PILBARA MINERALS LIMITED ANNUAL REPORT 2016 REPORT ANNUAL 2016 ANNUAL REPORT ACN 112 425 788 WWW.PILBARAMINERALS.COM.AU CORPORATE DIRECTORY CONTENTS DIRECTORS SHARE REGISTER Anthony Kiernan Chairman Advanced Share Registry Services Ken Brinsden Managing Director and CEO 110 Stirling Highway WHO IS PILBARA MINERALS? 1 Robert Adamson Non-Executive Director Nedlands WA 6009 Steve Scudamore Non-Executive Director Tel: +61 8 9389 8033 HIGHLIGHTS OF 2015/16 2 Neil Biddle Non-Executive Director John Young Executive Director FOCUS FOR THE YEAR AHEAD 2 SOLICITORS HERITAGE, HEALTH, SAFETY 3 COMPANY SECRETARY DLA Piper AND THE ENVIRONMENT Level 31, 152-158 St Georges Terrace Alex Eastwood Perth WA 6000, Australia CHAIRMAN’S REPORT 4 MANAGING DIRECTOR’S 5 REGISTERED OFFICE IN AUSTRALIA BANKERS REPORT 130 Stirling Highway Commonwealth Bank of Australia North Fremantle WA 6159 380A Scarborough Beach Road THE LITHIUM STORY 6 Tel: +61 8 9336 6267 Innaloo WA 6018 Fax: +61 8 9433 5121 PILGANGOORA 8 Website: www.pilbaraminerals.com.au LITHIUM-TANTALUM PROJECT AUDITORS ORE RESERVES AND 18 KPMG ACN AND ABN 235 St Georges Terrace MINERAL RESOURCES ACN: 112 425 788 Perth WA 6000 PILGANGOORA 20 ABN: 95 112 425 788 PROJECT METHODOLOGY DATE OF ANNUAL GENERAL MEETING AND DELIVERY ASX CODE 10am on Thursday, 24 November 2016 OTHER PROJECTS 22 PLS ABBREVIATIONS 23 AND DEFINITIONS CORPORATE GOVERNANCE 23 FINANCIAL STATEMENTS 24 ADDITIONAL SHAREHOLDER 74 INFORMATION CORPORATE DIRECTORY Inside back cover WHO IS PILBARA MINERALS? PILBARA MINERALS IS AN EMERGING LITHIUM AND TANTALUM PRODUCER FOCUSED ON THE DEVELOPMENT OF ITS 100%-OWNED PILGANGOORA LITHIUM-TANTALUM PROJECT, LOCATED APPROXIMATELY 130 KILOMETRES (BY ROAD) FROM THE WORLD RENOWNED PORT OF PORT HEDLAND IN THE PILBARA REGION OF WESTERN AUSTRALIA. Pilgangoora has been confirmed as the second largest spodumene (lithium pyroxene) and tantalite project in the world and is set to be developed into one of the world’s largest lithium mines, also producing tantalite as a valuable by-product. Pilbara Minerals' aim is to fast-track Pilgangoora towards production to capitalise on the widely anticipated shortfall of lithium in global markets over the next decade, with the project on track to commence production by the end of 2017. The size, quality and anticipated low operating cost of production at the Pilgangoora Project also provides Pilbara Minerals with an exceptional opportunity to pursue growth opportunities in downstream lithium markets. With all of this in mind, Pilgangoora is aptly described as the world’s leading lithium development project. The supply/demand fundamentals for lithium put this highly sought-after metal in a league of its own compared with other commodities. Demand is predicted to grow at an annualised rate of more than 12% and this could be set to accelerate further as its widespread use in conventional industries such as ceramics, glass, batteries and pharmaceuticals gets overrun by growing consumption in rechargeable batteries for portable electronic devices and the electrification of the transport industry. PILBARA MINERALS ANNUAL REPORT 2016 1 HIGHLIGHTS OF 2015/16 RC DRILLING WESTERN PEGMATITE SIGNIFICANT GROWTH in the Pilgangoora lithium and tantalum resource which clearly establishes the Pilgangoora Project as the world’s leading lithium development project. FOCUS PUBLISHED THE PREFEASIBILITY STUDY FOR THE and significant progress on the definitive feasibility study. YEAR ON THE BACK OF THE PREFEASIBILITY STUDY, the Company raised A$100 million to further de-risk AHEAD Pilgangoora’s development. GREW THE COMPANY’S LITHIUM MARKETING PRESENCE in China and globally through many MOUs COMPLETION OF THE and culminating in the Company’s first offtake agreement PILGANGOORA PROJECT DEFINITIVE FEASIBILITY STUDY with General Lithium Corporation. FINALISE FINANCING OF THE RELATIONSHIP WITH GENERAL LITHIUM PILGANGOORA PROJECT CORPORATION GROWS into the possible CONSTRUCTION COSTS establishment of a joint venture project to consider the AWARD OF MAJOR development of an offshore (ex-China) chemical conversion CONSTRUCTION CONTRACT(S) facility, drawing on General Lithium Corporation’s technology, designs and operating capability. AWARD OF MINING CONTRACT COMMENCEMENT OF PROJECT FURTHER CAPACITY DEVELOPED at the CONSTRUCTION Pilbara Board and executive team, in preparation for the Company’s move towards construction and production. COMMENCEMENT OF MINING JOINT VENTURE CHEMICAL GROWTH OF THE LITHIUM ION SUPPLY CHAIN PLANT SCOPING STUDY both in China and throughout the rest of the world, as COMPLETION AND PROGRESS lithium ion becomes the dominant battery technology. OF FEASIBILITY STUDY 2 PILBARA MINERALS ANNUAL REPORT 2016 HERITAGE, HEALTH, SAFETY AND THE ENVIRONMENT PILBARA MINERALS IS ACTIVELY ENGAGED WITH THE TRADITIONAL OWNERS IN THE AREA WITHIN WHICH IT OPERATES. PILBARA UNDERSTANDS AND SUPPORTS ABORIGINAL PEOPLE, AND THEIR CONNECTION WITH THEIR TRADITIONAL LANDS. In support of these links, Pilbara Pilbara Minerals works closely with its Since the commencement of Minerals recognises its responsibility contracting partners and the Safety the Pilgangoora Project, Pilbara to work with traditional owners to Management Plans in use to manage Minerals has embraced its expanded understand, maintain and where safety of all activities on site for both environmental responsibility possible grow relationships that the Company and its contractors. and continue to meet or exceed enhance both connection to the Integral to providing a safe working its statutory requirements over land and maintenance of their environment is to ensure Pilbara its tenure. The risks associated heritage. Pilbara Minerals seeks to Minerals is tracking and reporting with environmental incidents ensure the Traditional Aboriginal safety performance and reviewing are taken into account as part of Owners are meaningfully engaged incidents so as to continuously the Company’s normal course of through employment and enterprise improve and reduce the risk of injury business and are managed through development opportunities arising to its workforce. As a large portion risk assessments, introduction of from the Company’s projects. Pilbara of the workforce at the Company’s preventative measures, ongoing Minerals will constantly review operations are contractors, Pilbara review and monitoring and, where opportunities to effectively engage Minerals works very closely with necessary, effective and efficient local Aboriginal employees and its contracting partners and their mitigation actions. Pilbara Minerals contractors at the Pilgangoora Project. workforce to enshrine a shared recognises the value for both itself The Company also encourages its culture of working safely. Any and key stakeholders in supporting business partners and contractors to incidents involving contractors are compliance of best environmental engage in this strategy by supporting investigated with Pilbara Minerals practice for achieving and maintaining employment, training and the involvement and included in all of its licence to operate. development of business opportunities the Company’s safety reporting and During the year, Pilbara Minerals has for local Aboriginal peoples. shared outcomes. obtained the necessary approvals Pilbara Minerals’ intent in the Pilbara Minerals’ Lost Time Injury to maintain the ongoing exploration development of the Company, (LTI) frequency rate for the period development, as well as undertaking its projects and the capability of 2015/16 was zero. environmental and social baseline its people is to ensure that safety studies, for the compilation of its Pilbara Minerals is committed to comes first in all its activities. Pilbara Pilgangoora Project Environmental operating in an environmentally Minerals’ strategy for health and Impact Assessment. responsible manner through industry safety is built on the four pillars of best-practice and key stakeholder Rehabilitation of our exploration great leadership, engaged employees, involvement. activities is progressive and effective, risk management focus and systems in line with our ongoing commitment that support safe work as a priority. and tenure conditions. PILBARA MINERALS ANNUAL REPORT 2016 3 CHAIRMAN’S REPORT DEAR SHAREHOLDERS Since joining the Board and being appointed Chairman of While this is an aggressive timetable, the team which has Pilbara Minerals in July 2016, I have had the opportunity been assembled by Managing Director, Ken Brinsden, gives to witness the key reasons and attributes which have made great confidence this goal will be achieved. Ken himself your Company one of the standout performers of Australia’s spent the past seven years overseeing the development and junior mining sector over the past 18 months. operation of several Pilbara iron ore mines for Atlas Iron. These include a world-class resource asset in a premier One of the keys to Pilbara’s future lies in the strength of the mining jurisdiction, an exceptional team of people, a strong relationships and partnerships it has forged quickly within balance sheet and a clear vision to become a leading global the lithium industry. This is a relatively complex and unique producer of a commodity which is currently experiencing industry – and one that is currently undergoing an almost transformational growth. breathtaking level of change, especially in China. It’s important to acknowledge the drive and vision of Particular attention is drawn to the importance of our Pilbara’s founding directors, Neil Biddle,