QUARTERLY ACTIVITIES REPORT TO 31 DECEMBER 2017

HIGHLIGHTS

• Decision to proceed with US$40 million Tanzanian Bond Issue in partnership with highly experienced Exotix Capital
• Proceeds of proposed Bond issue to complete Stage 1 development of Bunyu Graphite Project targeting production of 20,000tpa of graphite products
• Testwork confirms premium graphite product at Bunyu North which will be the main source for Stage 1 mine and Stage 2 expansion development
• Excellent testwork results from Bunyu North include C content of 99.6% and O content of 0.08% with no impurities found – high quality, defect-free material
• Offtake agreements further advanced with North American offtake partner Nano Graphene Inc. increasing graphene production and confirming premium quality of Bunyu Graphite Product
• Volt further strengthens financial position with completion of $2.3 million SPP, $0.9 million top-up placement and exercise of listed options raising $4.7 million during the quarter and early January
• Environmental and Social Impact Statement for Bunyu Graphite Project lodged post quarter end – key step towards Stage 1 development and production

Volt Resources Limited (ASX: VRC) (“Volt” or, the “Company”) is pleased to provide shareholders with an update on activities for the period ended 31 December 2017.

Management Commentary

“The December quarter was a highly productive period for the business with a number of key corporate and operational milestones achieved in line with our strategy to complete the Stage 1 development of the Bunyu Graphite Project within the next 12 months.

“Further, the Company is extremely encouraged by the robust level of support it received during the quarter from both new and existing investors – culminating in the securing of approximately $7.9 million in additional capital – a significant outcome for the business.

“Our priority focus is now on progressing the Stage 1 development of Bunyu over the coming months which we expect will be further underpinned by the securing of additional development capital via the Company’s Tanzanian bond issue arranged with Exotix Capital.

“Volt is entering an exciting phase in its evolution as a world-class graphite business and we look forward to providing further updates at both a corporate and operational level in due course.”

December Quarter Activities Review

Strategic Cooperation and Offtake Agreements

During the December 2017 quarter, testwork confirmed the purified graphite and graphene produced from Bunyu product samples by Volt’s North American offtake customer NanoGraphene Inc. (“NGI”) is of excellent quality and high purity.

Previous testwork completed by NGI had confirmed the high quality nature of product samples from Volt’s Bunyu South deposit – with the most recent testwork conducted using product samples from the Bunyu North deposit, which will be the focus of the planned Stage 1 near-term development.

Figure 1: Raman Spectra results outlining the quality of graphene from Bunyu North product samples

NGI Head of Research and Development Dr Jay Mondal, who is a highly-credentialed expert in the graphene sector, confirmed after elemental analysis was conducted on the samples using ultra high vacuum XRF, the samples returned C content 99.6% and O content 0.08%, with no impurity found. In addition, the properties exhibited by Bunyu graphite were excellent (see Figure 1 above).

The results confirmed the product quality at Bunyu and follows the positive feedback received from Chinese partner China National Building Materials General Machinery (“CNBMGM”) in October (ASX Announcement 5 October 2017).

Further product marketing samples and testwork have been on hold until the completion of funding activities and the recent drilling program to provide material for the production of graphite samples.

Key Approvals / Government and Community Relations

The Company is pleased to report that initial discussions with the recently appointed Tanzania Minister for Minerals, Ms Angellah Kairuki, were very positive and focused on the near-term development of the Bunyu Graphite Project, as well as the Company’s Mining Licence Application (“MLA”). Importantly, Ms Kairuki expressed her support for the project development. Ms Kairuki outlined important information in relation to the MLA and the recent legislation changes in Tanzania.

The meeting has provided a pathway for Volt to obtain the Mining Licence and commence the process of meeting other regulatory requirements for the project development, as well as the operation of the Bunyu Project.

Extensive meetings were held with community representatives from the Bunyu North villages of Utimbala, Namangale, the Bunyu South villages of Chidya and Chiwata. Representatives from the District Council, including the District Executive Director, attended to assist with the discussions on relocation compensation and other matters raised by the representatives at the meeting.

A key takeaway from the meetings completed this week is that the positive benefits of an export-oriented industry are well understood by many within the Tanzanian government and community. The development of Volt’s Bunyu Project will significantly boost regional employment. Volt will provide skills and safety training for local people to participate in the project development and opportunities for local and regional businesses.

Furthermore, Volt’s government and community relations activities, combined with the Company’s contributions to community projects and emergency assistance, is building goodwill within the community and local levels of government.

The Environmental and Social Impact Assessment study continued during the December 2017 quarter with the Company electing to complete further flora and fauna survey work and heritage surveys. This additional work was incorporated in the Environmental and Social Impact Statement recently lodged with the National Environmental Management Council (ASX announcement dated 23 January 2018).

The [su_tooltip style=”bootstrap” position=”north” content=”A document drafted by the sponsor or other parties responsible for resettlement (such as government agencies), specifying the procedures it will follow and the actions it will take to properly resettle and compensate affected people and communities.”]Resettlement Action Plan[/su_tooltip] (RAP) has been the subject of recent community meetings and Volt is currently working in collaboration with the relevant government authorities, to ensure that the RAP report is compliant and expedites the grant of the mining license.

Bunyu Graphite Project – Geology and Mine Planning

As planned, the Bunyu Stage 1 FS drilling programme commenced in November and concluded in late December. Below is a summary table of the drilling completed over the Bunyu 1 Deposit (previously Namangale North):

The total amount of drilling completed over the entire Bunyu Project now comprises:

The drilling completed in the December 2017 quarter was designed to infill the existing drilling at Bunyu 1 to provide the Stage 1 operations with grade control information to allow for appropriate mine scheduling activities and for resource estimation purposes. Furthermore, the drilling was designed to provide further sample for metallurgical test work, pit and mine infrastructure drilling to assist in developing pit wall angles and soil stability analysis. Finally, the water bores were to assist in hydrological modelling for water supply and pit de-watering.

Samples from this drilling programme have been partially dispatched. After the quarter, the diamond core for metallurgical test work was dispatched and received at ALS in Balcatta, Western Australia for Stage 1 FS test work. However, the resource samples for graphite analysis have been held up due to regulatory changes and approvals from the Tanzanian Mines Department. Volt expects these to be resolved in the March quarter and will provide an update accordingly.

Optiro has been engaged to update the mineral resource estimate for Bunyu 1, with Orelogy/Optiro forming an alliance to develop the mine plan and suitable supervision of the geotechnical and hydrological aspects of the study. Work commenced on this during the quarter and is expected to be completed in the March 2018 quarter for these facets of the overall Feasibility Study.

Overall, the December 2017 quarter was successful in completing the field work to assist the completion of the Bunyu Stage 1 FS.

Figure 2: Core from the recent diamond drilling programme at Bunyu 1

Bunyu Graphite Project Development Plan

The Stage 1 FS builds on the Pre-Feasibility Study (PFS) reported in December 2016 and internal studies of development options undertaken in 2017, leading to the commencement of the Stage 1 FS for a nominal 20,000tpa of graphite product in November 2017.

Most of the same consulting groups that were involved in the PFS continue to provide services at the FS level with this continuity assisting the project development and retention of project knowledge. Battery Limits are coordinating the FS engineering, ATC Williams the Tailings Storage Facility engineering design, and geotechnology, hydrology and ARD consultants also providing consulting services for the geology and mine planning scope to ensure a project-wide focused solution.

As advised above the diamond core from the drilling completed in December 2017 has been received at ALS in Balcatta and the metallurgical testwork program will be undertaken in Q1 2018 to finalise the flowsheet layout and equipment selection. This builds on the testwork undertaken in the PFS and the subsequent programs of work including that undertaken at Xinhai engineering laboratories and the product market feedback in 2017.

The engineering and testwork, along with progressing the development approvals, and the associated scopes of miscellaneous works to support the FS, are aimed at enabling a project development decision in Q2 2018.

The scope of Stage 1 will be complementary to the future Stage 2 expansion project with a number of the risks and opportunities better understood and mitigated from the project study and execution of Stage 1 construction and commissioning.

Corporate Activity Overview

On 1 November 2017, Volt announced the Share Purchase Plan (SPP) to existing eligible shareholders closed heavily oversubscribed raising $2,338,975. Paterson Securities, who underwrote the SPP, facilitated the placement of a further $900,000 to sophisticated and professional investors with shares from the placement issued on 6 November 2017.

Post the end of the December 2017 quarter, Volt advised the Company had successfully raised gross proceeds of $4.7 million through the exercise of 235,648,431 listed options at $0.02 (ASX announcement dated 9 January 2018).

The listed options exercise process was strongly supported, with approximately 90% of Volt optionholders exercising their options. The shortfall of approximately 24 million options was jointly underwritten and taken up by Empire Capital Partners Pty Ltd (“Empire”) and Cove Capital Pty Ltd (“Cove”).

Importantly, the additional funding from the SPP, placement and option exercise provides Volt with the required financial flexibility to aggressively progress the planned Stage 1 development of the Company’s flagship Bunyu Graphite Project in Tanzania.

Volt has previously advised it has engaged Exotix Capital to undertake a Tanzanian Bond issue to raise the required funding for the development of Stage 1 of the Bunyu project.

Following meetings with targeted investment groups in Tanzania, Uganda and Kenya in late November/early December 2017, Exotix recommended Volt proceed with a formal bond prospectus process and the listing of the bonds on the Dar es Salaam Stock Exchange in Tanzania.

Volt and Exotix have sized the debt transaction at US$40 million which will allow net project development and working capital funding of ~US$31 million after taking into account funding for a Debt Service Reserve Account (DSRA) and costs of the issue. The facility interest and bond maturity payments can be serviced by projected Stage 1 operating cashflows.

Importantly, the US$40 million debt sizing allows meaningful participation from Tanzanian and Ugandan Pension Funds combined with other investment groups seeking fixed income investments.

Following the preparation and issue of a prospectus by Volt’s Tanzanian subsidiary, Volt Graphite Tanzania Ltd, to accept investment subscriptions, the bonds be will listed on the Dar es Salaam Stock Exchange (DSE) in Tanzania. The estimated timeframe to complete the bond prospectus and DSE listing is 8-12 weeks.

This funding pathway provides for local investment in the largest graphite project in Tanzania and one of the largest in the world. With local job creation and skills acquisition, local business opportunities and significant export revenue for Tanzania, the Bunyu Graphite Project provides Tanzania with the opportunity to become a significant part of the global new energy sector.

For and on behalf of Volt Resources Limited

Trevor Matthews
Chief Executive Officer

FOR PERSONAL USE ONLY
For further information please contact:

Trevor Matthews – Chief Executive Officer
Tel: +61 8 9486 7788

Released through Sam Burns, Six Degrees Investor Relations, M: 0400 164 067