Specialty Minerals and Metals 

 

Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)The recommendations and opinions expressed in this research report accurately reflect the research analyst's personal, independent and objective views about any and allthe companies and securities that are the subject of this report discussed herein.

Australian Equity Research15 June 2017

Company Rating Price TargetSpecialty Minerals and MetalsAJM-ASX Spec Buy A$0.14 A$0.25GXY-ASX Buy A$1.70 A$3.35ORE-ASX Buy A$3.55 A$5.80Priced as of close of business 16 June 2017 

Reg Spencer | Analyst |  Canaccord Genuity (Australia) Ltd. |  reg.spencer@canaccord.com.au |  +61.2.9263.2701Larry Hill | Associate Analyst |  Canaccord Genuity (Australia) Ltd. |  larry.hill@canaccord.com.au |  +61.2.9263.2745

Industry Overview

Lithium DSO potential overstatedWe note a recent sell off among several ASX-listed lithium companies on fears of adramatic oversupply from Direct Ship Lithium Ore ("DSO"). In our view, suggestionsof large volumes of lithium from DSO sources are dramatically overstated. We seesignificant economic and technical reasons why it is unlikely for this material toultimately present as a meaningful or sustainable supply. We reiterate conviction BUYcalls for GXY.ASX and ORE.ASX, and maintain our SPEC BUY rating for AJM.ASX.DSO economics aren't as favourable as they seem: We estimate the productioncosts for lithium carbonate from DSO sources to be ~US$14,300/t LCE (dependent onrecovery to concentrate), affording less attractive margins to converter plants based oncurrent pricing of US$10-16,000/t). On this basis we see little incentive for convertersto resort to DSO sourced concentrate as an alternative feedstock despite its apparentavailability.Availability of suitable processing facilities and adequate mineral converterplant capacity a major question mark: We note the lack of suitable fit for purposeconcentration facilities in China, leading to doubts over the ability for re-purposed ironore (Fe contamination?) or copper concentrators to deliver a product which meetsminimum specifications (grade, impurities). Furthermore, we expect a considerablebottleneck in a current lack of adequate converter capacity to handle large volumesof concentrate produced from DSO ore (current capacity of 110-130kt LCE). Other keyconsiderations include disposal/storage of large volumes of waste material producedform the concentration process.Product qualification, product specification and suitability in end marketapplications: Conversion facilities are required to go through an extensive accreditationprocess (6-24 months) before product can be used as a battery feedstock material.Given this lead time, it's likely that any material produced from DSO sources would onlybe initially suitable for lower spec (and lower priced) applications.Sell off overdone - reiterating BUY/SPEC BUY ratings for CGAu lithium coverage:Altura Mining (AJM:ASX | SPEC BUY | Target: $0.25): current price represents 92%upside to our target. Catalysts include finalisation of project financing for Pilgangoora inJun/Jul'17.Galaxy Resources (GXY:ASX | BUY | Target: $3.35): Reiterating conviction call withtarget offering ~97% upside. Catalyst rich 2H expected including James Bay drilling/resource update (Jul/Aug'17), 2018 Mt Cattlin offtake pricing (Q3/Q4'17), Sal de Vidafinancing (Q4'17), James Bay feasibility (Q4'17).Orocobre (ORE:ASX | BUY | Target: $5.80): 62% upside to target, with improvingproduction outlook at Olaroz, and potential share price catalysts in finalisation of Stage 2financing and confirmation of 10ktpa lithium Hydroxide project.

For important information, please see the Important Disclosures beginning on page 9 of this document.

2

Lithium DSO potential over-stated

Lithium Direct Ship Ore – what is it?

Given prevailing tight market conditions for the supply of lithium mineral

concentrates in China, we note the perceived attractiveness of the supply of DSO

material to temporarily fill the supply gap, especially where resources are located

proximal to transport infrastructure and port facilities.

We note two particular projects which have either commenced DSO operations or

have previously proposed DSO style operations, namely Wodgina and Pilgangoora,

both in the Pilbara region of WA, ~100km from Port Hedland. The concept of

lithium DSO is predicated on the mining and crushing of lithium bearing pegmatite

ore, before transport to port and shipment to China. The material would then be

concentrated before being fed into mineral converter plants and converted to

either lithium carbonate (Li2CO3) or lithium hydroxide (LiOH)

Wodgina

The Wodgina project was acquired by Mineral Resources (MIN:ASX | Not rated) in

2016, and was previously operated as a tantalum mine from 1989 to 2012. The

project features existing infrastructure and crushing plant facilities.

The deposit hosts a total resource of 120.8Mt at 1.3% Li2O, and is being

reportedly developed as a 100-200kt per month direct ship ore operation, with

ore containing 1.2-1.5% Li2O. MIN reported in Apr’17 that it had made its first

shipment of 113kt.

Based on the above production rates, total contained LCE (prior to concentrate

recovery allowances) would be ~80ktpa. Crushing plant capacity of 6Mtpa could

conceptually support DSO production of 3-6Mtpa which would imply contained

LCE (prior to concentrate recovery) of 109kt and 220kt respectively.

Pilgangoora

The Pilgangoora project is planned to be developed by Pilbara Minerals (PLS:ASX |

Not rated) as a 2Mtpa open pit mining and spodumene concentrate project, with

planned production rates of 314ktpa (~44ktpa LCE) of 6% Li2O spodumene

concentrate. Current resources and reserves of 156Mt at 1.25% Li2O and 69.8Mt

at 1.26% Li2O respectively support a mine life of +30 years. Capital costs for the

development were estimated in a DFS at A$234m.

On 10 November 2016 PLS signed an off-take agreement with Chinese lithium

carbonate (Li2CO3) producer Shandong Ruifu Lithium Co. for the supply of DSO.

The terms included supply of 1.9Mt of run-of-mine (ROM) ore at a grade of 1.5%

Li2O. This translated to a rate of ~ 100kt/month from July 2017 until December

2018 to be shipped out of Utah Point, Port Hedland.

The agreement also included a US$10M pre-payment by Shandong Ruifu to assist

in project construction and start up. In its May 2017 corporate presentation PLS

indicated that the offtake remains subject to PRC approvals and receipt of the

US$10m prepayment.

Based on the agreed amounts with Shandong Ruifu, we estimate contained LCE

(prior to concentrate recoveries) to be delivered under the agreement would be

69kt over the 18 months.

Specialty Minerals and MetalsIndustry Overview

15 June 2017 2

3

Supply/demand considerations – fears of oversupply from DSO misplaced in our

view

We note the significant sell off in lithium names in recent days on fears the

volume of DSO would result in a material market oversupply. Based on our current

S/D forecasts (Figure 1), proposed DSO production volumes from Wodgina and

Pilgangoora (assuming what we consider to very optimistic recovery to

concentrate assumptions of 50% - explained in further detail below) could equate

to ~55kt LCE, or 23% of modelled 2017 demand (237kt LCE), and 24% of our

modelled 2018 demand of 271kt LCE.

Figure 1: Base case Li market balance forecasts (excluding impact of DSO) as at 15 Dec 16

Source: Canaccord Genuity estimates

In our view, suggestions of large volumes of lithium from DSO sources are

overstated, and as such fears of market oversupply from this material are

overdone. We see several economic and technical considerations, which would

impact the speed (and volume) of lithium from DSO sources that could enter the

market.

DSO needs to overcome significant hurdles to be a material/sustainable source of supply

DSO economics aren’t as favourable as many might think:

As per our market forecasts in Figure 1, we forecast a significantly undersupplied

lithium market in 2017 and 2018, in which DSO sourced lithium could

conceptually fill the supply gap. However, our analysis suggests there is flawed

economics supporting this concept.

We estimate that the total production cost of 99% lithium carbonate from a ~1.5%

Li2O DSO to be ~US$14,300/t LCE (Figure 2), which compared to current pricing,

affords little margin to converter plants. In comparison, we estimate the total cost

of production for an equivalent refined lithium product from GXY’s Mt Cattlin

operation to be US$8,611/t. We estimate that in order to produce a product at

the same costs as that from conventional sources, the maximum price that could

be paid for DSO ex-China, would be approximately US$54/t (i.e., DSO Case 2 in

Figure 2).

Specialty Minerals and MetalsIndustry Overview

15 June 2017 3

4

Based on this, it is our view that there is little economic incentive (in addition to

other technical and market considerations) for converter plants to resort to DSO

sourced concentrates as an alternative to conventional concentration production.

Underlying assumptions in our analysis are detailed in Appendix 1.

Figure 2: Economic cost analysis – DSO vs conventional concentrates

Source: Company Reports, Canaccord Genuity estimates

Availability of fit for purpose concentration facilities?

In addition to questionable economics, we note the lack of fit for purpose

concentration facilities in China to produce a product suitable as feed for mineral

converter plants. We note some suggestions that various groups in China are

planning to retrofit copper and iron ore concentration facilities with Dense Media

Separation (DMS) circuits to produce a spodumene concentrate product.

We harbor serious doubts about the ability of these facilities to produce a

concentrate product at the required specification for use in converter plants

without a significant ramp up and commissioning period. We highlight that Mt

DSO Case 1 DSO Case 2 CGe -Mt Cattlin

Concentrate Plant - Physicals

Feed rate mpta 2.4 1.2 1.4

recovery in plant % 50% 50% 64%

transport losses % 2.0% 2.0% -

moisture ∆ % 7.5% 3.0% -

Recovery % 45% 48% 64%

Grade % Li2O 1.5% 1.5% 1.1%

Product Yield % 14.0% 13.0% 11.7%

Li2O recovered tpa 16317 8555 9656

LCE tpa 40249 21103 23817

Spod con tpa 336000 156000 163949

Resultant Conc Grade % Li2O 4.9% 5.5% 5.89%

Concentrate Plant - Costs (US$/t ore)

Ore (purchase/mining) US$/t 100 54 5.25

Freight to plant US$/t 10 10 6

Processing/GA US$/t 20 20 21

Site Costs US$/t 130 84 31

Concentrate Plant - Costs ($/t spod conc)

Ore (purchase/mining) US$/t 714 415 45

Freight to plant US$/t 71 77 47

Processing/GA US$/t 143 154 176

Site Costs US$/t 929 646 268

Other (byproduct/capex/royalties) US$/t 80

Shipment to China US$/t 20

Total Production cost (at gate/port) US$/t 929 646 368

Concentrator Margin % 5% 5% 126%

Selling Price US$/t 977 680 830

Converter Plant - Physicals

Required Grade Li% 99% 99% 99%

spod conc: Product ratio x 8.26 7.32 6.81

Converter Recovery (85% for 5.5% Li2O) % 75% 85% 91%

Required spod conc for 1t product t 11.01 8.63 7.49

Converter Plant - Costs (US$/t product)

Ore Costs US/t 10764 5873 6215

Logistics for ore (@ US$20/t) US$/t 220 173 150

Processing cost (@US$300/t) US$/t 3304 2590 2246

Total Production Cost US$/t 14287 8636 8611

Specialty Minerals and MetalsIndustry Overview

15 June 2017 4

5

Cattlin concentrate recoveries (from DMS only) are currently only running at 54%

from a fit for purpose concentrator (data on Mt Marion recoveries into concentrate

are surprisingly unavailable) with dedicated screening/classification circuits to

remove deleterious elements such as mica. Additionally, we also note the

potential for iron contamination (another key deleterious element) from any

spodumene concentrate produced from re-purposed iron ore beneficiation plants

(or DSO loaded using iron ore loading facilities).

The availability of necessary in country expertise to commission and operate such

facilities may also be questionable.

Adequate mineral converter plant capacity in the near term a question mark

Our research suggests total mineral converter plant capacity in China at present

of 110-130kt LCE. Utilisation rates are difficult to determine with any degree of

accuracy given that low rates in certain facilities are a function of a lack of supply

of concentrate feed, but we understand that utilisation varies between 65-85%.

While we acknowledge that converter capacity in China is undergoing a rapid build

out, we estimate that there may insufficient available capacity to process DSO-

sources concentrate at the volumes that have been suggested, especially when

factoring in availability and utilisation rates.

Figure 3: Estimated Chinese mineral converter capacity

Source: Canaccord Genuity estimates

Increasing Chinese Government scrutiny of environmental compliance is a

potential headwind for large scale DSO processing

Our recent trip to China (see Li-B materials: China visit highlights 11 May 17)

highlighted increasing environmental standards as a key focus of the Chinese

Government across many different industries. A number of members of the

battery supply chain we visited suggested that this was especially the case in the

extractive and chemical industries.

The processing of DSO material into spodumene concentrate generates a

significant amount of waste with average yields into concentrate of 10-15%. This

would result in 85-90% of the volume of material imported required to be

stored/disposed of which we would expect would carry significant costs. Other

considerations include the potential requirement for additional permitting and

availability of suitable land in proximity to concentration facilities.

0

50

100

150

200

250

2016 2017 2018

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Greenbushes Mt Cattlin Mt Marion

Wodinga - 100kt/mth Wodinga - 200kt/mth Wodinga - 300kt/mth

2016 Converter Capacity estimate

Specialty Minerals and MetalsIndustry Overview

15 June 2017 5

6

Product/facility qualification and end market applications

Converter plants which produce battery grade lithium chemicals are required to go

through extensive qualification and accreditation processes which can take

between 6-24 months. We note the requirement for converter plants to re-qualify

their facilities in the event that feedstock sources are changed. Given the lead

times to complete these processes, we consider it unlikely that any concentrate

sourced from DSO material could be suitable for battery applications for a

considerable period of time.

Given the lead time to qualify product for use in battery material markets, lithium

products produced from DSO sources may only initially be suited for lower priced

traditional applications with less favourable demand outlooks.

Specialty Minerals and MetalsIndustry Overview

15 June 2017 6

7

Appendix – DSO economic analysis assumptions

Considerations for spodumene production

In 2017 third party spodumene (i.e. ex-Greenbushes) pricing could be best

represented by Galaxy's contracted price (US$830/t for 5.5% Li2O) for Mt Marion,

while Tawana Resources (TAW:ASX | Not rated) contracted 2018/19 pricing of

US$880/t for 6% product from its planned 120-160ktpa Bald Hill project could be

considered a proxy for 2018. Our analysis of DSO economics assumes that third

parties that concentrate DSO will have to produce a product at a minimum of

5.5% Li2O for it to be sold to converters.

Based on GXY’s recent announcement of preliminary steady state recoveries at Mt

Cattlin (through a dedicated spodumene concentration circuit featuring mica

removal and multi stage DMS) are 54%. We currently expect this to ramp up to

over 65% in 2017 as fines recovery (flotation or screen/gravity) is installed. It is

unlikely that facilities which are planned to treat DSO material have been built for

the subtle features of spodumene processing (mica removal) nor are likely to

consider the inherent mineralogy of the Wodinga (specific gravity, ore hardness)

ore. On this basis we have assumed a flat recovery into concentrate from DSO

feed of 45%.

We also consider that DSO as received will have a moisture content of 5% (to

mitigate fines loss) as specified in PLS agreement with Shandong Ruifu in

November 2016. Ore loss from transfer is assumed at 2%. We assume that DSO

will be treated at a grade of 1.5% Li2O noting this was the approximate grade of

the first shipment of DSO from Wodgina in April 2017.

The concentrate plant cost parameters are:

Purchase of Direct Shipping Ore: This is the variable that we ultimately want to

assess. We understand that this could be up to US$100/t for 1.5% Li2O ore.

Transport from Port to plant: Unknown location but US$10/t ore assumed

Processing/General Overheads: We have used CGe for the Mt Cattlin circuit

which is ~US$20/t.

We have not incorporated any costs for tails impounding or sustaining capital

to equip the plant for effective processing.

Under these assumptions we calculate that third party concentrators production

cost for a 5.5% Li2O product is US$1,000/t. For comparison CGe for a 5.89% Li2O

product from GXY shipped to China averages US$368/t over CY17.

We incorporate a negligible operating margin of 5% resulting in a selling price of

US$1,053/t for 5.50% Li2O concentrate to converters.

Considerations for spodumene conversion.

We have used the following assumptions to calculate the total production cost to

produce technical grade (99% Li2CO3) product.

Product ratio from 5.5% Li2O to 99% Li2CO3: 7.32

Converter Recovery: Based on discussions with several industry participants

as part of our recent China field trip we understand this figure to be 75-85%

to treat a 5.5% Li2O feedstock. Feed stock parameters such as grade,

impurities, density, particle size and moisture will influence this figure. Li2O

mineralogy regarding spodumene/petalite/lepidolite have a significant effect

on leaching kinetics and subsequent lithium extraction.

Specialty Minerals and MetalsIndustry Overview

15 June 2017 7

8

Logistics Costs; we have assumed a nominal US$20/t to transport product

from concentrator to converter.

Processing/conversion costs: We understand this to be approximately

US$2,500/t for each tonne of 99% Li2CO3 produced. This equates to US$300

per tonne of spodumene concentrate treated.

Specialty Minerals and MetalsIndustry Overview

15 June 2017 8

Appendix: Important DisclosuresAnalyst CertificationEach authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) therecommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent andobjective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoringanalyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to thespecific recommendations or views expressed by the authoring analyst in the research.Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons ofCanaccord Genuity Inc. and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communicationswith a subject company, public appearances and trading securities held by a research analyst account.Sector CoverageIndividuals identified as “Sector Coverage” cover a subject company’s industry in the identified jurisdiction, but are not authoringanalysts of the report.

Investment RecommendationDate and time of first dissemination: June 15, 2017, 23:08 ETDate and time of production: June 15, 2017, 23:08 ETTarget Price / Valuation Methodology:Altura Mining Limited - AJMOur A$0.25/sh price target is underpinned by a NPV10% for the Pilgangoora lithium project, net of corporate and other adjustments.Galaxy Resources Limited - GXYTo reach our target price, we value GXY on a NAV basis comprising our NPV10% for Mt. Cattlin, our blended DCF/market-based value forSal de Vida, and exploration, net of corporate and other adjustments.Orocobre Limited - OREOur target price is derived from a NAV comprising NPV10% of future dividends from the Olaroz JV, NPV10% for the Borax operations, net ofcorporate and other adjustments.Risks to achieving Target Price / Valuation:Altura Mining Limited - AJMFunding risk: As a pre-production company with no material income, AJM is reliant on equity and debt markets to fund feasibility studiesand development of its various projects. We can make no assurances that accessing these markets will be done without further dilutionto shareholders.Exploration risk: Exploration is subject to a number of risks and can require a high rate of capital expenditure. Risks can also beassociated with conversion of inferred resources and lack of accuracy in the interpretation of geochemical, geophysical, drilling and otherdata. No assurances can be given that exploration will delineate further minable reserves.Operating risk: Once in production, the company will be subject to risks such as plant/equipment breakdowns, metallurgical (meetingdesign recoveries within a complex flowsheet), materials handling and other technical issues. An increase in operating costs couldreduce the profitability and free cash generation from the operating assets considerably and negatively impact valuation. Further, theactual characteristics of an ore deposit may differ significantly from initial interpretations which can also materially impact forecastproduction from original expectations.Commodity price and currency fluctuations: As with any mining company, AJM is directly exposed to commodity price and currencyfluctuations. Commodity price fluctuations are driven by many macroeconomic forces including inflationary pressures, interest rates andsupply and demand factors. These factors could reduce the profitability, costing and prospective outlook for the business.Galaxy Resources Limited - GXYThe key investment risks for GXY include:Funding riskAs a pre-production company with no material income, GXY is reliant on equity and debt markets to fund feasibility studies anddevelopment of various projects. We can make no assurances that accessing these markets will be done without further dilution toshareholders.Exploration risksExploration is subject to a number of risks and can require a high rate of capital expenditure. Risks can also be associated withconversion of inferred resources and lack of accuracy in the interpretation of geochemical, geophysical, drilling and other data. Noassurances can be given that exploration will delineate further minable reserves.Operating risks

Specialty Minerals and MetalsIndustry Overview

15 June 2017 9

Once in production, the company will be subject to risks such as plant/equipment breakdowns, metallurgical (meeting design recoverieswithin a complex flowsheet), materials handling and other technical issues. An increase in operating costs could reduce the profitabilityand free cash generation from the operating assets considerably and negatively impact valuation. Further, the actual characteristicsof an ore deposit may differ significantly from initial interpretations which can also materially impact forecast production from originalexpectations.Commodity price and currency fluctuationsAs with any mining company, GXY is directly exposed to commodity price and currency fluctuations. Commodity price fluctuations aredriven by many macroeconomic forces including inflationary pressures, interest rates and supply and demand factors. These factorscould reduce the profitability, costing and prospective outlook for the business.Orocobre Limited - OREThe key investment risks for ORE include: Geological risk -- the actual characteristics of an ore deposit may differ significantly frominitial interpretations and expectations. We note however the resource is extremely large relative to the forecast extraction rates andmine life, somewhat mitigating geological risk. Technical risk -- the construction and operation of brine based lithium carbonate projectsalthough proven is still in its relative infancy and therefore construction and operating risks are inherently elevated. Mitigating this riskis a pilot plant has been operating on site for in excess of 18 months, producing battery grade lithium carbonate. Financing risk -- theability of ORE to fund its portion of the development of the Olaroz project should also be considered a key investment risk. Equity andcredit markets may not be conducive to securing the required funds to complete construction of the project although we consider withthe Capital expenditure and operating risk -- the risk that capital and or operating costs exceed budget and/or exhaust available fundingbefore project completion, and reduce the profitability and free cash generation of the project. Commodity price and exchange rate risk:As with all mining and mineral exploration companies, commodity price and exchange rate risk should also be considered. In particularlithium and lithium carbonate are not exchange-traded commodities and are relatively small markets. Small and illiquid markets can bemore susceptible to wild fluctuations in prices.

Distribution of Ratings:Global Stock Ratings (as of 06/15/17)Rating Coverage Universe IB Clients

# % %Buy 573 60.70% 40.14%Hold 273 28.92% 20.15%Sell 26 2.75% 15.38%Speculative Buy 72 7.63% 69.44%

944* 100.0%*Total includes stocks that are Under Review

Canaccord Genuity Ratings SystemBUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.

HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months.

SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months.

NOT RATED: Canaccord Genuity does not provide research coverage of the relevant issuer.“Risk-adjusted return” refers to the expected return in relation to the amount of risk associated with the designated investment or therelevant issuer.Risk QualifierSPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in thestock may result in material loss.

12-Month Recommendation History (as of date same as the Global Stock Ratings table)A list of all the recommendations on any issuer under coverage that was disseminated during the preceding 12-month periodmay be obtained at the following website (provided as a hyperlink if this report is being read electronically) http://disclosures-mar.canaccordgenuity.com/EN/Pages/default.aspx

Required Company-Specific Disclosures (as of date of this publication)Altura Mining Limited, Galaxy Resources Limited and Orocobre Limited currently are, or in the past 12 months were, a client ofCanaccord Genuity or its affiliated companies. During this period, Canaccord Genuity or its affiliated companies provided investmentbanking services to Altura Mining Limited, Galaxy Resources Limited and Orocobre Limited.

Specialty Minerals and MetalsIndustry Overview

15 June 2017 10

In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services fromAltura Mining Limited, Galaxy Resources Limited and Orocobre Limited .Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Bankingservices from Altura Mining Limited, Galaxy Resources Limited and Orocobre Limited in the next three months.The primary analyst, a member of primary analyst's household, or any individual directly involved in the preparation of this research, hasa long position in the shares or derivatives, or has any other financial interest in Galaxy Resources Limited and Orocobre Limited, thevalue of which increases as the value of the underlying equity increases.

An analyst has visited the material operations of Galaxy Resources Limited and Orocobre Limited. No payment was received for therelated travel costs.This report was prepared solely by Canaccord Genuity (Australia) Limited. ASX did not prepare any part of the report and has notcontributed in any way to its content. The role of ASX in relation to the preparation of research reports is limited to funding theirpreparation, by Canaccord Genuity (Australia) Limited, in accordance with the ASX Equity Research Scheme. ASX does not providefinancial product advice. The views expressed in this research report may not necessarily reflect the views of ASX. To the maximumextent permitted by law, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability isaccepted by ASX as to the adequacy, accuracy, completeness or reasonableness of the research reports.

Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17

AUD0.40AUD0.35AUD0.30AUD0.25AUD0.20AUD0.15AUD0.10AUD0.05AUD0.00

Altura Mining Limited Rating History as of 06/14/2017Altura Mining Limited Rating History as of 06/14/2017

Closing Price Target Price

Buy (B); Speculative Buy (SB); Sell (S); Hold (H); Suspended (SU); Under Review (UR); Restricted (RE); Not Rated (NR)

I:SB:AUD0.3505/25/16

SB:AUD0.2708/29/16

SB:AUD0.2609/26/16

SB:AUD0.2711/08/16

SB:AUD0.2512/15/16

SB:AUD0.2501/31/17

Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17

AUD3.50AUD3.00AUD2.50AUD2.00AUD1.50AUD1.00AUD0.50AUD0.00

Galaxy Resources Limited Rating History as of 06/14/2017Galaxy Resources Limited Rating History as of 06/14/2017

Closing Price Target Price

Buy (B); Speculative Buy (SB); Sell (S); Hold (H); Suspended (SU); Under Review (UR); Restricted (RE); Not Rated (NR)

I:SB:AUD0.1612/16/15

SB:AUD0.2502/04/16

SB:AUD0.3003/08/16

SB:AUD0.5004/18/16

SB:AUD0.6005/17/16

B:AUD0.6508/14/16

B:AUD0.6008/22/16

B:AUD0.5508/29/16

B:AUD0.5009/08/16

B:AUD0.6012/15/16

B:AUD0.8001/22/17

B:AUD0.7502/08/17

B:AUD0.7004/19/17

B:AUD3.3505/25/17

Specialty Minerals and MetalsIndustry Overview

15 June 2017 11

Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17

AUD7

AUD6

AUD5

AUD4

AUD3

AUD2

AUD1

Orocobre Limited Rating History as of 06/14/2017Orocobre Limited Rating History as of 06/14/2017

Closing Price Target Price

Buy (B); Speculative Buy (SB); Sell (S); Hold (H); Suspended (SU); Under Review (UR); Restricted (RE); Not Rated (NR)

B:AUD3.7507/02/14

B:AUD3.7707/31/14

B:AUD3.9109/30/14

B:AUD4.2010/26/14

B:AUD4.2012/28/14

B:AUD3.7003/18/15

B:AUD3.5506/23/15

B:AUD3.4007/01/15

B:AUD3.1010/21/15

B:AUD3.4001/14/16

B:AUD3.0501/26/16

B:AUD4.2003/15/16

B:AUD5.1505/17/16

B:AUD6.0007/12/16

B:AUD5.7508/29/16

B:AUD5.7009/19/16

B:AUD5.8010/30/16

B:AUD6.2512/15/16

B:AUD5.9502/28/17

B:AUD5.8004/27/17

Online DisclosuresUp-to-date disclosures may be obtained at the following website (provided as a hyperlink if this report is being read electronically)http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx; or by sending a request to Canaccord Genuity Corp. Research, Attn:Disclosures, P.O. Box 10337 Pacific Centre, 2200-609 Granville Street, Vancouver, BC, Canada V7Y 1H2; or by sending a requestby email to disclosures@canaccordgenuity.com. The reader may also obtain a copy of Canaccord Genuity’s policies and proceduresregarding the dissemination of research by following the steps outlined above.General DisclaimersSee “Required Company-Specific Disclosures” above for any of the following disclosures required as to companies referred to in thisreport: manager or co-manager roles; 1% or other ownership; compensation for certain services; types of client relationships; researchanalyst conflicts; managed/co-managed public offerings in prior periods; directorships; market making in equity securities and relatedderivatives. For reports identified above as compendium reports, the foregoing required company-specific disclosures can be found ina hyperlink located in the section labeled, “Compendium Reports.” “Canaccord Genuity” is the business name used by certain whollyowned subsidiaries of Canaccord Genuity Group Inc., including Canaccord Genuity Inc., Canaccord Genuity Limited, Canaccord GenuityCorp., and Canaccord Genuity (Australia) Limited, an affiliated company that is 50%-owned by Canaccord Genuity Group Inc.The authoring analysts who are responsible for the preparation of this research are employed by Canaccord Genuity Corp. a Canadianbroker-dealer with principal offices located in Vancouver, Calgary, Toronto, Montreal, or Canaccord Genuity Inc., a US broker-dealerwith principal offices located in New York, Boston, San Francisco and Houston, or Canaccord Genuity Limited., a UK broker-dealer withprincipal offices located in London (UK) and Dublin (Ireland), or Canaccord Genuity (Australia) Limited, an Australian broker-dealer withprincipal offices located in Sydney and Melbourne.The authoring analysts who are responsible for the preparation of this research have received (or will receive) compensation based upon(among other factors) the Investment Banking revenues and general profits of Canaccord Genuity. However, such authoring analystshave not received, and will not receive, compensation that is directly based upon or linked to one or more specific Investment Bankingactivities, or to recommendations contained in the research.Some regulators require that a firm must establish, implement and make available a policy for managing conflicts of interest arising asa result of publication or distribution of research. This research has been prepared in accordance with Canaccord Genuity’s policy onmanaging conflicts of interest, and information barriers or firewalls have been used where appropriate. Canaccord Genuity’s policy isavailable upon request.The information contained in this research has been compiled by Canaccord Genuity from sources believed to be reliable, but (with theexception of the information about Canaccord Genuity) no representation or warranty, express or implied, is made by Canaccord Genuity,its affiliated companies or any other person as to its fairness, accuracy, completeness or correctness. Canaccord Genuity has notindependently verified the facts, assumptions, and estimates contained herein. All estimates, opinions and other information containedin this research constitute Canaccord Genuity’s judgement as of the date of this research, are subject to change without notice and areprovided in good faith but without legal responsibility or liability.From time to time, Canaccord Genuity salespeople, traders, and other professionals provide oral or written market commentary ortrading strategies to our clients and our principal trading desk that reflect opinions that are contrary to the opinions expressed in thisresearch. Canaccord Genuity’s affiliates, principal trading desk, and investing businesses also from time to time make investmentdecisions that are inconsistent with the recommendations or views expressed in this research.This research is provided for information purposes only and does not constitute an offer or solicitation to buy or sell any designatedinvestments discussed herein in any jurisdiction where such offer or solicitation would be prohibited. As a result, the designatedinvestments discussed in this research may not be eligible for sale in some jurisdictions. This research is not, and under no

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circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or companythat is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. This material is prepared forgeneral circulation to clients and does not have regard to the investment objectives, financial situation or particular needs of anyparticular person. 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Ashort-term trade idea may differ from the price targets and recommendations in our published research reports that reflect the researchanalyst's views of the longer-term (i.e. one-year or greater) prospects of the subject company, as a result of the differing time horizons,methodologies and/or other factors. It is possible, for example, that a subject company's common equity that is considered a long-term ‘Hold' or 'Sell' might present a short-term buying opportunity as a result of temporary selling pressure in the market or for otherreasons described in the research report; conversely, a subject company's stock rated a long-term 'Buy' or “Speculative Buy’ could beconsidered susceptible to a downward price correction, or other factors may exist that lead the research analyst to suggest a sale overthe short-term. 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Theseanalysts may not be associated persons of Canaccord Genuity Inc. and therefore may not be subject to the FINRA Rule 2241 and NYSERule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analystaccount.For United Kingdom and European Residents:This research is distributed in the United Kingdom and elsewhere Europe, as third party research by Canaccord Genuity Limited,which is authorized and regulated by the Financial Conduct Authority. 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This material is not fordistribution in the United Kingdom or elsewhere in Europe to retail clients, as defined under the rules of the Financial Conduct Authority.For Jersey, Guernsey and Isle of Man Residents:This research is sent to you by Canaccord Genuity Wealth (International) Limited (CGWI) for information purposes and is not to beconstrued as a solicitation or an offer to purchase or sell investments or related financial instruments. This research has been producedby an affiliate of CGWI for circulation to its institutional clients and also CGWI. Its contents have been approved by CGWI and we areproviding it to you on the basis that we believe it to be of interest to you. This statement should be read in conjunction with your client

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agreement, CGWI's current terms of business and the other disclosures and disclaimers contained within this research. If you are in anydoubt, you should consult your financial adviser.CGWI is licensed and regulated by the Guernsey Financial Services Commission, the Jersey Financial Services Commission and the Isleof Man Financial Supervision Commission. CGWI is registered in Guernsey and is a wholly owned subsidiary of Canaccord Genuity GroupInc.For Australian Residents:This research is distributed in Australia by Canaccord Genuity (Australia) Limited ABN 19 075 071 466 holder of AFS Licence No234666. To the extent that this research contains any advice, this is limited to general advice only. Recipients should take into accounttheir own personal circumstances before making an investment decision. Clients wishing to effect any transactions in any financialproducts discussed in the research should do so through a qualified representative of Canaccord Genuity (Australia) Limited. CanaccordGenuity Wealth Management is a division of Canaccord Genuity (Australia) Limited.For Hong Kong Residents:This research is distributed in Hong Kong by Canaccord Genuity (Hong Kong) Limited which is licensed by the Securities and FuturesCommission. This research is only intended for persons who fall within the definition of professional investor as defined in the Securitiesand Futures Ordinance. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. Recipients ofthis report can contact Canaccord Genuity (Hong Kong) Limited. (Contact Tel: +852 3919 2561) in respect of any matters arising from, orin connection with, this research.Additional information is available on request.Copyright © Canaccord Genuity Corp. 2017 – Member IIROC/Canadian Investor Protection Fund

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All rights reserved. All material presented in this document, unless specifically indicated otherwise, is under copyright to CanaccordGenuity Corp., Canaccord Genuity Limited, Canaccord Genuity Inc or Canaccord Genuity Group Inc. None of the material, nor its content,nor any copy of it, may be altered in any way, or transmitted to or distributed to any other party, without the prior express writtenpermission of the entities listed above.None of the material, nor its content, nor any copy of it, may be altered in any way, reproduced, or distributed to any other partyincluding by way of any form of social media, without the prior express written permission of the entities listed above.

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