rutherford for any reasonable travel and accommodation expenses incurred in the performance of his services. Dr Rutherford is required to inform the Company in advance of incurring expenses likely to involve amounts greater than $200.

(e) (Termination): The agreement may be terminated by either the Company or Dr Rutherford by providing 30 days’ notice.

This agreement otherwise contains terms considered standard for an agreement of its nature.

12.9 Consultancy Agreement – Aaron Bertolatti

The Company and Mr Bertolatti have entered into a consultancy agreement whereby Mr Bertolatti is appointed as a consultant for the purpose of providing company secretarial, administrative and accountancy services. The key terms of the agreement are as follows:

(a) (Term): The agreement commenced on 1 December 2016 (Commencement Date) and continues for 12 months unless terminated or modified by mutual agreement.

(b) (Fee): Mr Bertolatti is paid a fee of $5,000 per month. A performance based bonus, to be determined by the Board, may also be payable.

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(c) (Consultant Options): Mr Bertolatti has been issued:

(i) 500,000 $0.20 Options, exercisable at $0.20 and vesting on the date that the Company successfully lists on the ASX, on the condition that Mr Bertolatti has not vacated his consultancy role prior to that date. The Options expire on the date which is 5 years after the Commencement Date. The Options will immediately vest on a Change of Control Event;

(ii) 500,000 Further Options.

(d) (Expenses): The Company will reimburse Mr Bertolatti for any reasonable travel and accommodation expenses incurred in the performance of his services. Mr Bertolatti is required to inform the Company in advance of incurring expenses likely to involve amounts greater than $200.

(e) (Termination): The agreement may be terminated by either the Company or Mr Bertolatti by providing 60 days’ notice.

This agreement otherwise contains terms considered standard for an agreement of its nature.

12.10 Non-Executive Chairman Appointment Letter – Mr Harold Roy Shipes

The Company has entered into a letter of appointment with Mr Shipes pursuant to which Mr Shipes is appointed as a Non-Executive Chairman of the Company on the following terms:

(a) (Fees): director fees of $60,000 per annum (inclusive of superannuation) are payable by the Company to Mr Shipes, effective 1 June 2017;

(b) (Term): the term of Mr Shipe’s appointment is subject to provisions of the Constitution and the ASX Listing Rules relating to retirement by rotation and re-election of directors and will automatically cease at the end of any meeting at which Mr Shipes is not re-elected as a director by Shareholders.

The appointment letter otherwise contains terms and conditions that are considered standard for agreements of this nature.

12.11 Non-Executive Director Appointment Letters

The Company has entered into a letter of appointment with each of Messrs Hunt and McKinney (the Non-Executive Directors) pursuant to which the Non-Executive Directors are appointed as Non-Executive Directors of the Company on the following terms:

(a) (Fees): director fees of $36,000 per annum (inclusive of superannuation where applicable) are payable by the Company to the Non-Executive Directors, effective 1 June 2017;

(b) (Term): the terms of the Non-Executive Directors’ appointments are subject to provisions of the Constitution and the ASX Listing Rules relating to retirement by rotation and re-election of directors and will automatically cease at the end of any meeting at which the Non- Executive Directors are not re-elected as directors by Shareholders.

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The appointment letter otherwise contains terms and conditions that are considered standard for agreements of this nature.

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13. ADDITIONAL INFORMATION

13.1 Litigation

As at the date of this Prospectus, our Company is not involved in any legal proceedings and the Directors are not aware of any legal proceedings pending or threatened against the Company.

13.2 Rights attaching to Shares

The following is a summary of the more significant rights attaching to Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice.

Full details of the rights attaching to Shares are set out in the Constitution, a copy of which is available for inspection at the Company’s registered office during normal business hours.

(a) General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company.

Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution.

(b) Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of Shares, at general meetings of Shareholders or classes of Shareholders:

(i) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative;

(ii) on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and

(iii) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid Shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

(c) Dividend rights

Subject to the rights of any preference Shareholders and to the rights of the holders of any shares created or raised under any special arrangement as to dividend, the Directors may from time to time declare a dividend to be paid to the Shareholders entitled to the dividend which shall be payable on all Shares according to the proportion that the

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amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such Shares.

No dividend shall carry interest as against the Company.

Subject to the ASX Listing Rules and the Corporations Act, the Company may, by resolution of the Directors, implement a dividend reinvestment plan on such terms and conditions as the Directors think fit and which provides for any dividend which the Directors may declare from time to time payable on Shares which are participating Shares in the dividend reinvestment plan, less any amount which the Company shall either pursuant to the Constitution or any law be entitled or obliged to retain, be applied by the Company to the payment of the subscription price of Shares.

(d) Winding-up

The assets of the Company must on a winding up be applied in repayment to the Shareholders in proportion to their respective holdings, subject to any express provision of the Constitution.

(e) Shareholder liability

As the Shares under the Prospectus are fully paid shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.

(f) Transfer of Shares

Generally, Shares are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act or the ASX Listing Rules.

(g) Variation of rights

Pursuant to Section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to Shares.

If at any time the share capital is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three-quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

(h) Alteration of Constitution

The Constitution can only be amended by a special resolution passed by at least three quarters of Shareholders present and voting at the general meeting. In addition, at least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

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13.3 Rights attaching to $0.20 Options

(a) Entitlement

Each Option entitles the holder to subscribe for one Share upon exercise of the Option.

(b) Exercise Price

Subject to paragraph (j), the amount payable upon exercise of each Option will be $0.20 (Exercise Price).

(c) Expiry Date

Each Option will expire at 5:00 pm (Hong Kong time) on 30 November 2021 (Expiry Date). An Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(d) Conditions for Vesting

There are 4 different vesting conditions of the $0.20 options as follows:

Number of Vesting Condition Options 3,000,000 Options will vest on the date that the Company successfully lists on the ASX. 1,000,000 Options will vest on the date that the Company successfully lists on the ASX, on the condition that the relevant consultant has not vacated its consultancy role prior to that date. If the consultant being the recipient of these Options ceases to be a consultant or otherwise employed by the Company prior to this vesting date, the relevant Options that have not vested shall be forfeited, unless otherwise agreed by the parties. 1,000,000  500,000 Options will vest on the date that the Company successfully lists on the ASX, on the condition that the relevant director has not vacated their directorship prior to that date; and  500,000 Options will vest 12 months after the date that the Company successfully lists on the ASX, on the condition that the relevant director remains in their capacity as a director of the Company as at that date. If the director being the recipient of these Options ceases to be a director or otherwise employed by the Company prior to this vesting date, the relevant Options that have not vested shall be forfeited, unless otherwise agreed by the parties. 2,000,000 Options will vest 12 months after the date that the Company successfully lists on the ASX, on the condition that the relevant director remains in their capacity as a director of the Company as at that date.

(together, the Vesting Conditions).

(e) Exercise Period

The exercise period for the Options will commence when the Options have vested in accordance with the Vesting Conditions and will end on the Expiry Date (Exercise Period).

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(f) Notice of Exercise

The Options may be exercised during the Exercise Period by notice in writing to the Company (Notice of Exercise) and payment of the Exercise Price for each Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company.

(g) Exercise Date

A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt of the payment of the Exercise Price for each Option being exercised in cleared funds (Exercise Date).

(h) Timing of issue of Shares on exercise

Within 10 Business Days after the Exercise Date, the Company will issue the number of Shares required under these terms and conditions in respect of the number of Options specified in the Notice of Exercise and for which cleared funds have been received by the Company.

(i) Shares issued on exercise

Shares issued on exercise of the Options rank equally with the then issued shares of the Company.

(j) Reconstruction of capital

If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

(k) Participation in new issues

There are no participation rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options without exercising the Options.

(l) Quotation

The Company will not apply for quotation of the Options.

13.4 Rights attaching to $0.30 Options

Apart from the rights set out below, the rights attaching to the $0.30 Options are the same as those attaching to the $0.20 Options.

(a) Exercise Price

Subject to paragraph 13.3(j), the amount payable upon exercise of each $0.30 Option will be $0.30 (Exercise Price).

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(b) Expiry Date

Each $0.30 Option will expire at 5:00 pm (Hong Kong time) on 30 November 2021 (Expiry Date). A $0.30 Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(c) Conditions for Vesting

The $0.30 Options will vest on the earlier of:

(i) 15 months after the date that the Company successfully lists on the ASX; and

(ii) the occurrence of a Change Of Control Event,

(together, the Vesting Conditions).

A Change of Control Event means either:

(i) a change of control of the Company within the meaning of section 50AA of the Corporations Act;

(ii) when a court sanctions a compromise or arrangement for the purposes of or in connection with a scheme for the amalgamation of the Company with any other company or companies under Part 5.1 of the Corporations Act; or

(iii) when the Company passes a resolution for voluntary winding up or if an order is made for the compulsory winding up of the Company.

The Board may in its absolute discretion waive satisfaction of the Vesting Condition either unconditionally or subject to compliance with any other exercise restriction that is less onerous than that previously fixed.

(d) Exercise Period

The exercise period for the $0.30 Options will commence when the Options have vested in accordance with the Vesting Conditions and will end on the Expiry Date (Exercise Period).

13.5 Rights attaching to the Further Options

The rights attaching to the Further Options are the same as those attaching to the Managing Director Options.

13.6 Rights attaching to the Managing Director Options

Apart from the rights set out below, the rights attaching to the Managing Director Options are the same as those attaching to the $0.20 Options.

(a) Exercise Price

Subject to paragraph 13.3(j), the amount payable upon exercise of each Managing Director Option will be $0.30 (Exercise Price).

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(b) Expiry Date

Each Managing Director Option will expire at 5:00 pm (Western Australian time) on 31 May 2022 (Expiry Date). A Managing Director Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(c) Conditions for Vesting

The Managing Director Options will vest in two tranches as follows:

(i) half will vest 15 months after 1 June 2017; and

(ii) half will vest 30 months after 1 June 2017,

(together, the Vesting Conditions).

If the Managing Director ceases to be a Managing Director or otherwise employed by the Company prior to the satisfaction of the Vesting Conditions, the Managing Director Options that have not vested will be forfeited, unless otherwise agreed by the parties.

(d) Change of Control Event

Notwithstanding the Vesting Conditions, all Managing Director Options will vest immediately upon a Managing Director Option Change of Control Event.

A Managing Director Option Change of Control Event means any event that results in a change in the person or persons who control the Company or the substantive assets of the Company, which may occur by way of, without limitation:

(i) a takeover or partial (greater than 50%) takeover of the Company;

(ii) a reverse or “back door” listing of another company into the Company;

(iii) any other sale, or issuance, or transfer of all, or a majority, of the share capital of the Company; or

(iv) a sale of all, or a majority, of the material assets or undertakings of the Company.

(e) Exercise Period

The exercise period for the Managing Director Options will commence when the Managing Director Options have vested in accordance with the Vesting Conditions and will end on the Expiry Date (Exercise Period).

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13.7 Summary of Employee Incentive Option Plan

The Company has adopted an employee incentive option plan (ESOP or Option Plan) on the terms and conditions as set out below:

(a) Eligibility: Participants in the Plan may be:

(i) a Director (whether executive or non-executive) of the Company, its subsidiaries and any other related body corporate of the Company (Group Company);

(ii) a full or part time employee of any Group Company;

(iii) a casual employee or contractor of a Group Company to the extent permitted by ASIC Class Order 14/1000 (or any amendment to or replacement of that Class Order) (Class Order); or

(iv) a prospective participant, being a person to whom the offer is made but who can only accept the offer if an arrangement has been entered into that will result in the person becoming a Participant under clauses (a), (b) or (c) above,

who is declared by the Board to be eligible to receive grants of Options under the Plan (Participants).

(b) Offer: The Board may, from time to time, in its absolute discretion, make a written offer to any Participant (including a Participant who has previously received an offer) to apply for up to a specified number of Options, upon the terms set out in the Plan and upon such additional terms and conditions as the Board determines.

(c) Plan limit: The Company must have reasonable grounds to believe, when making an offer, that the number of Shares to be received on exercise of Options offered under an offer, when aggregated with the number of Shares issued or that may be issued as a result of offers made in reliance on the Class Order at any time during the previous 3 year period under an employee incentive scheme covered by the Class Order or an ASIC exempt arrangement of a similar kind to an employee incentive scheme, will not exceed 5% of the total number of Shares on issue at the date of the offer.

(d) Issue price: unless the Options are quoted on the ASX, Options issued under the Plan will be issued for no more than nominal cash consideration.

(e) Vesting Conditions: An Option may be made subject to vesting conditions as determined by the Board in its discretion and as specified in the offer for the Option.

(f) Vesting: The Board may in its absolute discretion (except in respect of a Change of Control occurring where Vesting Conditions are deemed to be automatically waived) by written notice to a Participant, resolve to waive any of the Vesting Conditions applying to Options due to

(i) the Participant ceasing to be a Participant due to death or total and permanent disability; or

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(ii) a Change of Control occurring; or

(iii) the Company passing a resolution for voluntary winding up, or an order is made for the compulsory winding up of the Company.

(g) Lapse of an Option: An Option will lapse upon the earlier to occur of:

(i) an unauthorised dealing in the Option;

(ii) a Vesting Condition in relation to the Option is not satisfied by its due date, or becomes incapable of satisfaction, unless the Board exercises its discretion to vest the Option (e.g. due to death, total and permanent disability);

(iii) in respect of unvested Option only, a Participant ceases to be a Participant, unless the Board exercises its discretion to vest the Right (e.g. due to death, total and permanent disability) or allow the unvested Options to remain unvested after the relevant person ceases to be a Participant;

(iv) in respect of vested Options only, a relevant person ceases to be a Participant and the Option granted in respect of that person is not exercised within one (1) month (or such later date as the Board determines) of the date that person ceases to be a Participant;

(v) the Board deems that an Option lapses due to fraud, dishonesty or other improper behaviour of the Participant;

(vi) the Company undergoes a change in control or winding up, and the Board does not exercise its discretion to vest the Option;

(vii) the expiry date of the Option; and

(viii) the 7 year anniversary of the date of grant of the Option.

(h) Not transferrable: Options are only transferrable with the prior written consent of the Board (which may be withheld in its absolute discretion) or by force of law upon death to the participant’s legal personal representative or upon bankruptcy to the participant’s trustee in bankruptcy.

(i) Shares: Shares resulting from the exercise of the Options shall, subject to any Sale Restrictions (refer below) from the date of issue, rank on equal terms with all other Shares on issue.

(j) Quotation of Shares: If Shares of the same class as those issued upon exercise of Options issued under the Plan are quoted on the ASX, the Company will, subject to the ASX Listing Rules, apply to the ASX for those Shares to be quoted on ASX within 10 business days of the later of the date the Shares are issued and the date any restriction period applying to the disposal of Shares ends.

(k) Share Sale Restrictions: The Board may, in its discretion, determine at any time up until exercise of Options, that a restriction period will apply to some or all of the Shares issued to a Participant (or their eligible nominee) on exercise of those Options up to a maximum of seven (7) years from the grant date of the Options.

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(l) No Participation Rights: There are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options.

(m) Reorganisation: If, at any time, the issued capital of the Company is reorganised (including consolidation, subdivision, reduction or return), all rights of a holder of an Option are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reorganisation.

(n) Amendments: Subject to express restrictions set out in the Plan and complying with the Corporations Act, ASX Listing Rules and any other applicable law, the Board may at any time by resolution amend or add to all or any of the provisions of the Plan, or the terms or conditions of any Option granted under the Plan including giving any amendment retrospective effect.

13.8 Interests of Directors

Other than as set out in this Prospectus, no Director or proposed Director holds, or has held within the 2 years preceding lodgement of this Prospectus with the ASIC, any interest in:

(a) the formation or promotion of the Company;

(b) any property acquired or proposed to be acquired by the Company in connection with:

(i) its formation or promotion; or

(ii) the Offer; or

(c) the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to a Director or proposed Director:

(d) as an inducement to become, or to qualify as, a Director; or

(e) for services provided in connection with:

(i) the formation or promotion of the Company; or

(ii) the Offer.

13.9 Interests of Experts and Advisers

Other than as set out below or elsewhere in this Prospectus, no:

(a) person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus; or

(b) promoter of the Company,

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holds, or has held within the 2 years preceding lodgement of this Prospectus with the ASIC, any interest in:

(a) the formation or promotion of the Company;

(b) any property acquired or proposed to be acquired by the Company in connection with:

(i) its formation or promotion; or

(ii) the Offer; or

(c) the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of these persons for services provided in connection with:

(a) the formation or promotion of the Company; or

(b) the Offer.

Xstract Mining Consultants has acted as Independent Geologist and has prepared the Independent Geologist’s Report which is included in Section 7. The Company estimates it will pay Xstract Mining Consultants a total of $47,200 (excluding GST) for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, Xstract Mining Consultants has not received fees from the Company for any other services.

RSM Corporate Australia Pty Ltd has acted as Investigating Accountant and has prepared the Investigating Accountant’s Report which is included in Section 8. The Company estimates it will pay RSM Corporate Australia Pty Ltd a total of $8,000 (excluding GST) for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, RSM Corporate Australia Pty Ltd has not received any fees from the Company for any other services.

Lilburn Corporation Ltd has prepared the Report entitled “Land Use Ownership and Entitlement Review” which is included in Section 9. The Company estimates it will pay Lilburn Corporation Ltd a total of $15,000 (excluding GST) for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, Lilburn Corporation Ltd has not received any fees from the Company for any other services.

Steinepreis Paganin has acted as the solicitors to the Company in relation to the Offer. The Company estimates it will pay Steinepreis Paganin $100,000 (excluding GST) for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, Steinepreis Paganin has not received fees from the Company for any other services.

13.10 Consents

Chapter 6D of the Corporations Act imposes a liability regime on the Company (as the offeror of the Securities), the Directors, the persons named in the Prospectus with their consent as Proposed Directors, any underwriters, persons named in the Prospectus with their consent having made a statement in the Prospectus and persons involved in a contravention in relation to the Prospectus, with regard to misleading and deceptive statements made in the Prospectus,

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Although the Company bears primary responsibility for the Prospectus, the other parties involved in the preparation of the Prospectus can also be responsible for certain statements made in it.

Each of the parties referred to in this Section:

(a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this section; and

(b) in light of the above, only to the maximum extent permitted by law, expressly disclaim and take no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this section.

Xstract Mining Consultants has given its written consent to being named as Independent Geologist in this Prospectus, the inclusion of the Independent Geologist’s Report in Section 7 in the form and context in which the report is included and the inclusion of statements contained in the Important Notices section of this Prospectus in the form and context in which those statements are included. Xstract Mining Consultants has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

RSM Corporate Australia Pty Ltd has given its written consent to being named as Investigating Accountant in this Prospectus and to the inclusion of the Investigating Accountant’s Report included in Section 8 in the form and context in which the information and report is included. RSM Corporate Australia Pty Ltd has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

RSM Australia Partners has given its written consent to being named as auditor in this Prospectus in the form and context in which the information is included. RSM Australia Partners has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Steinepreis Paganin has given its written consent to being named as the solicitors to the Company in this Prospectus. Steinepreis Paganin has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Advanced Share Registry has given its written consent to being named as the share registry to the Company in this Prospectus. Advanced Share Registry has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Lilburn Corporation Ltd has given its written consent to being named as the author of the Report entitled “Land Use Ownership and Entitlement Review” incorporated by reference in Section 9 in this Prospectus and to the inclusion of the summary of the Land Ownership Report in Section 9 in the form and context in which the information and report is included. Lilburn Corporation Ltd has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Lachlan Rutherford has given his written consent to being named in this Prospectus as the Company’s competent person and the inclusion of the statement on page 3 of this Prospectus in the form and context in which it is included. Dr Rutherford has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

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13.11 Expenses of the Offer

The total expenses of the Offer (excluding GST) are estimated to be approximately $956,550 for the Minimum Subscription or $1,139,550 for the Maximum Subscription and are expected to be applied towards the items set out in the table below:

Item of Expenditure Minimum Maximum Subscription Subscription ($) ($) ASIC fees 2,350 2,350 ASX fees 72,000 75,000 Placement Fee 600,000 750,000 Legal Fees 100,000 100,000 Independent Geologist’s Fees 47,200 47,200 Investigating Accountant’s Fees 10,000 10,000 Printing and Distribution 5,000 5,000 Miscellaneous 120,000 150,000 TOTAL 956,550 1,139,550

13.12 Continuous disclosure obligations

Following admission of the Company to the Official List, the Company will be a “disclosing entity” (as defined in Section 111AC of the Corporations Act) and, as such, will be subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company will be required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company’s securities.

Price sensitive information will be publicly released through ASX before it is disclosed to shareholders and market participants. Distribution of other information to shareholders and market participants will also be managed through disclosure to the ASX. In addition, the Company will post this information on its website after the ASX confirms an announcement has been made, with the aim of making the information readily accessible to the widest audience.

13.13 Electronic Prospectus

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please contact the Company and the Company will send you, for free, either a hard copy or a further electronic copy of this Prospectus or both. Alternatively, you may obtain a copy of this Prospectus from the website of the Company at www.americanpacificborate.com.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

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13.14 Financial Forecasts

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

13.15 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

The Company will apply to participate in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company.

Electronic sub-registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with statements (similar to a bank account statement) that set out the number of Shares issued to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Electronic sub-registers also mean ownership of securities can be transferred without having to rely upon paper documentation. Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month.

13.16 Privacy statement

If you complete an Application Form, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder.

The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, regulatory bodies including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the share registry.

You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the share registry at the relevant contact number set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. You should note that if you do not provide the information required on the application for Shares, the Company may not be able to accept or process your application.

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14. DIRECTORS’ AUTHORISATION

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

In accordance with Section 720 of the Corporations Act, each Director has consented to the lodgement of this Prospectus with the ASIC.

Harold Roy Shipes Non-Executive Chairman For and on behalf of American Pacific Borate & Lithium Ltd

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15. GLOSSARY

Where the following terms are used in this Prospectus they have the following meanings:

$ means an Australian dollar.

$0.20 Options are the Options issued on the terms contained in Section 13.3.

$0.30 Options are the Options issued on the terms contained in Section 13.4.

APBL means the Company.

Acquisition means the acquisition by the Company of the Project.

Application Form means the application form attached to or accompanying this Prospectus relating to the Offer.

ASIC means Australian Securities & Investments Commission.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by it as the context requires.

ASX Listing Rules means the official listing rules of ASX.

Atlas means Atlas Precious Metals, Inc (a company incorporated in Canada).

Board means the board of Directors as constituted from time to time.

Business Day means a day that is not a Saturday, Sunday or public holiday in Perth, Western Australia.

Change of Control Event has the meaning set out in Section 13.4.

Closing Date means the closing date of the Offer as set out in the indicative timetable in the Key Offer Information Section of this Prospectus (subject to the Company reserving the right to extend the Closing Date or close the Offer early).

Company means American Pacific Borate & Lithium Ltd (ACN 615 606 114).

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company at the date of this Prospectus.

Elementis means Elementis Specialities, Inc (a company incorporated in Delaware).

Elementis Mineral Lease Agreement means the agreement entered into by FCCC and Elementis.

Exposure Period means the period of 7 days after the date of lodgement of this Prospectus, which period may be extended by the ASIC by not more than 7 days pursuant to Section 727(3) of the Corporations Act.

FCCC means Fort Cady California Corporation (a company incorporated in Maryland, USA).

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FCMC means Fort Cady Minerals Corporation (a company incorporated in Canada).

Fort Cady Holdings means Fort Cady Holdings Pty Ltd (ACN 617 760 746), a wholly owned subsidiary of the Company.

Fort Cady Project means the Fort Cady borate-lithium project and the associated plant infrastructure, mining and environmental permits.

Further Options are the Options issued on the terms contained in Section 13.5.

JORC Code means the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” by the Joint Ore Committee.

Land Ownership Report means the Land Use Ownership and Entitlement Review for the Fort Cady Borate Mine contained in Section 9.

Land Titles means the land titles (including applications) in which the Company has an interest as set out in Section 9.1 and further described in the Land Ownership Report or any one of them as the context requires.

Managing Director Options are the Options issued on the terms contained in Section 13.6.

Managing Director Option Change of Control Event has the meaning set out in Section 13.6(d).

Maximum Subscription means the maximum amount to be raised under the Prospectus, being $15,000,000 assuming oversubscriptions of 15,000,000 Shares at $0.20 per Share are accepted.

Mining Information means the following:

(a) all data, information, development plans, materials and records relating to the Project, whether in written or electronic format;

(b) all surveys, maps, plans, geophysical plots (including magnetics) and diagrams of the Project and adjacent areas;

(c) all samples, drilling locations and logs from drilling, development and production conducted on the Project or adjacent areas;

(d) all reports, samples, geological and geochemical samples and reports of or with respect to any resource extracted from or located upon the Project or adjacent areas; and

(e) all papers, notes, advices and reports extracted or compiled from or based upon the documents and items referred to above and all other data, specification records (in whatever form), reports, accounts and other documents or things and knowledge (whether reduced to writing or not) relating to the Project or adjacent areas.

Minimum Subscription means the minimum amount to be raised under the Offer, being $12,000,000 assuming no oversubscriptions are accepted.

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Miscellaneous Assets means the following assets:

(a) 1x Butler building, steel paneled on steel I beam frame, 40 feet x 40 feet, two story, two sets of stairs to open loft with steel grating floor, one overhead garage door and two entry doors;

(b) 2x Eimco brand cone bottom thickeners on legs, 12 feet diameter, 10 feet side wall, insulated, with conventional rake and drive mechanisms, standard overflow weirs. Mild steel construction. Roughly 6000 gallon capacity;

(c) 2x Eimco brand vacuum drum filters, 30 inch diameter x 6 feet wide, each with slurry feed tank and scraper system. One with right hand rotation, one left hand. Polycarbonate drum, mild steel tank. Complete units with drives. Serial numbers EIMCO 82801-01- AR and 82801-01-BR;

(d) 1x Gas fired rotary dryer, manufactured by Falk, 3 feet diameter x 18 feet with dual trunnion drive and 10 foot fire box/air preheater with Maxon GenPack burner model 400 size 435. Capacity up to 10 tons dry product per hour;

(e) 1x Dry product receiving bin with cone bottom, 12 feet diameter x 20 feet, mild steel. Equipped with baghouse type vent filter and side bucket conveyor with feeder. Connections for pneumatic bulk bagging system;

(f) 1x WECO vibratory screen, model 2540 c66, stainless steel. Approximately 1 ton/hour capacity; and

(g) 2x Lime mixing/slaking tanks, mild steel, 1200 gallon capacity, open top with supports for Chemineer agitators and drives.

mt means a metric tonne.

Offer means the offer of Shares pursuant to this Prospectus as set out in Section 3.

Official List means the official list of ASX.

Official Quotation means official quotation by ASX in accordance with the ASX Listing Rules.

Option means an option to acquire a Share and includes the $0.20 Options, the $0.30 Options, the Managing Director Options and the Further Options.

Optionholder means a holder of an Option.

Patented Mining Claim means patented mining claim is a complex application process whereby a claimant applies to the US Department of Interior, Bureau of Land Management to transfer the surface and mineral rights from the US Federal government to the claimant as fee simple title to the land. Patent means a document conveying title to Federal surface and/or minerals. In 1999, the Federal government established a moratorium on patenting of unpatented mining claims, which is still in effect.

Permits means the permits contained in the below table and includes any permit granted as a result of an application and any extension, renewal, variation, conversion, amalgamation, approval, replacement or substitution of such permit and includes all rights to mine and other privileges appurtenant to those permits or existing applications for permits applied for.

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Permit Details Commencement Holder date Plan of operations and combined December 1994 Fort Cady Minerals environmental impact statement and Corp. environmental impact report Mining Conditional Use Permit and June 1994 Fort Cady Minerals Reclamation Plan (94M-04); and Corp. combines EIS/EIR Water Quality Management Permit May 1988 Fort Cady Minerals (Waste Discharge Requirements), Board Corp. Order No. 6-88-63

Project means the Fort Cady Project, located in Southern California, USA which comprises the Project Area and the Company’s interest in and adjacent to the Project Area as the context requires.

Project Area means as defined in Section 4.3.

Project Assets means the Permits, the Mining Information and the Miscellaneous Assets.

Prospectus means this prospectus.

SCE means Southern California Edison.

Section means a section of this Prospectus.

Share means a fully paid ordinary share in the capital of the Company.

Share Purchase Agreement means the share purchase agreement dated 2 May 2017 entered into by the Company, Fort Cady Holdings, FCCC, FCMC and Atlas to give effect to the Acquisition.

Shareholder means a holder of Shares.

st means short ton (US), with the conversion being 1st:0.91mt

Unpatented Mining Claim means an unpatented mining claim is a particular parcel of US Federal land, valuable for a specific mineral deposit or deposits.

An unpatented mining claim is a parcel for which an individual has asserted a right of possession on Federal lands open for mining by locating or staking the claim in the field, recording the claim with the appropriate agency, and conducting annual assessment work or paying an annual assessment fee.

WST means Western Standard Time as observed in Perth, Western Australia.

4467-01/1715392_1 179 Share Registrars use only Broker/Dealer stamp only

American Pacific Borate & Lithium Ltd

ACN 615 606 114

SHARE OFFER APPLICATION FORM

This is an Application Form for fully paid ordinary shares (Shares) in the capital of American Pacific Borate & Lithium Ltd (Company) and relates to the offer of up to 60,000,000 Shares at issue price of $0.20 per Share to raise $12,000,000, with the right to accept oversubscriptions of up to a further 15,000,000 Shares at an issue price of $0.20 per Share to raise up to a further $3,000,000 (Share Offer) pursuant to the Prospectus dated 30 May 2017 (Prospectus). The Share Offer is scheduled to close at 5.00pm (WST) on 3 July 2017 (Closing Date) unless extended, closed early or withdrawn. Applications must be received before the Closing Date to be valid. A person who gives another person access to this Application Form must at the same time give the other person access to the Prospectus and any additional supplementary prospectuses (if applicable). The Prospectus contains important information relevant to your decision to invest and you should read the entire Prospectus before applying for Shares. If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. 1 Number of Shares you are applying for 2 Total amount payable (multiply box 1 by $0.20 per Share) , , A$ , , . Applications for Shares must be a minimum of 10,000 Shares ($2,000.00) and thereafter, in multiples of $500.00 worth of Shares (2,500 Shares)

3 Write the name(s) you wish to register the Shares in (see reverse for instructions) Name of Applicant 1

Name of Applicant 2 or

Name of Applicant 3 or

4 Write your postal address here – to be registered against your holding Number/Street

Suburb/Town State Postcode

5 CHESS Participants only – Holder Identification Number (HIN) Note: if the name and address details in sections 3 & 4 above do not match exactly with your registration details held at CHESS, any Shares issued as a result of your Application will be held X on the Issuer Sponsored subregister.

6 EMAIL ADDRESS (see reverse of form – this is for all communications legally permissible and despatched by the Company)

7 TFN/ABN/EXEMPTION CODE Applicant 1 Applicant #2 Applicant #3

If NOT an individual TFN/ABN, please note the type in the box C = Company; P = Partnership; T = Trust; S = Super Fund

8 PAYMENT DETAILS To pay via BPAY® please complete the online form available at www.advancedshare.com.au/ipo, payment details will then be emailed to you. Payment by cheque: Cheques must be drawn on an Australian branch of a financial institutional in Australian currency, made payable to “AMERICAN PACIFIC BORATE & LITHIUM LTD” crossed “Not Negotiable” and forwarded to Advanced Share Registry to arrive no later than the Closing Date. Please enter cheque, Drawer Bank Branch Amount bank draft or money order details $ If you are unable to pay via BPAY® or cheque, please contact Advanced Share Registry on ph +61 8 9389 8033 or email [email protected]

9 CONTACT DETAILS Please use details where we can contact you between the hours of 9:00am and 5:00pm should we need to speak to you about your application. Telephone number Contact name (PRINT) ( )

10 DECLARATION AND STATEMENTS By lodging this Application Form: • I/We declare that I/we have received a copy of the Prospectus dated 30 May 2017 issued by American Pacific Borate & Lithium Ltd and that I/we are eligible to participate in the Share Offer. • I/We declare that all details and statements made by me/us are complete and accurate. • I/We agree to be bound by the terms and conditions set out in the Prospectus and by the Constitution of the Company. • I/We acknowledge that the Company will send me/us a paper copy of the Prospectus free of charge if I/we request so during the currency of the Prospectus. • I/we authorise the Company to complete and execute any documentation necessary to affect the issue of Shares to me/us; and • I/We acknowledge that returning the Application Form with the application monies will constitute my/our offer to subscribe for American Pacific Borate & Lithium Ltd Shares and that no notice of acceptance of the Application will be provided.

INSTRUCTIONS FOR COMPLETION OF THIS APPLICATION FORM

YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE COMPLETING THIS APPLICATION FORM Please complete all relevant sections of this Application Form using BLOCK LETTERS The below instructions are cross-referenced to each section of the Application Form.

1 Number of Shares Insert the number of Shares you wish to apply for in section 1. Your application must be a minimum of 10,000 Shares ($2,000.00).

2 Payment Amount Enter into section 2 the total amount payable. Multiply the number of Shares applied for by $0.20 – the application price per Share.

3 Name(s) in which the Shares are to be registered Note that ONLY legal entities can hold Shares. The Application must be in the name of a natural person(s), companies or other legal entities acceptable by the Company. At least one full given name and surname is required for each natural person.

CORRECT FORMS OF REGISTRABLE TITLE Type of Investor Correct Form of Registration Incorrect Form of Registration Trusts Mr John Richard Sample John Sample Family Trust Superannuation Funds Mr John Sample & Mrs Anne Sample John & Anne Superannuation Fund Partnerships Mr John Sample & John Sample & Son Mr Richard Sample Clubs/Unincorporated Bodies Mr John Sample Food Help Club < Food Help Club A/C> Deceased Estates Mr John Sample Anne Sample (Deceased)

4 Postal Address Enter into section 4 the postal address to be used for all written correspondence. Only one address can be recorded against a holding. With exception to annual reports, all communications to you from the Company will be mailed to the person(s) and address shown. Annual reports will be made available online when they are released. Should you wish to receive a hard copy of the annual report you must notify the Share Registry. You can notify any change to your communication preferences by visiting the registry website – www.advancedshare.com.au

5 CHESS Holders If you are sponsored by a stockbroker or other participant and you wish to have your allocation directed into your HIN, please complete the details in section 5.

6 Email Address You may elect to receive communications despatched by American Pacific Borate & Lithium Ltd electronically (where legally permissible), such as the Company’s annual report.

7 TFN/ABN/Exemption If you wish to have your Tax File Number, ABN or Exemption registered against your holding, please enter the details in section 7. Collection of TFN’s is authorised by taxation laws but quotation is not compulsory and it will not affect your Application Form.

8 PAYMENT DETAILS By making your payment, you confirm that you agree to all of the terms and conditions of the American Pacific Borate & Lithium Ltd Share Offer as outlined in this Application Form and within the Prospectus. Your cheque should be made payable to “AMERICAN PACIFIC BORATE & LITHIUM LTD” in Australian currency, crossed “NOT NEGOTIABLE” and drawn on an Australian branch of a financial institution. Please complete your cheque with the details overleaf and ensure that you submit the correct amount, as incorrect payments may result in your Application being rejected. Cheques will be processed on the day of receipt and as such, sufficient cleared funds must be held in your account as cheques returned unpaid may not be re-presented and may result in your Application being rejected. Paperclip (do not staple) your cheque(s) to the Application Form. Cash will not be accepted. A receipt for payment will not be forwarded. To pay via BPAY® please complete the online form available at www.advancedshare.com.au/ipo, payment details will then be emailed to you. If the amount you pay is insufficient to pay for the number of Shares you apply for, you will be taken to have applied for such lower number of Shares as that amount will pay for, or your Application will be rejected.

9 Contact Details Please enter contact details where we may reach you between the hours of 9:00am and 5:00pm should we need to speak to you about your application.

10 Declaration Before completing the Application Form the Applicant(s) should read the Prospectus in full. By lodging the Application Form, the Applicant(s) agrees that this Application is for Shares in the Company upon and subject to the terms of the Prospectus, agrees to take any number of Shares equal to or less than the number of Shares indicated in Section 1 that may be issued to the Applicant(s) pursuant to the Prospectus and declares that all details and statements made are complete and accurate. It is not necessary to sign this Application Form.

HOW TO LODGE YOUR APPLICATION FORM Mail or deliver your completed Application Form with your cheque to the following address. Payments made via Bpay do not require an form the be provided.

Mailing Address Hand Delivery (Please do not use this address for mailing purposes) American Pacific Borate & Lithium Ltd American Pacific Borate & Lithium Ltd C/- Advanced Share Registry C/- Advanced Share Registry PO Box 1156 110 Stirling Highway Nedlands, WA 6909 Nedlands, WA 6009