TALGA GROUP LTD — Capital/Financing Update 2020

ASX Release 20 March 2020

ASX:TLG

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Talga and Mitsui Execute MOU Agreement for Joint Anode Project Development

• Talga and Mitsui execute non-binding Memorandum of Understanding to evaluate joint development of the Vittangi Anode Project in northern Sweden

• Potential joint development may include strategic stake in project via Mitsui contributing towards consortium financing for pre-development and production stages

• Offers substantial synergies in establishing a European supply chain and securing strategic source of anode material for Mitsui customers

Battery anode and graphene additives provider Talga Resources Ltd (“ Talga ” or “ the Company ”) ( ASX:TLG ) is pleased to advise it has executed a Memorandum of Understanding (“ MoU ”) with Mitsui & Co. Europe Plc (“ Mitsui ”), the subsidiary of Mitsui & Co., Ltd., one of the largest global trading and investment companies based in Japan.

Talga is establishing a European supply of sustainable, low-CO2 emission anode materials for lithium-ion batteries utilising its 100% owned mineral and technology assets in northern Sweden. Building on the Company’s vertically integrated business strategy, the development plan includes construction of a scalable lithium-ion battery anode production facility and integrated graphite mining operations in northern Sweden, with initial production capacity of 19,000 tonnes coated anode per annum (“ Vittangi Anode Project ”).

Following the completion of a Pre-Feasibility Study (see ASX:TLG 23 May 2019), outlining the strong economics of the Vittangi Anode Project, and a period of undertaken due diligence, Mitsui and Talga have executed a MoU.

The MoU outlines the intention to negotiate and enter into definitive agreements to form a joint venture with respect to the financing, construction and operation of the Vittangi Anode Project ("Joint Venture”) subject to a series of technical and commercial evaluation stages. A summary of the project background and MoU terms are detailed below.

Talga Managing Director, Mr Mark Thompson: “We are very pleased to enter into this agreement with Mitsui to explore Talga’s value proposition together. Talga sees strong synergies with Mitsui in our goal to build a European supply chain of anode materials for lithium-ion batteries and we look forward to working closely with them as we drive the Vittangi Anode Project in Sweden towards production.”

Project Background

Europe is undergoing unprecedented growth in the demand for domestic, sustainable and costeffective battery production, driven by the move to renewable energy storage and electric vehicles (see ASX:TLG 11 Nov 2019). This is creating new demand for sustainable and locally sourced battery anode materials as cell manufacturers and automotive OEMs look to secure more stable raw material supply chains and strive to minimise their carbon footprints.

Talga’s innovation is to establish scalable European anode manufacturing in Sweden underpinned by vertical integration and in-house technology to build a secure, cost competitive and high-quality co-located supply. Building the anode refinery in northern Sweden, given its availability of fossil free energy, enables Talga to position itself as a low-carbon leader in anode production.

Talga Resources Ltd ABN 32 138 405 419 ASX: TLG Germany: TGX USA: TLGRF 1st Floor, 2 Richardson St, West Perth 6005 Australia E: [email protected] T: +61 8 9481 6667 F: +61 8 9322 1935 W: www.talgagroup.com

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Agreement Terms

Mitsui and Talga have executed a non-binding MoU with the intention to negotiate and enter into a Joint Venture with respect to the Vittangi Anode Project. In completing due diligence on the Vittangi Anode Project and the proposed Joint Venture, Mitsui will review definitive feasibility and other studies of the development stages.

Mitsui, at their discretion, will have the non-exclusive right to negotiate and enter into a binding financing agreement for Stage 1 and Stage 2 of the Vittangi Anode Project, with the MoU term to end with the definitive agreements for Joint Venture.

Under the Joint Venture, Talga and Mitsui would jointly engineer, procure, construct and operate the Vittangi graphite mining and anode refinery operation in Europe, and market and sell Talga developed lithium-ion battery anode products. Should the Joint Venture be entered into the Company will release details in accordance with its disclosure obligations at that time.

Authorised for release by:

Dean Scarparolo Company Secretary Talga Resources Ltd T: +61 (0) 8 9481 6667

For further information please contact:

Mark Thompson Managing Director Talga Resources Ltd T: +61 (0) 8 9481 6667

Nikki Löf

Marketing & Investor Relations Coordinator Talga Resources Ltd T: +61 (0) 8 9481 6667

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Forward-Looking Statements & Disclaimer

Statements in this document regarding the Company's business or proposed business, which are not historical facts, are forward-looking statements that involve risks and uncertainties, such as estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. Investors are cautioned not to place undue reliance on forward-looking statements.

This announcement may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. Recipients should inform themselves of the restrictions that apply in their own jurisdiction. A failure to do so may result in a violation of securities laws in such jurisdiction. This document does not constitute investment advice and has been prepared without taking into account the recipient’s investment objectives, financial circumstances or particular needs and the opinions and recommendations in this representation are not intended to represent recommendations of particular investments to particular investments to particular persons.

About Talga

Talga Resources Ltd (ASX:TLG) is building a European source of battery anode and graphene additives, to offer graphitic products critical to its customers’ innovation and the shift towards a more sustainable world. Vertical integration, including ownership of several high-grade Swedish graphite projects, provides security of supply and creates long-lasting value for stakeholders. Joint development programs are underway with a range of international corporations.

Company website: www.talgagroup.com

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