Sand - The World s Indispensable Commodity

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Sand - The World’s Indispensable

Commodity

Why the humble sand grain could be the world’s next boom commodity

Perpetual Resources Limited ASX: PEC

Company Projects Presentation – August 2020

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Disclaimer

This presentation contains summary information about Perpetual Resources Ltd (Perpetual) and is current as of 17th August 2020. The information in this presentation is of a general background and does not purport to be complete.

This presentation is not investment or financial product advice (nor tax, accounting or legal advice) and is not intended to be used for the basis of making an investment decision. The information contained in this presentation has been prepared without taking into account the objectives, financial situation or needs of individuals. Investors should obtain their own advice before making any investment decision.

Perpetual has prepared this document based on information available to it at the time of preparation. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information, opinions and conclusions contained in this presentation.

This presentation contains certain “forward-looking statements”. Forward looking statements can generally be identified by the use of forward looking words such as, “expect”, “should”, “could”, “may”,

“predict”, “plan”, “will”, “believe”, “forecast”, “estimate”, “target” and other similar expressions. Indications of, and guidance on, future earnings and financial position and performance are also forward- looking statements. Forward-looking statements, opinions and estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions.

Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. This presentation contains statements that are subject to risk factors associated with Perpetual and the mining exploration industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially.

Perpetual disclaim any intent or obligation to publicly update any forward looking statements, whether as a result of new information, future events or results or otherwise.

To the maximum extent permitted by law, Perpetual, their related bodies corporate (as that term is defined in the Corporations Act 2001 (Cth)) and the officers, directors, employees, advisers and agents of those entities do not accept any responsibility or liability including, without limitation, any liability arising from fault or negligence on the part of any person, for any loss arising from the use of the presentation or its contents or otherwise arising in connection with it.

Competent Persons Statement

The information in this announcement that relates to the Exploration Results for the Beharra Project is based on information compiled and fairly represented by Mr Colin Ross Hastings, who is a Member of the Australian Institute of Mining & Metallurgy and consultant to Perpetual Resources Ltd. Mr Hastings is also a shareholder of Perpetual Resources Ltd. Mr Hastings has sufficient experience relevant to the style of mineralisation and type of deposit under consideration, and to the activity which he has undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Hastings consents to the inclusion in this report of the matters based on this information in the form and context in which it appears.

The information in this report that relates to Exploration Targets and Mineral Resources is based on information compiled by Ms Elizabeth Haren and Dr Andrew Scogings. Ms Haren is Associate Principal Consultant at Snowden Group Mining Industry Consultants, a Competent Person who is a Member and Chartered Professional of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Dr Scogings is Associate Executive Consultant at a Snowden Group Mining Industry Consultants and a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Ms Haren and Dr Scogings has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as Competent Persons as defined in the 2012 Edition of the Australasian Code for the Reporting of Exploration Results, Mineral

Resources, and Ore Reserves. Ms Haren and Dr Scogings consent to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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4 Corporate Overview

T H E F U T U R E O F S I L I C A S A N D S

ASX Code PEC

Shares on Issue 398.7m Share Price

^(17/08/20)

$0.043 Market Cap. $17.1m

O p t i o n s @ $ 0 . 0 2 , E x p i r i n g 8

Ap r i l 2 0 2 2

2.5m

Performance Shares 122m BOARD OF DIRECTORS

Julian Babarczy (Executive Chairman)

Mr Babarczy is a finance industry professional, having worked at Regal Funds Management for the past 14 years, most recently as a Portfolio Manager for the Regal Emerging

Companies strategy.

Mr Babarczy has extensive experience investing across all areas of the financial markets.

Robert Benussi (Managing Director)

Mr Benussi has extensive experience in finance, corporate advisory, stockbroking and business development. Previous positions include:

- Silver Heritage Group Limited (ASX: SVH) (resigned October 2018) - Tawana Resources Limited (ASX: TAW) (resigned December 2018) - Bligh Resources Limited (ASX: BGH) (resigned October 2014)

- Jupiter Mines Limited (ASX: JMS) Company Secretary & CFO (July 06 to June 11)

George Karafotias (Non-Executive Director & Company Secretary)

Mr Karafotias is an accountant holding a Bachelor of Commerce degree from the University of Adelaide. He also provides corporate advisory services to listed and unlisted companies, focusing on restructuring and refinancing.

Mr Karafotias is currently the Chief Financial Officer of WHA Limited. (ASX : WHA)

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Project Portfolio Overview

Three discrete Project Hubs prospective for high purity silica & construction sand products – all located proximal to established infrastructure

Beharra:

• Maiden Mineral Resource Estimate announced in July 2020

• 111.3mt at 98.6% SiO

₂

• Proximal to road infrastructure – c.130km via road to Port of Geraldton

• Agreement with integrated logistics solution provider Qube Bulk Pty Ltd (ASX:QUB) to evaluate options and undertake logistics services for a “project to end user” transport and materials handling solution

• <30% of tenement drilled to date

• >90% high purity white sand sequences encountered

• Pre-feasibility study commenced

• Mining License application imminent

Sargon Hub ^:

• Strategically located adjacent to Brand Highway & 45km by road to Geraldton

• Priority high purity silica sand target identified

• Prospective for export quality construction sand

Eneabba Hub:

• Prospective for both high purity silica sand and construction sand

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“We give such little thought to sand….but sand and

gravel build the foundations of our economies.

^.

"

5 Source: United Nations Report on Sand and Sustainability, 2019

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Supply Concerns are Increasing

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Don't just take our word for it

7 https://www.youtube.com/watch?v=f12SSCUfOhk https://www.youtube.com/watch?v=8J78ezpadFo

https://www.youtube.com/watch?v=0_Oik7CBueM

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• Global demand for industrial silica sand is growing at 5% per year*

and is expected to continue to grow at this rate at least, for in the foreseeable future.

• This demand is driven by industrial uses, urbanisation of the developing world, higher grade requirements from high-tech

manufacturing and the global legislative shift against single use repackaging.

• Silica sand is environmentally sustainable, recycle-able and has many industrial and consumer applications, including;

 Windows and high performance glass

 Glass bottles and consumer packaging

 LCD screens

Clearly, the world needs more silica sand

Seaborne market is US$705 million per annum (2017). Australia is the largest exporter of silica & quartz sands with annual value of US$105 million (2017)

Australia has primary proximity to key

exports market to Asia. Australian share of Chinese imports has grown from 25% pre 2018 to now greater than 50%

Chinese domestic production of glass

grade silica sand is 35 million tons in 2018 (SiO

₂

≥99-99.5% Fe

₂

O

₃

≤0.02-0.015%).

Chinese imports have grown from 270,000 tons in 2014 to more than 2 million tons in 2019

Silica Sand Demand is Strong

*IMARC Group information & forecast

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Seaborne Silica Sands Industry

• Total exports of high quality silica sand from Australia are estimated to be around 5 million tons per annum

• 70% of Japanese & 68% of South Korean silica imports are from Australia – mostly from vertically integrated owners

• Australian share of the Chinese import market has grown from around 25% prior to 2018 to about 50%

now

• Chinese domestic production of glass grade silica

sand is 35 million tons in 2018 (SiO

₂

≥99-99.5% Fe

₂

O

₃

≤0.02-0.015%)

• Chinese imports have grown from 270,000 tons in 2014 to more than 2 million tons in 2019

• As China glass production increases, it’s demand for higher quality silica sand imports will also increase

• China represents a huge potential addressable market for Perpetual

Chinese Imports of Silica Sands

Calendar

Year Total Imports

mt Australian share

mt Australian

share % Average Price USD/mt

2018 1,661,944 830,502 50% 47.6

2019 2,160,163 1,036,796 48% 46.6

Japan 41%

South Korea

34%

China 11%

Philippines 10%

Others 4%

Australian silica export destination

Charts & data from Observatory of Economic Complexity,

China Customs Data compiled & industry sources T H E F U T U R E O F S I L I C A S A N D S

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Silica Sands

Use

GLASS -

Smartphones

-Tablets -Automotive

-Fiberglass

CONSTRUCTION SANDS

CHEMICALS

FILLERS &

EXTENDERS FOUNDRY SANDS

- Automotive &

Manufacturing into Foundry sand

markets

BUILDING PRODUCTS

-Quartz Surfaces -Roofing Shingles

Mix of End Markets

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Industrial Uses of Silica Sands

Glass Industry

37%

Foundry 32%

Hydraulic Fracturing

16%

Filtration 7%

Abrasives 5%

Others 3%

SILICA USES

IMARC Group information & forecast

• The global glass and the

foundry sand industries are the two largest and also among the highest growth

• These markets are the focus of Perpetual

• Initial beneficiation test work has confirmed Beharra silica sand exceeds the minimum specification for the major float and container glass applications

• Particle size distribution

analysis also demonstrates that Beharra sands can service the foundry sand markets of Asia

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Beharra High Grade Silica Sands

• LOCATION - Approximately 130km south of Geraldton, comprising a north- south striking exploration licence covering an area of about 49 km

²

• SCALE - The project lies within the northern part of the Perth Basin and contains a 13km strike length of potentially high grade silica sand

• RESOURCE

• 111.3mt at 98.6% SiO

₂

(estimated by Snowden Mining Consultants)

• Beharra tenement only 30% explored – significant upside remains

• >90% of resource identified as higher purity white sands

• PROCESSING - Metallurgical test work conducted by Perpetual on shallow auger samples confirmed beneficiation using conventional scrubbing and gravity plus magnetic separation techniques produced a concentrate that resulted in upgrading the SiO

₂

to 99.8% and reduced Fe

₂

O

₃

content to 0.03% (from 0.18% in situ)

• PRODUCT

• Extensive metallurgical testing has confirmed suitability for the major glass and foundry sand markets in Asia

• Further treatment of the concentrate with acid and calcination produced a very pure “four nines” silica product and further reduced iron oxide level to 0.01% (not a focus for PEC)

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Maiden Mineral Resource Estimate

Beharra High Grade Silica Sands Project

*Mineral Resource Estimate, see appendix

13 Highlights:

• Inferred Mineral Resource Estimate of 111.3mt at 98.6% SiO ₂ prepared by Snowden Mining Consultants

• 40 air core holes for 507m and 38 augur holes for 76m included

• Average depth of drilling 10.1m (constrained by water table)

• >90% prevalence of higher purity white sand

• <30% of tenement drilled suggests material resource upside remains

• In-situ impurity levels proven to be easily reduced to required product specification through simply gravity and magnetic separation techniques

• Aim to update resource in coming months to “Indicated” category

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Beharra Beneficiation Test Work –

Exceptional High Purity Silica Results Achieved

Beharra Leach Residue Calcined Product, 99.94% SiO2

MIMS Non Magnetic Concentrate

Acid Leach sample 3 with a SiO2grade of 99.79.

After calcination the grade was improved to 99.94% SiO2

• Beharra lab tests demonstrate the potential for Perpetual to target a broad range of high value product markets

• Test work is based on a single 178kg bulk

composite sample, extracted from 9 auger drill hole samples from 0.5m - 2m deep

• Initial leaching and calcination test work on Beharra sand reported up to 99.94% SiO ₂ (99.992%

SiO ₂ +LOI) and further reduction of iron, aluminium and titanium

• Further detailed metallurgical test work now

commenced as part of PFS analysis with favourable results expected

Beharra Initial Test work Flowsheet

-1mm +1mm

-0.075mm

+0.075mm Heavies

Middlings Lights

Mags Mids

Non Mags (Concentrate) Beharra

Composite

~178kg

Wet Sieve Attrition

Wet Screen Rougher Spiral

Composite

~156kg MIMS Acid Leach

Calcination

+99.9% SiO₂Product

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Beharra- Favourable Petrological Analysis

• Initial mineralogical examination of beneficiated Beharra sand concentrate confirms geochemistry results at the Beharra Silica sand project are very clean and with only minor slimes evident

• The total non-quartz components in the sample are <1%

• An extract from the Petrology Report stated: “The non- magnetic, -1 +0.075mm product is “clean” and probably contains >99% quartz.”

• Further beneficiation test work underway

Petrological Examination of Beneficiated Silica Sand Product (2mm field of view)

Typical view of quartz grains in reflected light

Slimes fraction fine quartz dominant

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White Sand – Mother Nature’s Gift

• Beharra hosts predominantly high purity white (pale) sands

• Geological model predicted PEC would encounter a high percentage of white sands

• >90% of defined Mineral Resource Estimate is now confirmed as white sand

• Why is white sand superior?

• White sand has less impurities

• Impurities are the key to achieving a saleable product

• Higher impurities requires more processing, which adds to capital and operating costs

• In most cases, it is not economic to utilise yellow sand for anything other than construction sand applications

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Beharra White Sand (top) compared to Beharra Yellow Sand (bottom) Beharra project surface geology overlain by tenement

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PFS and Advanced Metallurgical Study Begins

17 Pre-Feasibility Study:

• PFS commenced in July 2020

• Designed to prove the economic potential of Beharra

• Detailed analysis to be undertaken on;

• Processing plant design and analysis

• Further detailed metallurgy

• Mining & civil works

• Logistics trade-off studies

• Power, water and environmental considerations

• Heritage & native title

• Overall capital requirements

• PFS due for completion in December 2020

Expanded Metallurgical Program:

• The scope of work for a second phase of detailed metallurgical testing is underway

• Aim is to optimise the product specifications and define a process flow sheet for utilisation in the PFS, including trade off studies with regard to end product specification and product yield

• Due for completion in November 2020

Mining Lease Application:

• Submission of a Mining Lease Application with the Western Australian Department of Mines is imminent

Typical sand plant showing various product streams being produced

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Beharra –

Investment Catalysts

Recently completed air-core drilling program at Beharra expected to lead to multiple, high impact events for PEC in coming months

 PFS commenced

 Further detailed metallurgical test work and flow sheet design underway

 Size fraction analysis being undertaken

 Marketing samples to be used for initial product marketing & off take discussions

 Mining License Application to be submitted

 Upgrade Mineral Resource Estimate to “Indicated” category in readiness for a reserve classification

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Current Exploration and Development Timeline

19 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

PFS BFS

Advanced Metallugical Testwork Mining License Application

Resource upgrade

Sales & Marketing Engagement

Exploration & Development Timeline

2020 Calendar Year 2021 Calendar Year

Beh arra

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Appendix

20 MINERAL RESOURCE ESTIMATE REFERENCE:

Perpetual Resources Limited. 22/07/20. Maiden Mineral Resource Estimate. Beharra Silica Sands Project.

https://www.asx.com.au/asxpdf/20200722/pdf/44kr163nbs2wwq.pdf

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Level 8, 84 Pitt Street, Sydney NSW, 2000 w w w .p e r p e tu al r e s o u r c e s li m i te d. c o m . a u

Contact:

Julian Babarczy Robert Benussi

Executive Chairman Managing Director

[email protected] +61 410 415 335

T H E F U T U R E O F S I L I C A S A N D S ASX: PEC

Sand - The World s Indispensable Commodity