Mr. Martin Perez de Solay reports

MT CATTLIN ANNUAL ORE RESOURCE AND RESERVE UPDATE AT 30 JUNE, 2023

Allkem Ltd. has provided an ore reserve update for its Mount Cattlin operation in Western Australia.

Key points:

• Mineral resource updated to reflect depletion due to mining since Dec. 31, 2022, and modest increases due to adjustment to cut-off grade (0.3 per cent) and new pit shell of $1,500 (U.S.);
• The ore reserve and planned mining schedule suggest a projected life of mine for the next four or five years (2027 or 2028) through open-pit mining methods;
• The ore reserve has been updated to account for:
  • Mining depletion since the previous reserve dated March 31, 2023;
  • Adjustment to cut-off grade of 0.3 per cent in the same pit shell design as modelled March 31, 2023;
  • A correction to the previously stated ore reserve released June 16, 2023, which contained a modelling error;
• The increasing waste to ore strip ratio at depth to reach ore through open-pit mining methods is being evaluated against an alternative underground mining option;
• An underground feasibility study is expected to be delivered in calendar year 2024; it will enable a variety of scenarios to be modelled and will ensure an optimized future mining method is selected.

Ore reserve estimate

The Mount Cattlin ore reserve estimate is based on an updated mineral resource estimate released on April 17, 2023. The mineral resource was updated after the completion of a major infill drilling program, which upgraded inferred mineral resources.

Allkem has reviewed and updated the Mount Cattlin ore reserve, incorporating infill drilling results from the 2NW deposit, depleted mined material and site stockpiles at June 30, 2023, and material to be mined after this date is presented in accordance with Joint Ore Reserves Committee (2012) ore reserve reporting.

A breakdown of the adjustments is shown herein.

Reserve methodology

Pit optimizations have been carried out using a fixed spodumene concentrate sale price of $1,500 (U.S.) per tonne and an exchange rate of 70 U.S. cents to $1 (Australian). Whittle pit optimization software has been used to identify the preferred pit shell on which the pit design was based.

The target design shells were selected to provide a logically phased mine life that maintains future optionality to further evaluate the trade-off between the larger second-phase cutback compared with, or in conjunction with, underground mining.

The current mine sequence is based on:

• Continued mining of the current stage (Stage 3) of the 2NW pit to completion;
• Phasing of the next stage (Stage 4) into two separate cutbacks to manage the strip ratio and provide smoother ore supply to the processing plant;
• The timing of a mining proposal that has been lodged with Western Australian regulators to extend the current pit and allow for both cutbacks. This is expected to take place by end of calendar year 2023.

The mine plan is shown to be technically and financially feasible with an overall life-of-mine ore to waste strip ratio of 21.5 to 1. A suitable cash flow positive buffer exists below the assumed product prices to provide confidence that the ore reserve estimate will be financially viable within a reasonably expected range of possible product prices.

Mineral resources and mineral resources exclusive of ore reserves

Mount Cattlin is an active mine, and the new NW pit is the fifth sequential open pit in development and production. The mineral resource had been tested against an RPEEE open-pit design with a $1,500 (U.S.) revenue factor, and reported, depleted of mining, at a cut-off grade of 0.3 per cent lithia. Pegmatite mineralization is wire framed and modelled at COG greater than 0.3 per cent lithia. Tonnages and grades reported are depleted for mining completed to June 30, 2023. In addition, separate mineral resource tonnages and grades are reported, exclusive of ore reserves, on the same basis, below or outside of the current pit design.

Underground feasibility study

The underground feasibility study is under way and will trade off optimized mining methodologies to improve the most beneficial/more economic outcomes. It is expected to be delivered in calendar year 2024.

Stepout drilling

It was observed that both the $1,100 (U.S.) and 1,500 RPEEE mineral resource iterations remain limited by a lack of drilling data, which will be resolved by further stepout drilling planned for later in calendar year 2023.

Resource and reserve controls and governance

Allkem continues to evolve processes to ensure that quoted mineral resource and ore reserve estimates are subject to internal controls and external review. Mineral resource and ore reserves are estimated and reported in accordance with the 2012 edition of the Joint Ore Reserves Committee Code.

Allkem stores and collects exploration data using industry standard software that contains internal validation checks. Exploration samples from drilling have certified reference material standards introduced to the sample stream at set ratios, typically one per 25 samples. These are reported as necessary to the relevant competent persons to assess both accuracy and precision of the assay data applied to resource estimates. In resource modelling, block models are validated by checking the input drill hole composites against the block model grades by domain.

Allkem engages independent, qualified experts on a commercial fee for service basis to undertake mineral resource and ore reserve audits. Allkem internally reconciles the resource outcomes to validate both the process and the outcome.

The company has developed its internal systems and controls to maintain JORC compliance in all external reporting, including the preparation of all reported data by competent persons, who are members of the Australasian Institute of Mining and Metallurgy or a recognized professional organization. As set out herein, the mineral resource and ore reserve statements included in this announcement were reviewed by suitably qualified competent persons prior to their inclusion in the form and context announced.

Project economics

Operating costs

Operating cash costs for the LOM are estimated at $969 (U.S.) per dry metric tonne produced. It incorporates the rest of the current Stage 3 open pit, Stage 4 open pits and processing of end-of-life stockpiles from July 1, 2023, to end of mine life.

An attached table proves a summary of the estimated LOM annual unitary cost by category.

Commodity prices

Forecast pricing for benchmark 6.0-per-cent Li2O spodumene concentrate has been sourced from independent market analyst group Wood Mackenzie (1) and discounted for costs and penalties to give a realized price. The final pricing used is effectively net Australian-dollar FOB.

Tantalite (Ta2O5) concentrate is a byproduct that contributes meaningful, but not material, revenue to the project. A flat sale price based on existing contracts has been applied to expected production.

A forward U.S.-dollar/Australian-dollar exchange rate forecast provided by Allkem has been used for this study.

The cash flow model was also tested at a conservative realized price of $1,500 (U.S.) per dry metric tonne Li2O in the optimization, and cash flows remained positive for the overall ore reserve and on each stage.

Economic evaluation

An economic evaluation was conducted by consultant Entech Pty. Ltd. using financial data sourced from Allkem, independent market analysis and competitive tender.

The 2023 ore reserve statement is forecast to generate a net present value of $1.4-billion (Australian) ($900-million (U.S.)) when evaluated with the prices as tabulated. As an existing operation, Mount Cattlin requires only minor initial capital expenditure to support the Stage 4 expansion and low total project capital requirements of approximately $115-million (Australian) ($80-million (U.S.)).

The economic model calculates net present value at a discount rate of 10 per cent over the LOM from June 30, 2023. The NPV is based on financial model period cash flows, without allowance for taxation, depreciation or financing provisions. The summary of this is shown in an attached table.

Sensitivity analysis

Sensitivity analysis was conducted on the following variables (plus or minus 20 per cent) and quantified with the NPV outputs:

• Revenue factors: spodumene concentrate price, currency exchange rate and plant recovery;
• Cost factors: mining operating costs and processing operating costs.

Competent person statement

The information in this announcement that relates to exploration results and mineral resources is based on information compiled by Albert Thamm, BSc (honours), MSc, FAusIMM (203217), a competent person who is a fellow of the Australasian Institute of Mining and Metallurgy. Mr. Thamm is a full-time employee of Galaxy Resources Pty. Ltd. Mr. Thamm has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity being undertaken to qualify as a competent person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr. Thamm consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to the March 31, 2023, Mount Cattlin ore reserve is based on information compiled by Daniel Donald, BEng (mining), FAusIMM (210032), a competent person who is a member of the Australasian Institute of Mining and Metallurgy. Mr. Donald is an employee working for Entech Mining Pty. Ltd. and has been engaged by Allkem to prepare the documentation for the Mount Cattlin operation on which the ore reserve report is based for the period ended March 31, 2023, and has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity being undertaken to qualify as a competent person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr. Donald consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

Technical information relating to the company's Mount Cattlin project contained in this release is derived from, and in some instances is an extract from, the technical report entitled "Mount Cattlin Stage 4 Expansion Project," which has been reviewed and approved by Albert Thamm, FAusIMM (who is an employee of Galaxy Resources), as it relates to geology, drilling, sampling, exploration, quality assurance/quality control and mineral resources, and Daniel Donald, FAusIMM (an employee of Entech), as it relates to mining methods, ore reserves, site infrastructure, capital cost, operating cost estimates, mining cost, financial modelling and economic analysis in accordance with National Instrument 43-101 (Standards of Disclosure for Mineral Projects). The technical report will be available for review under the company's profile on SEDAR.

(1) The data and information provided by Wood Mackenzie should not be interpreted as advice, and you should not rely on it for any purpose. You may not copy or use this data and information except as expressly permitted by Wood Mackenzie in writing. To the fullest extent permitted by law, Wood Mackenzie accepts no responsibility for your use of these data and information except as specified in a written agreement you have entered into with Wood Mackenzie for the provision of such data and information.

We seek Safe Harbor.