PLS.asx Buy

Pilbara Minerals Ltd (PLS) 30 Jun 2016

Share Price $0.615 Valuation $0.77 LTD (PLS) Price Target (12 month) $0.92

Big (and getting bigger) project Brief Business Description: Very large spodumene development in WA Pilbara Minerals is developing the very large Pilgangoora spodumene

(Lithium ore) deposit in northern WA. The Company has a reserve of 29.5Mt Hartleys Brief Investment Conclusion Very large deposit that looks highly economic. at 1.31% Li2O. The Company plans to begin construction later this year. We expect spodumene sales ~330ktpa, which in LCE equivalent terms is ~44ktpa (~22% of current demand). Based on consensus demand forecasts, the Chairman & MD market is not large enough to take all supply of potential lithium mines. Tony Kiernan (Non-exec Chair.) Hence it is important to be at an advanced stage, be technically robust, and Ken Brinsden (MD) have long mine life (for off-take agreements). PLS fits this profile well. If Major Shareholders electric vehicle take-up is stronger than expected, demand could be far stronger than anticipated. The large orebody at Pilgangoora suggest PLS can quickly expand into such a growing market. Company Address 130 Stirling Hwy, Economics are compelling. DFS due in August. North Fremantle, WA, 6159

The PFS (completed by Como Engineering) estimates capex of A$184m for Issued Capital 1148.1m a 2Mtpa processing plant generating 330ktpa of chemical grade spodumene - fully diluted 1244.5m Market Cap A$706.1m and 274klbpa of tantalite. The PFS estimates life-of-mine EBITDA of A$103m - fully diluted A$765.4m pa with higher profits in early years given the lower strip ratio. We use higher Cash (30 Jun 16e) A$100.0m spodumene prices and expect life-of-mine EBITDA of ~$156m pa, despite Debt (30 Jun 16e) A$0.0m EV A$606.1m assuming less tantalite than the PFS. The PFS assumes a 15 year mine life, EV/Resource Spod. A$36.1/t but that should be increased (exploration target implies >70years). EV/Reserve Spod. A$94.1/t Tantalite a good credit, but not important to the economics Prelim. (A$m) FY19e FY20e FY21e Prod (Li Spod. eq) 0.3 0.3 0.3 The tantalite grade is only 128ppm, the Company assumes recoveries of Op Cash Flw 137.1 126.6 99.3 47%. We are more conservative and assume there are modest tantalite Norm NPAT 128.5 100.5 73.4 sales, partly because the mine is optimised for lithium, and hence tantalite CF/Share (cps) 10.5 8.1 5.9 EPS (cps) 14.0 10.6 7.6 sales could be volatile given the tantalite will not be evenly distributed with P/E 5.9 7.6 10.4 the lithium. Our estimates could be assumed to be a worst case result. Note, Mt Li2O Spod. in the PFS, tantalite sales reduce operating costs by ~A$65/t (US$40/t) or Resources (Li2O) 80.2 1.25% 16.8 Reserve (Li2O) 29.5 1.31% 6.4 ~A$22m (US$16m) pa. Given the strong selling prices for spodumene, the margins for PLS are significant even without the tantalite. We assume operating costs of ~$A360/t, in line with Company estimates excluding Pilbara Min Ltd tantalite credits. 1.00 35.

Lithium: Developer 0.90 30. Off-take agreements 0.80 Historically the lithium market has been small, and concentrated amongst a 0.70 25. 0.60 20. few players. The additional supply that PLS is planning to bring to the market A$ 0.50 M is significant (~44ktpa LCE) and will need to find customers. The Company 0.40 15. 0.30 10. has no offtake agreement, but has MOUs with 8 potential customers and aims 0.20 5. have significant proportion signed around August. GAM has a first right of 0.10 0.00 . refusal for all spodumene and tantalum produced at Pilgangoora. The Jul-15 Nov-15 Mar-16 Jun-16 Company does not believe that the GAM right will be exercised and hence is Volume - RHS Source: IRESS PLS Shareprice - LHS Sector (S&P/ASX SMALL RESOURCES) - LHS limited risk. We only note the right for the outside chance it becomes an issue. Initiate with Buy PLS is a very exciting and large project. The recent shareprice retracement Trent Barnett means it now trades at a large discount to our valuation. We assume a 20 Head of Research Ph: +61 8 9268 3052 year mine life, which is longer than the PFS, but lower than the inferred E: [email protected] resource, and lower than implied by the 130-150Mt resource exploration Hartleys has assisted in the completion of part of a capital raising in the past 12 months for Pilbara Mines target (upgrade due in July). We initiate with a Buy recommendation. On our Limited. estimates, which are more conservative on capex and tantalite sales, PLS trades on 4.6x ‘year one’ EBITDA. Note, on spot prices (we assume US$750/t), our multiple estimate falls to 4.0x ‘year one’ EBITDA. Hartleys Limited ABN 33 104 195 057 (AFSL 230052) 141Page St Georges 1 of 21 Terrace, Perth, Western , 6000 Hartleys does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Further information concerning Hartleys’ regulatory disclosures can be found on Hartleys website www.hartleys.com.au

Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

Pilbara Min Ltd Share Price 30 June 2016 PLS $0.615 Buy

Key Market Information Directors Company Information Share Price $0.615 Tony Kiernan (Non-exec Chair.) 130 Stirling Hwy, Market Capitalisation - ordinary A$765m Ken Brinsden (MD) North Fremantle, WA, 6159 Net cash A$100m Neil Biddle (Non-exec) Ph +61 8 9336 6267 Market Capitalisation - fully diluted A$765m Robert Adamson (Non-exec) Fax +61 8 9433 5121 EV A$665m John Young (Non-exec., Technical) Issued Capital 1148.1m Brian Lynn (CFO) www.pilbaraminerals.com.au #REF! Options 96.4 Top Shareholders Ordinary Ord Issued Capital (diluted for options) 1244.5m m sh. % Issued Capital (diluted inc. options and new capital) 1244.5m 1 12month price target $0.92 2

3 Reserves & Resources Mt Li % Ta2O5 P&L Unit 30 Jun 17 30 Jun 18 30 Jun 19 30 Jun 20 30 Jun 21 4 Pilgangoora M+I 35.7 1.31% n/a Net Revenue A$m 0.0 273.0 365.0 315.0 267.0 5 Pilgangoora Inf 44.5 1.21% n/a Total Costs A$m -2.4 -100.1 -136.8 -133.5 -130.4 6 Pilgangoora Total 80.2 1.25% n/a EBITDA A$m -2.4 172.9 228.2 181.5 136.6 7 - margin - 63% 63% 58% 51% 8 Pilgangoora Reserve 29.5 1.31% 134 Depreciation/Amort A$m -11.1 -18.0 -19.9 -19.9 -19.9 9 EBIT A$m -13.5 154.9 208.4 161.6 116.6 Global Total 80.2 1.25% n/a Net Interest A$m -2.7 -4.9 -2.8 -0.8 0.8 10 Global Reserve 29.5 1.31% 134 Pre-Tax Profit A$m -16.2 150.1 205.6 160.8 117.5 Production Summary Unit Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Tax Expense A$m 0.0 -30.6 -77.1 -60.3 -44.1 Normalised NPAT A$m -16.2 119.4 128.5 100.5 73.4 Processed Mill Throughput Mt 1.50 2.00 2.00 2.00 Abnormal Items A$m 0.0 0.0 0.0 0.0 0.0 Mined grade Li % 1.3% 1.3% 1.3% Reported Profit A$m -16.2 119.4 128.5 100.5 73.4 Produced Spodumene - Technical Mt 0.000 0.000 0.000 0.000 Minority A$m 0.0 0.0 0.0 0.0 0.0 Produced Spodumene - Battery Mt 0.251 0.335 0.335 0.335 Profit Attrib A$m -16.2 119.4 128.5 100.5 73.4 Produced Tantalite Mlb pa 0.064 0.086 0.086 0.086 Produced Spodumene - Battery Eq Mt 0.256 0.341 0.343 0.344 Balance Sheet Unit 30 Jun 17 30 Jun 18 30 Jun 19 30 Jun 20 30 Jun 21 LCE equiv (0.135x Spod) ktpa 34.6 46.1 46.2 46.4 Cash A$m 39.7 62.3 169.1 275.2 354.1 Mine Life yr 19.50 18.50 17.50 16.50 Other Current Assets A$m 0.2 33.8 45.2 39.0 33.1 Assumed Mining Inventory Mt 39.0 37.0 35.0 33.0 Total Current Assets A$m 39.9 96.2 214.2 314.2 387.2 Assumed Mining Inventory - Li grade % 1.34% 1.34% 1.34% 1.34% Property, Plant & Equip. A$m 140.9 173.9 154.1 134.2 114.3 Assumed Mining Inventory - Tant grade % 0.0% 0.0% 0.0% 0.0% Exploration A$m 96.0 96.4 96.8 97.2 97.6 Capex -153.0 -51.0 0.0 0.0 0.0 Investments/other A$m 1.2 1.2 1.2 1.2 1.2 Costs Unit Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Tot Non-Curr. Assets A$m 238.1 271.5 252.1 232.6 213.1 Cost per milled tonne $A/t 50.2 50.2 50.2 50.2 Total Assets A$m 278.0 367.7 466.3 546.8 600.2 EBITDA / tonne milled ore $A/t 115.3 114.1 90.7 68.3 Total cost per milled tonne 66.8 68.4 66.7 65.2 Short Term Borrowings A$m - - - - - Total Cash Costs $A/t Spod. Batt. eq 390.9 400.5 389.7 379.5 Other A$m 0.1 0.3 0.4 0.4 0.4 C1: Operating Cash Cost = (a) $A/t Spod. Batt. eq 294.1 294.2 293.3 292.4 Total Curr. Liabilities A$m 0.1 0.3 0.4 0.4 0.4 (a) + Royalty = (b) $A/t Spod. Batt. eq 372.5 372.9 360.8 349.2 Long Term Borrowings A$m 100.0 70.0 40.0 20.0 - C2: (a) + depreciation & amortisation = (c) $A/t Spod. Batt. eq 364.2 352.4 351.4 350.4 Other A$m - - - - - (a) + actual cash for development = (d) $A/t Spod. Batt. eq 494.7 295.4 294.5 293.5 Total Non-Curr. Liabil. A$m 100.0 70.0 40.0 20.0 - AISC: (c) + Royalty $A/t Spod. Batt. eq 442.6 431.0 418.9 407.2 Total Liabilities A$m 100.1 70.3 40.4 20.4 0.4 (d) + Royalty $A/t Spod. Batt. eq 573.1 374.0 361.9 350.3 Net Assets A$m 177.9 297.4 425.9 526.4 599.8 Price Assumptions Unit Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Net Debt A$m 60.3 7.7 -129.1 -255.2 -354.1 AUDUSD US$/A$ 0.69 0.73 0.75 0.76 0.77 Spodumene - Chemical (ie Battery) US$/t 675 775 800 700 600 Cashflow Unit 30 Jun 17 30 Jun 18 30 Jun 19 30 Jun 20 30 Jun 21 Tantalite US$/t 60 60 60 60 60 Operating Cashflow A$m -2.4 139.5 217.0 187.7 142.5 Income Tax Paid A$m 0.0 -30.6 -77.1 -60.3 -44.1 Hedging Unit Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Interest & Other A$m -2.7 -4.9 -2.8 -0.8 0.8 none Operating Activities A$m -5.0 104.0 137.1 126.6 99.3 Sensitivity Analysis Valuation FY21 NPAT Property, Plant & Equip. A$m -153.0 -51.0 0.0 0.0 0.0 Base Case 0.77 73.4 Exploration and Devel. A$m -0.4 -0.4 -0.4 -0.4 -0.4 Spot Prices 0.95 (24.4%) 118.2 (61.0%) Other A$m 0.0 0.0 0.0 0.0 0.0 Spot USD/AUD 0.74, Chemical Spod $750/t,Tant. $60/lb. Investment Activities A$m -153.4 -51.4 -0.4 -0.4 -0.4 AUDUSD +/--10% 0.68 / 0.88 (-11.8% / 14.4%) 59.2 / 90.8 (-19.4% / 23.7%) Spodumene - Technical +/--10% 0.77 / 0.77 (0.0% / 0.0%) 73.4 / 73.4 (0.0% / 0.0%) Borrowings A$m 100.0 -30.0 -30.0 -20.0 -20.0 Spodumene - Chemical +/--10% 0.86 / 0.67 (12.6% / -12.6%) 88.6 / 58.2 (20.7% / -20.7%) Equity or "tbc capital" A$m 0.0 0.0 0.0 0.0 0.0 Tantalite +/--10% 0.77 / 0.76 (0.3% / -0.3%) 73.8 / 73.0 (0.6% / -0.6%) Dividends Paid A$m 0.0 0.0 0.0 0.0 0.0 Production +/--10% 0.86 / 0.67 (12.4% / -12.4%) 88.3 / 58.5 (20.3% / -20.3%) Financing Activities A$m 100.0 -30.0 -30.0 -20.0 -20.0 Operating Costs +/--10% 0.73 / 0.80 (-4.8% / 4.8%) 67.1 / 79.8 (-8.6% / 8.6%) Unpaid Capital Net Cashflow A$m -58.4 22.6 106.7 106.2 78.9 Year Expires No. (m) $m Avg price % ord 30-Jun-16 0.0 0.0 0.00 0% Shares Unit 30 Jun 17 30 Jun 18 30 Jun 19 30 Jun 20 30 Jun 21 30-Jun-17 23.4 1.7 0.07 2% Ordinary Shares - End m 1171.4 1213.0 1244.5 1244.5 1244.5 30-Jun-18 41.6 15.8 0.38 4% Ordinary Shares - W'ted m 1159.7 1192.2 1228.7 1244.5 1244.5 30-Jun-19 31.5 12.6 0.40 3% Diluted Shares - W'ted m 1244.5 1244.5 1244.5 1244.5 1244.5 30-Jun-20 0.0 0.0 0.00 0% TOTAL 96.4 30.1 0.31 8% Ratio Analysis Unit 30 Jun 17 30 Jun 18 30 Jun 19 30 Jun 20 30 Jun 21 Valuation $m $/shr Cashflow Per Share A$ cps -0.4 8.7 11.2 10.2 8.0 100% Pilgangoora (pre-tax NAV at disc. rate of 12%) 944 0.76 Cashflow Multiple x -141.4 7.1 5.5 6.0 7.7 Other Assets/Exploration 240 0.19 Earnings Per Share A$ cps -1.4 10.0 10.5 8.1 5.9 Forwards 0 0.00 Price to Earnings Ratio x -44.1 6.1 5.9 7.6 10.4 Corporate Overheads -73 -0.06 Dividends Per Share AUD - - - - - Net Cash (Debt) 100 0.08 Dividend Yield % 0.0% 0.0% 0.0% 0.0% 0.0% Net Debt / Net Debt + Equity% 25% 3% -43% -94% -144% Tax (NPV future liability) -276 -0.22 Interest Cover X na 31.8 75.2 206.8 na Options & Other Equity 18 0.01 Return on Equity % na 40% 30% 19% 12% Total 954 0.77

Analyst: Trent Barnett 30 Jun 16 +61 8 9268 3052 "tbc capital" could be equity or debt. Our valuation is risk-adjusted for how this may be obtained. Sources: IRESS, Company Information, Hartleys Research

Page 2 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

Pilbara Minerals is BUSINESS OVERVIEW focussed on Pilbara Minerals is focussed on developing the very large Pilgangoora spodumene developing the very project located in northern WA. The Company also has a JV for the Tabba Tabba large Pilgangoora tantalum project, but this is far less meaningful. The Company is aggressively spodumene project. proceeding with the study work for Pilgangoora in order to enter the market quickly and then subsequently expand (economics permitting).

Fig. 1: Pilgangoora located near Port Hedland

Source: PLS

Page 3 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

PILGANGOORA

Pilbara's Pilgangorra Pilbara's Pilgangorra is the biggest new hardrock lithium ore (spodumene) deposits in is the biggest new the world. The deposit contains an Indicated and Inferred Resource of 80.2 Mt grading hardrock lithium ore 1.26% Li2O (spodumene). Within the total resource of 80.2 Mt, using a cut-off of 1% (spodumene) deposits Li2O the resource is 59.3 Mt @ 1.44% Li2O. The Company is currently completing a in the world, with resource update with an exploration target of 130-150Mt @ 1.2-1.5% Li2O3 and 175- another update due in 225ppm Ta2O3. The new resource is expected in July. July. The flow sheet assumes crushing, feed preparation, dense media separation, gravity separation, grinding, flotation, magnetic separation and dewatering. The project is well located in the Pilbara which means it has strong access to infrastructure (road & port) and suppliers (skilled labour, logistics, etc).

The Company has shown that metallurgical work to date suggests ~270ktpa of chemical grade product (6% Li2O) and 50ktpa of Technical Grade Spodumene Concentrate (+6% Li2O) can be produced, however it is assumed (by the PFS and in our valuation) that all product is sold as chemical grade given the difficulty in placing technical grade into the market.

Flotation test work to date suggests the spodumene product will be concentrate grading 5.7% Li2O (lithium oxide) and 0.37% Fe2O3 (iron oxide). Magnetic separation after flotation reduced the iron oxide content of the spodumene concentrate to 0.11% Fe2O3. This should be a desirable product, in our view.

Fig. 2: Resource and Reserve – resource update expected in July, DFS reserve August

Source: PLS

Page 4 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

Fig. 3: Pilgangoora cross section. Shows potential for large reserve upgrade.

Source: PLS

Fig. 4: Pilgangoora flow sheet

Source: PLS Page 5 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

Fig. 5: Pilgangoora study and Hartleys assumptions PFS Hartleys (base) Difference

Mining inventory 29.5Mt 40Mt 35.6% - grade Li2O 1.31% 1.34% 2.2% - grade Ta2O5 134 130 -3.0% Potential Mining inventory 53.9 40 -25.8% - grade Li2O 1.29% 1.34% 3.8% - grade Ta2O5 128 130 1.6%

Mine Life (yrs) 15.0yrs 20.0yrs 33.3% Capex - Total A$184m A$205.8m 11.8% Mined Ore + Waste (mt pa) 9.0mt pa 9.5mt pa 5.6% Waste (mt pa) 7.0mt pa 7.5mt pa 7.2% Strip Ratio (x) 3.5x 3.8x 7.2% - first five years 2.9x 2.9x 1.0% Mill Feed (mt pa) 2.0mt pa 2.0mt pa 0.0% Total Spodumene Mined Total Tantalite Mined Spodumene Recoveries 76.7% 75.0% -2.2% Tantalite Recoveries 47.0% 15.0% -68.1% Spudumene Sold 330.0ktpa 334.7ktpa 1.4% - LCE (0.135x) 44.6ktpa 45.2ktpa 1.4% Tantalite Sold 274klb pa 86klb pa -68.6% Construction date Dec-16 Dec-16 0.0% Commisioning date Dec-17 Dec-17 0.0%

Revenue (US$) - LOM US$2,257m US$4,266m 89.0% - tantalite US$245m US$103m -57.9% Costs (US$) - LOM -US$1,099m -US$1,857m 69.1% - / tonne -US$ 222 /t -US$ 277 /t 25.0% EBITDA (US$) - LOM US$1,159m US$2,409m 107.9% EBITDA - A$ pa A$103m pa A$156.5m pa 51.9% - first 5 years A$120m pa A$188.5m pa 57.1%

EV/EBITDA (year 1) 7.1x 4.6x -34.7% EV/EBITDA (lom) 8.2x 5.6x -32.5%

Life of mine avg selling price (Spodumene) US$ fob US$ 456 /t US$ 637 /t 39.7% Life of mine avg selling price (Tantalite) US$ fob US$ 60 /t US$ 60 /t 0.0% Life of mine avg C1 cash costs pre credit A$ 339 /t A$ 360 /t 6.1% Life of mine avg C1 cash costs after credit A$ 273 /t A$ 340 /t 24.4% - US$ after credit US$ 205 /t US$ 262 /t 28.0% Life of mine avg C2 cash costs pre credit A$ 364 /t A$ 387 /t 6.1% after credit A$ 293 /t A$ 365 /t 24.4% fx US$/A$ 0.75 0.77 2.9%

Source: PLS

Page 6 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

TABBA TABBA, WESTERN AUSTRALIA (50%) Tabba Tabba is a tantalum development project, with an inferred resource of 318kt @ 950ppm Ta2O5. The Tabba Tabba Tantalite project is being developed under a five year (due to expire in 2018) exclusive mining and off-take agreement with Global Advanced Metals (Wodgina) Pty Ltd (GAM). Construction was completed in November 2015 but commissioning was underwhelming, and the operation was placed into care and maintenance in January 2016. We assume no explicit value in our PLS valuation.

Fig. 6: Tabba Tabba resource

Source: PLS

Fig. 7: Tabba Tabba construction 2015

Source: PLS WEST PILBARA, WESTERN AUSTRALIA (20%) The West Pilbara Mineral Tenements cover approximately 800 square kilometres and are considered to be prospective for base metals, platinum group elements and/or gold mineralisation associated with concealed greenstone sequences or layered mafic - ultramafic intrusions. The tenements have been farmed out to Fox Resources Ltd.

We assume no explicit value in our PLS valuation.

Page 7 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

INDUSTRY EXPOSURE

PLS is exposed to the PLS is exposed to the spodumene price. Consequently, PLS is exposed to the lithium spodumene price. carbonate price. Consequently, PLS is exposed to the lithium Current demand for LCE is ~200ktpa, which is satisfied by current supply. However, carbonate price. demand is expected to grow significantly. Forecasts depend largely on the take up of lithium battery cars, for which industry is uncertain. However, most forecasts assume ~100ktpa of additional LCE is required by 2020 (50% increase). The world has enough resources to satisfy the demand, and hence there is a short window to get into production. Those mines likely to enter production will be those that can sign offtakes. Offtake partners normally want high quality product (low impurities), low sovereign risks, long mine life and robust projects (basically security of supply).

We estimate that if electric vehicle market share is around 11% by 2025 (currently ~1.5%) then global LCE demand will be ~400kt, which seems to be close to consensus estimates for demand. However, if market share increases faster (~extra 100bp pa), such that penetration is 17% by 2025 then global LCE demand could be 500kt by 2025. If demand truly accelerated, and penetration reach ~45% by 2025, then LCE demand would be 900kt. If penetration rates are slower, then the point at which demand reaches 500kt pa may be deferred, but ultimately the structural demand for LCE is still very strong.

Some expectations are for 100% market share by 2030, which could mean substantially higher LCE demand, although if autonomous vehicles market share is also very high then it is possible that global new car sales begin to decline.

Note, the PFS assumes that PLS will not be selling technical grade spodumene, which is used in the ceramics and glass industry (which is driven by global consumer growth). Technical grade spodumene sells for a higher price, but market growth is much lower. The Company believes it is a potential product stream, but we are far more cautious because it probably is more competitive to displace incumbents given the slower growth profile.

Fig. 8: Lithium Carbonate outlook

Source: PLS Page 8 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

Fig. 9: Hartleys simple LCE demand forecasts LCE demand in 2025 1000 900 800 700 600 500 400 300 200 100 0 2016 demand Electric Vehicle market share market share market share market share market share 17% in 2025 24% in 2025 31% in 2025 47% in 2025 11% of new car sales in 2025

Source: Hartleys

Fig. 10: Tesla Giga Factory

Source: http://electrek.co/2016/06/02/tesla-gigafactory-update-aerial-shots-gallery-june-2016/#jp-carousel-17490

GEOGRAPHIC EXPOSURE The project is located in northern Western Australia.

Page 9 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

PEERS AND COMPETITORS

Fig. 11: Selection of ASX listed lithium miners, developers and explorers Company Ticker Last Quot. Mkt CapStatus ASX Listed 1. Mineral Resources Limited MIN 8.31 1,560 Producer (Spod.) 2. Limited ORE 4.79 980 Producer (Brine) 3. Pilbara Minerals Limited PLS 0.615 683 Developer (Spod.) 4. Limited GXY 0.495 642 Producer (Spod.) & Developer (Brine) 5. Neometals Ltd NMT 0.45 257 Producer (Spod.) 6. General Mining Corporation Limited GMM 0.795 251 Producer (Spod.) 7. Altura Mining Limited AJM 0.19 207 Developer (Spod.) 8. Lithium Australia NL LIT 0.255 57 Explorer (Spod.) 9. Poseidon Nickel Limited POS 0.055 46 Explorer (Spod.) 10. European Metals Holdings Limited EMH 0.455 46 Developer (Spod.) 11. Birimian Gold Limited BGS 0.2875 44 Explorer (Spod.) 12. Global Geoscience Limited GSC 0.049 40 Explorer (Clay / dried brine) 13. Kidman Resources Limited KDR 0.155 39 Explorer (Spod.) 14. Crusader Resources Limited CAS 0.15 36 Explorer (Spod.) 15. Pioneer Resources Limited PIO 0.035 32 Explorer (Spod.) 16. Dakota Minerals Limited DKO 0.098 32 Explorer (Spod.) 17. Platypus Minerals Ltd PLP 0.017 31 Explorer (Spod.) 18. Metalicity Limited MCT 0.068 29 Explorer (Spod.) 19. Prospect Resources Limited PSC 0.022 24 Explorer (Spod.) 20. Ardiden Ltd ADV 0.027 21 Explorer (Spod.) 21. Zenith Minerals Limited ZNC 0.11 20 Explorer (Spod.) 22. Argosy Minerals Limited AGY 0.04 19 Explorer (Spod.) 23. Sayona Mining Limited SYA 0.03 16 Explorer (Spod.) 24. Hannans Ltd HNR 0.016 16 Explorer (Spod.) 25. Plymouth Minerals Limited PLH 0.14 15 Explorer / Developer (Muscovite) 26. Kairos Minerals Limited KAI 0.055 15 Explorer (Spod.) 27. Liontown Resources Limited LTR 0.018 13 Explorer (Spod.) 28. Peninsula Mines Limited PSM 0.027 12 Explorer (Spod.) 29. Walkabout Resources Ltd WKT 0.005 11 Explorer (Spod.) 30. Exterra Resources Limited EXC 0.045 11 Explorer (Spod.) 31. Cazaly Resources Limited CAZ 0.073 10 Explorer (Spod.) 32. Venture Minerals Limited VMS 0.032 10 Explorer (Spod.) 33. Marindi Metals Limited MZN 0.0085 10 Explorer (Spod.) 34. Venus Metals Corporation Limited VMC 0.145 9 Explorer (Spod.) 35. Argonaut Resources NL ARE 0.012 8 Explorer (Brine) 36. Silver City Minerals Limited SCI 0.05 6 Explorer (Spod.) 37. Core Exploration Limited CXO 0.022 6 Explorer (Spod.) 38. Paynes Find Gold Limited PNE 0.083 6 Developer (Spod.) 39. Kingston Resources Limited KSN 0.021 6 Explorer (Spod.) 40. Cullen Resources Limited CUL 0.003 6 Explorer (Spod.) 41. Maximus Resources Limited MXR 0.003 6 Explorer (Spod.) 42. Traka Resources Limited TKL 0.02 5 Explorer (Spod.) 43. Mithril Resources Limited MTH 0.006 3 Explorer (Spod.) 44. Quantum Resources Limited QUR 0.026 3 Explorer (Spod.) *Market cap is quoted ordinary shares from IRESS. It does not dilute for options, escrow shares, performance shares, convertible notes, recent placements etc. These can be meaningful adjustments that should be taken into account.

Source: Hartleys, IRESS

Page 10 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

KEY SUPPLIERS & CUSTOMERS

Como Engineers have Como Engineers have completed the PFS and are performing the DFS. completed the PFS and are performing The Company expects to export products to customers using Qube at Port Hedland. the DFS. The Company expects to use contract mining and power supply. There is currently no offtake arrangement for the spodumene or tantalite but GAM have first right of refusal for both products. Securing an offtake is important, and could be complicated to negotiate given GAM’s first right, although the Company believes it is unlikely, especially as customer offtakes could also include partnerships and hence could be difficult to match. If GAM does not exercise its right, then it receives a 2.5% NSR instead. Our NPV12 of the royalty to GAM is >A$40m. We note that MIN.asx recently purchased the GAM Wodgina assets (excluding Tantalum rights). We are unaware if the sale included the GAM royalty over PLS’s project.

The Company recently announced that it has “Eight product off-take MOU’s signed with leading chemical and technical grade customers for 100% of forecast production”. The Company expects to announce significant agreements around August.

Fig. 12: DFS consultants

Source: PLS

Fig. 13: Customers

Source: PLS Page 11 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

MANAGEMENT, DIRECTORS AND MAJOR SHAREHOLDER

Economic Exposure of Board and key management Total Total Options Shares Economic # Exposure Position millions rank Directors Tony Kiernan Non-Exec Chairman n/a n/a Ken Brinsden MD 15,000,000 869,565 15,869,565 3 Neil Biddle Non-Exec Director 8,000,000 39,271,930 47,271,930 1 Robert Adamson Non-Exec Director 4,000,000 3,937,851 7,937,851 4 John Young Technical (exploration) director 10,000,000 16,158,316 26,158,316 2 Source: PLS Director and management biographies are copied from the Company Tony Keirnan, Non-Executive Chairman Mr Kiernan is a highly experienced public company director and former solicitor well credentialed in the mining sector. He is currently Chairman of ASX-listed resource companies BC Iron (ASX: BCI), Chalice Gold Mines (ASX: CHN) and Venturex Resources (ASX: VXR) and a non-executive director of Danakali Limited (ASX: DNK). BC Iron of which Mr. Kiernan was founding Chairman, went from a market capitilisation on listing of $12.5m to over $700m and paying out over $100m in fully franked dividends over a 3 year period. Chalice Gold Mines successfully developed then sold a high grade gold project in Eritrea and Danakali recently completed a positive feasibility study on its large potassium sulphate project in Eritrea.

Ken Brinsden, MD Mr Brinsden is a Mining Engineer with over 20 years’ experience in surface and underground mining operations, including roles in mine management, production, brown-fields and green-fields development roles, across multi-commodities. Most recently Mr Brinsden was Managing Director at , contributing to the substantial growth of the Company from a junior explorer, to a significant ore producer. Mr Brinsden joined Pilbara Minerals as CEO from January 2016.

Neil Biddle, Executive Director, BAppSc (Geology), M AusIMM Mr Biddle is a geologist and Corporate Member of the Australasian Institute of Mining and Metallurgy. He has over 30 years professional and management experience in the exploration and mining industry and since 1987 has served on the Board of several ASX listed companies. Mr Biddle was Managing Director of TNG Ltd from 1998-2007, Border Gold NL from 1994-1998 and Consolidated Victorian Mines 1991-1994.

Robert Adamson, Non-Executive Director & Consultant Geologist, BSc, MSc (Hons), MAusIMM, MMICA Mr Adamson has most recently served as the Company's consultant geologist and has been managing the exploration program for the Company's tenements in the West Pilbara, WA. Robert (Bob) Adamson's professional career spans some 43 years, (1966-present), The first 25 of which he was employed in a range of technical and managerial positions with international mining houses, and in managerial and board positions with several publically-listed exploration and mining companies. Bob has been operating as an independent mineral industry consultant since 1993.

Page 12 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

Mr John Young, Technical Director, B.AppSc Geology; MAus.IMM Mr Young is a highly experienced geologist having been engaged on exploration and production projects encompassing gold, uranium and specialty metals. From 2002 to 2006 Mr Young was Exploration Manager for Haddington Resources Limited and was responsible for resource exploration and resource definition for their Bald Hill Tantalum mine. His corporate experience has included appointments as CEO of Marenica Energy Limited and CEO and director of Thor Mining PLC. Mr Young has been the Company’s Exploration Manager since June 2014 and a Director since September 2015.

MAJOR SHAREHOLDERS There are no substantial shareholders.

OPTIONS, CONVERTIBLES AND UNPAID CAPITAL The main holders of the options are management and the Board.

Fig. 14: Options Expiry Strike Number Unpaid Capital ($m) Mar-17 $0.03 4,166,665 0.18 Dec-16 $0.05 1,250,000 0.06 Mar-17 $0.05 4,937,500 0.31 Mar-17 $0.10 13,000,000 1.50 Dec-17 $0.15 3,268,181 0.49 May-18 $0.40 37,500,000 15.00 May-17 $0.65 7,000,000 4.55 May-18 $0.40 800,000 0.32 May-19 $0.40 31,500,000 12.60 Total 103,422,346 $35.0m Source: PLS

Page 13 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

FINANCIALS

PRODUCTION / PROFIT & LOSS

The Company is Company guidance targeting construction The Company is targeting construction from December 2016 and commissioning from December 2016 December 2017. and commissioning December 2017. Hartleys Forecasts We assume first production in early CY18.

Fig. 15: Production and Profit and Loss P&L Unit 30 Jun 17 30 Jun 18 30 Jun 19 30 Jun 20 30 Jun 21 Net Revenue A$m 0.0 273.0 365.0 315.0 267.0 Total Costs A$m -2.4 -100.1 -136.8 -133.5 -130.4 EBITDA A$m -2.4 172.9 228.2 181.5 136.6 - margin - 63% 63% 58% 51% Depreciation/Amort A$m -11.1 -18.0 -19.9 -19.9 -19.9 EBIT A$m -13.5 154.9 208.4 161.6 116.6 Net Interest A$m -2.7 -4.9 -2.8 -0.8 0.8 Pre-Tax Profit A$m -16.2 150.1 205.6 160.8 117.5 Tax Expense A$m 0.0 -30.6 -77.1 -60.3 -44.1 Normalised NPAT A$m -16.2 119.4 128.5 100.5 73.4 Abnormal Items A$m 0.0 0.0 0.0 0.0 0.0 Reported Profit A$m -16.2 119.4 128.5 100.5 73.4 Minority A$m 0.0 0.0 0.0 0.0 0.0 Profit Attrib A$m -16.2 119.4 128.5 100.5 73.4

Source: Hartleys Research Estimates BALANCE SHEET

Fig. 16: Balance Sheet Balance Sheet Unit 30 Jun 17 30 Jun 18 30 Jun 19 30 Jun 20 30 Jun 21 Cash A$m 39.7 62.3 169.1 275.2 354.1 Other Current Assets A$m 0.2 33.8 45.2 39.0 33.1 Total Current Assets A$m 39.9 96.2 214.2 314.2 387.2 Property, Plant & Equip. A$m 140.9 173.9 154.1 134.2 114.3 Exploration A$m 96.0 96.4 96.8 97.2 97.6 Investments/other A$m 1.2 1.2 1.2 1.2 1.2 Tot Non-Curr. Assets A$m 238.1 271.5 252.1 232.6 213.1 Total Assets A$m 278.0 367.7 466.3 546.8 600.2

Short Term Borrowings A$m - - - - - Other A$m 0.1 0.3 0.4 0.4 0.4 Total Curr. Liabilities A$m 0.1 0.3 0.4 0.4 0.4 Long Term Borrowings A$m 100.0 70.0 40.0 20.0 - Other A$m - - - - - Total Non-Curr. Liabil. A$m 100.0 70.0 40.0 20.0 - Total Liabilities A$m 100.1 70.3 40.4 20.4 0.4 Net Assets A$m 177.9 297.4 425.9 526.4 599.8 Net Debt A$m 60.3 7.7 -129.1 -255.2 -354.1

Source: Hartleys Research Estimates

Page 14 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

Gearing ratios

Fig. 17: Gearing Ratios Ratio Analysis Unit 30 Jun 17 30 Jun 18 30 Jun 19 30 Jun 20 30 Jun 21 Cashflow Per Share A$ cps -0.4 8.7 11.2 10.2 8.0 Cashflow Multiple x -146.0 7.3 5.7 6.2 8.0 Earnings Per Share A$ cps -1.4 10.0 10.5 8.1 5.9 Price to Earnings Ratio x -45.6 6.3 6.1 7.9 10.8 Dividends Per Share AUD - - - - - Dividend Yield % 0.0% 0.0% 0.0% 0.0% 0.0% Net Debt / Net Debt + Equity% 25% 3% -43% -94% -144% Interest Cover X na 31.8 75.2 206.8 na Return on Equity % na 40% 30% 19% 12%

Source: Hartleys Research Estimates

Fixed Assets PLS currently has minimal fixed assets. We assume ~A$100m of debt or pre- Debt payments to finance We assume ~A$100m of debt or pre-payments to finance construction. construction.

Hedging Currently there is no hedging. However, the Company intends to write offtake

agreements with cap and collar price clauses.

CASH FLOW

Fig. 18: Cash Flow Statement Cashflow Unit 30 Jun 17 30 Jun 18 30 Jun 19 30 Jun 20 30 Jun 21 Operating Cashflow A$m -2.4 139.5 217.0 187.7 142.5 Income Tax Paid A$m 0.0 -30.6 -77.1 -60.3 -44.1 Interest & Other A$m -2.7 -4.9 -2.8 -0.8 0.8 Operating Activities A$m -5.0 104.0 137.1 126.6 99.3

Property, Plant & Equip. A$m -153.0 -51.0 0.0 0.0 0.0 Exploration and Devel. A$m -0.4 -0.4 -0.4 -0.4 -0.4 Other A$m 0.0 0.0 0.0 0.0 0.0 Investment Activities A$m -153.4 -51.4 -0.4 -0.4 -0.4

Borrowings A$m 100.0 -30.0 -30.0 -20.0 -20.0 Equity or "tbc capital" A$m 0.0 0.0 0.0 0.0 0.0 Dividends Paid A$m 0.0 0.0 0.0 0.0 0.0

Financing Activities A$m 100.0 -30.0 -30.0 -20.0 -20.0 The PFS estimates Net Cashflow A$m -58.4 22.6 106.7 106.2 78.9 capex of A$184m. We assume slightly Source: Hartleys Research Estimates higher. Capex requirements The PFS estimates capex of A$184m. We assume slightly higher.

Free cash flow PLS should generate substantial free cash flow once in production. Dividends

We do not expect the Company to pay dividends in the foreseeable future.

Page 15 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

EQUITY ISSUANCE We assume no more equity dilution to fund construction.

We assume no more SENSITIVITIES equity dilution to fund construction. FX exposure PLS costs are based in AUD while selling prices are denominated in USD.

Interest Rate exposure

We assume some debt financing to fund construction. However, our valuation sensitivity to interest rates is small. Commodity price exposure PLS is exposed the spodumene prices, which in turn can be driven by lithium carbonate and lithium hydroxide prices.

Fig. 19: Valuation sensitivity to selling prices Spodumene Price Base Case EBITDA pa LOM per tonne PLS Val. New Shares A$m pa US$m pa EV/EBITDA AUD* USD (A$/shr) (m) 403 300 $ 0.24 0 $ 32 $ 23 27.6x 470 350 $ 0.34 0 $ 52 $ 39 16.7x 537 400 $ 0.41 0 $ 73 $ 54 11.9x 604 450 $ 0.49 0 $ 94 $ 70 9.3x 671 500 $ 0.57 0 $ 115 $ 85 7.6x 739 550 $ 0.65 0 $ 135 $ 101 6.4x 806 600 $ 0.72 0 $ 156 $ 116 5.6x 873 650 $ 0.80 0 $ 177 $ 132 4.9x 940 700 $ 0.88 0 $ 198 $ 147 4.4x 1007 750 $ 0.95 0 $ 219 $ 163 4.0x 1074 800 $ 1.03 0 $ 239 $ 178 3.6x 1142 850 $ 1.11 0 $ 260 $ 194 3.3x 1209 900 $ 1.18 0 $ 281 $ 209 3.1x 1276 950 $ 1.26 0 $ 302 $ 225 2.9x 1343 1000 $ 1.34 0 $ 323 $ 240 2.7x AUD/USD* 0.74

Source: Hartleys Research Estimates

Page 16 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

VALUATION CONSIDERATIONS AND PRICE TARGET METHODOLOGY

VALUATION

Fig. 20: Pilgangoora study and Hartleys assumptions PFS Hartleys (base) Difference Hartleys (spot) Hartleys (spot versus base)

Mining inventory 29.5Mt 40Mt 35.6% 40Mt - grade Li2O 1.31% 1.34% 2.2% 1.34% - grade Ta2O5 134 130 -3.0% 130 Potential Mining inventory 53.9 40 -25.8% 40 - grade Li2O 1.29% 1.34% 3.8% 1.34% - grade Ta2O5 128 130 1.6% 130

Mine Life (yrs) 15.0yrs 20.0yrs 33.3% 20.0yrs Capex - Total A$184m A$205.8m 11.8% A$205.8m Mined Ore + Waste (mt pa) 9.0mt pa 9.5mt pa 5.6% 9.5mt pa Waste (mt pa) 7.0mt pa 7.5mt pa 7.2% 7.5mt pa Strip Ratio (x) 3.5x 3.8x 7.2% 3.8x - first five years 2.9x 2.9x 1.0% 2.9x Mill Feed (mt pa) 2.0mt pa 2.0mt pa 0.0% 2.0mt pa Total Spodumene Mined Total Tantalite Mined Spodumene Recoveries 76.7% 75.0% -2.2% 75.0% Tantalite Recoveries 47.0% 15.0% -68.1% 15.0% Spudumene Sold 330.0ktpa 334.7ktpa 1.4% 334.7ktpa - LCE (0.135x) 44.6ktpa 45.2ktpa 1.4% 45.2ktpa Tantalite Sold 274klb pa 86klb pa -68.6% 86klb pa Construction date Dec-16 Dec-16 0.0% Dec-16 Commisioning date Dec-17 Dec-17 0.0% Dec-17

Revenue (US$) - LOM US$2,257m US$4,266m 89.0% US$5,124m 20.1% - tantalite US$245m US$103m -57.9% US$103m Costs (US$) - LOM -US$1,099m -US$1,857m 69.1% -US$1,868m 0.6% - / tonne -US$ 222 /t -US$ 277 /t 25.0% -US$ 279 /t 0.6% EBITDA (US$) - LOM US$1,159m US$2,409m 107.9% US$3,256m 35.2% EBITDA - A$ pa A$103m pa A$156.5m pa 51.9% A$218.6m pa 39.7% - first 5 years A$120m pa A$188.5m pa 57.1% A$219.8m pa 16.6%

EV/EBITDA (year 1) 7.1x 4.6x -34.7% 4.0x -14.3% EV/EBITDA (lom) 8.2x 5.6x -32.5% 4.0x -28.4%

Life of mine avg selling price (Spodumene) US$ fob US$ 456 /t US$ 637 /t 39.7% US$ 765 /t 20.1% Life of mine avg selling price (Tantalite) US$ fob US$ 60 /t US$ 60 /t 0.0% US$ 60 /t 0.0% Life of mine avg C1 cash costs pre credit A$ 339 /t A$ 360 /t 6.1% A$ 375 /t 4.2% Life of mine avg C1 cash costs after credit A$ 273 /t A$ 340 /t 24.4% A$ 354 /t 4.2% - US$ after credit US$ 205 /t US$ 262 /t 28.0% US$ 264 /t 0.6% Life of mine avg C2 cash costs pre credit A$ 364 /t A$ 387 /t 6.1% A$ 403 /t 4.2% after credit A$ 293 /t A$ 365 /t 24.4% A$ 381 /t 4.2% fx US$/A$ 0.75 0.77 2.9% 0.74 -3.5%

Source: PLS

Page 17 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

Fig. 21: Key Assumptions and Risks for valuation Assumption Risk of not realising Downside risk to Comment assumption valuation if assumption is incorrect ~20 year mine life Low Meaningful upside This appears reasonable based on current resources

2mtpa processing Upside/downside Moderate We assume throughput in line with the PFS. The Company may look to expand should the market allow.

Capex slightly higher than Low Upside / downside We assume capex slightly higher than the PFS PFS

Debt/equity funding Low Upside / downside We assume the project is mostly equity funded. More debt funding would improve our valuation

Tantalite recoveries lower than Low Upside We assume low recoveries in order to be PFS estimate conservative

No value for Tabba Tabba or Low Upside We assume no explicit value outside of the other projects lithium project.

No value for downstream Low Upside We assume no explicit value for potential opportunities downstream opportunities.

Exploration value Moderate Low We assume modest exploration value.

Conclusion Spodumene selling prices are the most significant risk, and adjacent to this is signing the offtakes for product. Commissioning and financing are also risks to our valuation.

Source: Hartleys PRICE TARGET Our price target is based on a risk weighted scenario of various potential valuation outcomes.

Price Target Methodology Weighting Spot 12 mth out NPV base case, assuming significant equity dilution 44% $0.77 $0.84 NPV at spot commodity and fx prices 40% $0.95 $1.03 NPV base case with tantalite 15% $0.85 $0.93 Net cash 1% $0.09 $0.09 Risk weighted composite $0.85 12 Months Price Target $0.92 Shareprice - Last $0.615 12 mth total return (% to 12mth target + dividend) 50% Source: Hartleys Estimate

Page 18 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

RECOMMENDATION & RISKS

INVESTMENT THESIS & RECOMMENDATION We initiate with a Buy recommendation. On Company estimates, PLS is trading on We initiate with a Buy EV (diluted for capex) of 7.1x (year 1) and 8.2x LOM. On our estimates, which are recommendation. more conservative on capex and tantalite sales but more aggressive on spodumene prices, PLS trades on 4.6x ‘year one’ EBITDA. Note, on spot prices, our multiple estimate falls to 4.0x ‘year one’ EBITDA, showing the significant leverage for spodumene bulls. RISKS The largest risk for PLS is financing the construction. Adjacent to this risk, is the ability for the Company to sign offtakes for the product to provide certainty for financers. Additionally, the prices for spodumene are a risk. Other risks for are similar to most developers: the outcomes of more detailed studies, management key-man risk, relevant government approvals, political risk, commodity prices, commissioning success and the asset performance versus nameplate design.

SIMPLE S.W.O.T. TABLE Strengths Strong cash balance Large deposit and long mine life Good lithium grades Low capex Speed to first production Potential to expand Located in Western Australia

Weaknesses Low tantalite grade First right of refusal with GAM Offtakes still to be signed

Opportunities Mine life extensions Technical grade lithium sales Expansion into downstream

Threats Metallurgical recoveries Selling prices Source: Hartleys Research

Page 19 of 21 Hartleys Limited Pilbara Minerals Ltd (PLS) 30 June 2016

EV/EBITDA BANDS

Fig. 22: Using Hartleys base case commodity forecasts

Shareprice 1.80

1.60 PLS Actual Hartleys Target 1.40 8x EV/EBITDA 1.20 6x EV/EBITDA 1.00 4x EV/EBITDA

.80 2x EV/EBITDA

.60 1x EV/EBITDA .40

.20

.00

Source: Hartleys Estimates, IRESS

Fig. 23: Using spot commodity prices Shareprice 1.80

1.60 PLS Actual

1.40 8x EV/EBITDA

1.20 6x EV/EBITDA

1.00 4x EV/EBITDA

.80 2x EV/EBITDA

.60 1x EV/EBITDA

.40

.20

.00

Source: Hartleys Estimates

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HARTLEYS CORPORATE DIRECTORY

Research Trent Barnett Head of Research +61 8 9268 3052 Institutional Sales Mike Millikan Resources Analyst +61 8 9268 2805 Carrick Ryan +61 8 9268 2864 Scott Williamson Resources Analyst +61 8 9268 3045 Justin Stewart +61 8 9268 3062 Simon Andrew Energy Analyst +61 8 9268 3020 Simon van den Berg +61 8 9268 2867 Janine Bell Research Assistant +61 8 9268 2831 Chris Chong +61 8 9268 2817 Digby Gilmour +61 8 9268 2814 Corporate Finance Veronika Tkacova +61 8 9268 3053 Dale Bryan Director & Head of +61 8 9268 2829 Wealth Management Corp Fin. Nicola Bond +61 8 9268 2840 Richard Simpson Director +61 8 9268 2824 Bradley Booth +61 8 9268 2873 Paul Fryer Director +61 8 9268 2819 Adrian Brant +61 8 9268 3065 Ben Wale Associate Director +61 8 9268 3055 Nathan Bray +61 8 9268 2874 Ben Crossing Associate Director +61 8 9268 3047 Sven Burrell +61 8 9268 2847 Simon Casey +61 8 9268 2875 Stephen Kite Associate Director +61 8 9268 3050 Tony Chien +61 8 9268 2850 Scott Weir Associate Director +61 8 9268 2821 Tim Cottee +61 8 9268 3064 Rhys Simpson Manager +61 8 9268 2851

David Cross +61 8 9268 2860 Registered Office Nicholas Draper +61 8 9268 2883 Level 6, 141 St Georges TcePostal Address: John Featherby +61 8 9268 2811 Ben Fleay +61 8 9268 2844 PerthWA 6000 GPO Box 2777 James Gatti +61 8 9268 3025 Australia Perth WA 6001 John Goodlad +61 8 9268 2890 PH:+61 8 9268 2888 FX: +61 8 9268 2800 Andrew Gribble +61 8 9268 2842 www.hartleys.com.au [email protected] David Hainsworth +61 8 9268 3040 Note: personal email addresses of company employees are Neil Inglis +61 8 9268 2894 structured in the following Murray Jacob +61 8 9268 2892 manner:[email protected] Gavin Lehmann +61 8 9268 2895 Shane Lehmann +61 8 9268 2897 Hartleys Recommendation Categories Steven Loxley +61 8 9268 2857 Andrew Macnaughtan +61 8 9268 2898 Buy Share price appreciation anticipated. Scott Metcalf +61 8 9268 2807 Accumulate Share price appreciation anticipated but the risk/reward is David Michael +61 8 9268 2835 not as attractive as a “Buy”. Alternatively, for the share Jamie Moullin +61 8 9268 2856 price to rise it may be contingent on the outcome of an Chris Munro +61 8 9268 2858 uncertain or distant event. Analyst will often indicate a Michael Munro +61 8 9268 2820 price level at which it may become a “Buy”. Ian Parker +61 8 9268 2810 Neutral Take no action. Upside & downside risk/reward is evenly Charlie Ransom +61 8 9268 2868 balanced. (CEO)Conlie Salvemini +61 8 9268 2833 Reduce / It is anticipated to be unlikely that there will be gains over Mark Sandford +61 8 9268 3066 Take profits the investment time horizon but there is a possibility of David Smyth +61 8 9268 2839 Greg Soudure +61 8 9268 2834 some price weakness over that period. Sonya Soudure +61 8 9268 2865 Sell Significant price depreciation anticipated. Dirk Vanderstruyf +61 8 9268 2855 No Rating No recommendation. Samuel Williams +61 8 9268 3041 Speculative Share price could be volatile. While it is anticipated that, Jayme Walsh +61 8 9268 2828 Buy on a risk/reward basis, an investment is attractive, there is at least one identifiable risk that has a meaningful possibility of occurring, which, if it did occur, could lead to significant share price reduction. Consequently, the investment is considered high risk.

Disclaimer/Disclosure The author of this publication, Hartleys Limited ABN 33 104 195 057 (“Hartleys”), its Directors and their Associates from time to time may hold shares in the security/securities mentioned in this Research document and therefore may benefit from any increase in the price of those securities. Hartleys and its Advisers may earn brokerage, fees, commissions, other benefits or advantages as a result of a transaction arising from any advice mentioned in publications to clients. Hartleys has assisted in the completion of part of a capital raising in the past 12 months for Pilbara Mines Limited. Any financial product advice contained in this document is unsolicited general information only. Do not act on this advice without first consulting your investment adviser to determine whether the advice is appropriate for your investment objectives, financial situation and particular needs. Hartleys believes that any information or advice (including any financial product advice) contained in this document is accurate when issued. Hartleys however, does not warrant its accuracy or reliability. Hartleys, its officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law.

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