Metals Australia : Half Year Accounts 31 December 2021

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METALS AUSTRALIA LTD

AND CONTROLLED ENTITIES

(ACN 008 982 474)

Interim Financial Report

for the Half Year Ended

31 December 2021

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METALS AUSTRALIA LTD AND CONTROLLED ENTITIES

CONTENTS
Directors' Report	3
Auditor's Independence Declaration	10
Consolidated Statement of Profit or Loss and Other	11
Comprehensive Income
Consolidated Statement of Financial Position	12
Consolidated Statement of Changes in Equity	13
Consolidated Cash Flow Statement	14
Notes to the Financial Statements	15
Directors' Declaration	21
Independent Auditor's Review Report to the Members	22

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METALS AUSTRALIA LTD AND CONTROLLED ENTITIES

DIRECTORS' REPORT

The Directors present their report on the consolidated group of Metals Australia Ltd (the "Company") and controlled entities (the "Group") for the half year ended 31 December 2021.

1. DIRECTORS

The names of Directors in office during the half year and up to the date of this report:

Gino D'Anna

Michael Scivolo

Basil Conti (appointed 21 January 2022)

Robert Collins (deceased 16 January 2022)

2. REVIEW OF OPERATIONS

Manindi Project, Western Australia

During the 6 months to 31 December 2021, the Company announced the results of initial rock chip sampling program at the Foundation Pegmatite at Manindi1,2. The sampling produced high-grade lithium, tantalum and caesium results, confirming Foundation is a significant LCT pegmatite discovery.

The Manindi project includes three granted Mining Leases (MLs) located in the Youanmi region of Western Australia (see Figure 1 below).

Figure 1: Manindi Lithium Project, mapped pegmatites and Rockchip sample locations

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METALS AUSTRALIA LTD AND CONTROLLED ENTITIES

DIRECTORS' REPORT (continued)

REVIEW OF OPERATIONS (continued)

The high-grade LCT rock chip sample results are from a nine rock chip sample program. Samples were collected during initial reconnaissance within the >3km strike-length pegmatite corridor at the Manindi Project1 (see Figure 1).

The Foundation Pegmatite is the largest pegmatite identified to date at Manindi at over 500m long in a southwest-northeast direction and 200m wide in a northwest-southeast direction (see Figure 1). The peak lithium and tantalum rockchip results produced from the Foundation Pegmatite include2:

MNRK0001: 0.46% Li2O, 101.3 ppm Ta205 and 60.1 ppm Cs2O (Foundation)

MNRK0002: 1.25% Li2O, 126.0 ppm Ta205 and 154.6 ppm Cs2O (Foundation)

These results confirm that the Foundation Pegmatite is a high-grade LCT pegmatite and compare very favourably in both lithium and tantalum grade with a sample from the Mulgara pegmatite:

MNRK0009: 0.42% Li2O, 65.5 ppm Ta205 and 50.5 ppm Cs2O (Mulgara)2

Previous, systematic, rockchip sampling of the Mulgara pegmatites produced high-grade results of up to 2.84% Li2O, 296 ppm Ta205 and up to 746ppm Cs2O3,4. This was followed by a shallow RC drilling program that tested the three initially identified pegmatites on an approximate 40m spacing, but with only one hole per section. This program producing several significant intersections of lithium and tantalum mineralisation, including (see locations Figure 2):

• 8m @ 1.06% Li2O from 18m incl. 3m @ 1.65% Li2O with up to 1.96% Li2O in MNRC0305,6
• 8m @ 1.00% Li2O, 158ppm Ta205 from 32m, and 7m @ 1.29% Li2O, 242ppm Ta205 from 42 m incl. 5m @ 1.53% Li2O in MNRC0335,6

Figure 2: Manindi Lithium Project, Mulgara North, drillhole location plan

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METALS AUSTRALIA LTD AND CONTROLLED ENTITIES

DIRECTORS' REPORT (continued)

REVIEW OF OPERATIONS (continued)

In late January 2022 the Company commenced systematic channel sampling across the entire 500m identified northeast-southwest strike length of the Foundation Pegmatite as well as various other pegmatite outcrops within the >3km pegmatite corridor at Manindi (see Figure 1).

Subsequent to the end of the reporting period, the Company commenced a substantial RC drilling program, with the dual objectives of:

1. Following up the previous high-grade lithium and tantalum results at Mulgara with both deeper drilling on key sections and extension drilling along strike of the three LCT pegmatites identified to date (see Figure 2), and,
2. Initial RC drilling of the Foundation Pegmatite at approximately 40m section spacing along the identified 500m strike length.

Lac Rainy Graphite Project, Quebec (Canada)

The Lac Rainy Project consists of a contiguous landholding of 92 mineral claims covering an area of approximately 45.5 km2 located 22 km south-west of the historic mining town of Fermont in one of the premier graphite mining regions of Quebec. The Project is approximately 15 km east of Route 389, a paved highway that links the Project with major ports along the St. Lawrence River (Figure 3).

During the Quarter ended 31 December 2021, the Company continued the Phase 2 advanced metallurgical test work on the Lac Rainy Graphite Project, being carried out by SGS Canada. This work is designed to optimise the concentrate recovery, total graphitic carbon (TGC) content and flake-size distribution under a concentrate only production model.

Previous metallurgical testwork was able to achieve total graphitic carbon (TGC) grades of up to 97.1% Ct, with up to 22.8% of the Lac Rainy graphite concentrate categorised in the large and jumbo flake size fractions7.

A key component of the Phase 2, advanced metallurgical test work is to optimise product yield across the various size fractions and increase the proportion of medium, large and jumbo flake mesh sizes, where premium pricing can be achieved.

This testwork has the potential to enhance the product yield / mass feed into the concentrate plant, resulting in a smaller plant size and a corresponding reduction in upfront capital costs. There is also potential to reduce operating costs due to the optimised product mix, producing a positive impact on operating margins. It is anticipated that an increase in the large flake size fractions, and improved recoveries, will deliver enhanced returns for the Project.

In preparation for the current testwork, the Company arranged for a mini bulk sample of graphite to be transported from the Lac Rainy Graphite Project and delivered to SGS Canada. This material underwent compositing prior to being fed through the flowsheet that is currently being developed.

The final optimised testwork is designed to generate a sizeable quantity of high-purity /high-total carbon graphite concentrate which can then be tested further for downstream product generation, including expandable graphite and purified micronized graphite and spherical graphite.

The final concentrate optimisation testwork is in progress and the overall report and raw data is expected to be received shortly. The final testwork results and report will be reviewed before initiation of downstream spherical graphite testwork based on medium flake sizes and expandable graphite testwork on the large flake (>180 micron) component.

The results of the downstream testwork will allow the Company to focus its efforts on marketing the high-quality and high-purity Lac Rainy graphite concentrate to end-users across North America and Europe, that can then apply the graphite concentrate in the downstream market.

Developing an understanding of what downstream products can be produced, and their quality, will be critical in directing marketing efforts and initial off-take discussions.

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