Quantum Graphite : CORRECT Quarterly Activity Report and App 5B

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QUANTUM

GRAPHITE

MARKET RELEASE

For Immediate Release

29 July 2022

Quarterly Activity Report and Appendix 5B

for 30 June 2022

Highlights

Uley 2 - Execution of Binding Offtake Agreement with Swiss Commodities Trading Group

During the quarter, the Company executed a binding offtake agreement (Offtake Agreement) with Swiss based global metal and minerals trading group MRI Trading AG for the sale of 100% of its Uley 2 production for a term ending 5 years from the first delivery of Uley 2 flake graphite production.

MRI is uniquely positioned to add Uley 2 flake products seamlessly to its existing minerals coverage. The agreement delivers ready access to MRI's Japanese and European customer base which has significant synergies with the Company's traditional customers.

These customers demand reliable supply of quality products and offer premium pricing. Based on consensus forecasts, high prices within these customer markets are likely to be sustained over the long term. The partnership with MRI is a key part of the Company's commercial strategy. It provides a strong platform to build critical market share - the combination of key customer access and direct connectivity to MRI's superior freight capabilities provides the stability and reliability of supply demanded within these markets.

MRI commenced sales and marketing activities immediately following execution of the agreement and the Company's handover of its pre-existing commercial relationships. The Company will continue to provide all necessary technical support to MRI in its dealings with prospective customers.

The Offtake Agreement will result in the transition of the supply of flake graphite to QSP from the Company to MRI.

ABOUT QUANTUM GRAPHITE LIMITED

QGL is the owner of the Uley flake graphite mineral deposits located south-west of Port Lincoln, South Australia. The company's Uley 2 project represents the next stage of development of the century old Uley mine, one of the largest high-grade natural flake deposits in the world. For further information, qgraphite.com.

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QUANTUM GRAPHITE

QSP Operating Plans

During the quarter the Company progressed the negotiation of the definitive agreement with Sunlands Co. governing the financing and operation of QSP. This agreement is expected to be finalised by the end of Q1 F2023.

QSP Thermal Energy Storage Pilot Project Update

During the quarter, arrangements were finalised with Technische Universitat Bergakadermie Freilberg's INEMET group to undertake the independent ultra-high temperature test work. The test work is being conducted at a commercial scale well beyond the bench scale of the programs completed in prior years. The critical test work includes various specifications of Uley coarse flake graphite required to form the thermal energy storage media essential for Sunlands Co. long duration energy storage battery cells.

The results of the INEMET test work will be utilised to construct a commercial pilot plant capable of fully demonstrating the Sunlands Co. Long Duration Energy Storage (LDES) technology.

The successful completion of this work and the operational phase of the pilot plant will expedite commercialisation of the Sunlands Co. technology.

QSP estimates that initial results should be available by September 2022.

ASX Listing Rules Appendix 5B (01/12/19)

+ See chapter 19 of the ASX Listing Rules for defined terms.

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QUANTUM GRAPHITE

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QSP Technical and Market Studies

On 4 April 2022, the Company released details of the submission made by QSP to the Australian Energy Ministers Meeting. The submission outlines QSP's recommendations for changes to the National Electricity Market's (NEM) rules to support the installation of LDES within the NEM.

The submission makes specific references to a type of LDES, referred to as RESERVE STORAGE; this relates to a form of deep mass storage that would enable the acceleration of the penetration of renewables within the NEM.

Thermal LDES and the forecast increase in global EV manufacturing support a significant increase in the market for Uley 2 coarse graphite. Together with the supply to the traditional thermal management market segments, the Company offers a diversified commercial exposure that sets it apart from other flake graphite producers.

Thermal Long

Duration Energy

Storage

"…At Macroeconomics Advisory, we have estimated that the cost of replacing existing thermal power with solar and wind and back-up will be in excess of $150 billion. That impost is likely to be borne by governments/taxpayers.

But there is a way to avoid most of these transition costs and perhaps restore some of our old manufacturing base sourcing cheap, emissions- free, reliable energy.

The thermal option

One little known option that is apparently ready to go is long-term thermal storage. It is a scalable and compact way of storing energy that provides relatively cheap, very-long-durationback-up for intermittent systems. Even better, it is a leading-edgeAustralian-based technology.

The technology sources flake graphite locally to manufacture energy storage blocks that are fitted within energy storage cells. The critical breakthrough is that these cells operate at a very high operating temperature range with virtually unlimited cycles and can be charged and discharged simultaneously.

This unique capability enables them to drive the large-scale turbines used in coal-fired power stations. Heating cells with solar and wind generation and then using this heat to drive these turbines means it can deliver dispatchable power through the existing infrastructure in the Hunter and La Trobe valleys.

The technology fits Angus Taylor's far-sighted plan to support technologies even if the execution of the strategy is floundering.

Who would have thought risk-averse bureaucrats would use it to dole out big dollars to foreign-sourced solar (including solar thermal), wind and now, hydrogen?

Why not just back the thermal option that appears to require no assistance whatsoever? It may just offer the good folks at the Energy Security Board the level of energy security to allow them to sleep nights."

Dr. Stephen Anthony, Contributor

- Australian Financial Review, 28 March 2022

Dr. Anthony's comments follow Macroeconomics Advisory's study in which it undertook an independent assessment of the requirements for long duration energy storage (LDES) within the NEM as part of the AEMO Net Zero by 2050 Plan. This study examines in detail the deployment of large scale thermal LDES by retrofitting existing coal fired power stations with TES technology. The findings in this study also form the basis for Macroeconomics Advisory's submission to AEMO on 11 February 2022; see Attachment 2 for study highlights.

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Uley 2 Pit Location and Resource Extension Priorities

	ML 5561
	ML 5562			ULEY 1
				RL 66
	ULEY		RL 67
	560000	565000
6150000	ML 5561			6150000
	ML 5562
			RL 66
	ULEY		RL 67	ULEY 2
	EL 6224

6145000	HOMESTEAD	6145000

	SALT LAKE			PRIORITY 3
6140000	KACEY		6140000	PRIORITY 1	PRIORITY 2
		LEGEND
		EM Target
		Primary EM Target
		Secondary EM Target
6135000	FISHERY	Exploration Lease	6135000
Retention Lease
		Mining Lease

Conservation and National Parks

Lincoln (CP)

1. Lincoln (NP)

0 1,250 2,500	5,000	Sleaford Mere (CP)
Railway line
Meters	GDA94; MGA53	Road
560000	565000	Uley 2 Ore Reserve and near-mine extension target priorities

Priority 1 Short Term Ore Reserve extension: Uley 2 South 50m, Infill drilling at Uley 3 (area bordered by blue dotted line).

Priority 2 Medium Term Resource extension: Uley 3 South, Extension drilling to 50m-by-50m intervals.

Priority 3 Long Term Resource extension: Uley 2 West geophysical anomaly target, Uley 2 South beyond Priority 1 along strike of the geophysical anomaly.

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QUANTUM GRAPHITE

Uley 2 Phase 1 Mining Study and Feasibility Summary Financial Metrics

Total undiscounted	A$310.5million*
cash flow
Crusher feed	500,000 tonnes per annum
Graphitic carbon grade	11.89%
Graphitic carbon recovery	84%
Concentrate purity	>97% graphitic carbon
Capital expenditure	A$79.98 million
Processing cost (PCAF)	A$55.3 per tonne
Mining cost (MCAF)	A$2.5/t milled at surface
	plus 5c for every 4m
Production	55,000 tonnes per annum
Product Cost (Av LOM)	US$368 dmt
Product Price (Ex-works)	US$919 dmt

*Includes JORC 2012 Reserves and Resources

Schedule of JORC 2012 Minerals Reserves and Resources

JORC 2102 Mining Study Reserve Statement, November 2019
Reserve	Classification	Tonnes (kt)	Total Graphitic Carbon (%)
Uley 2	Proved	811	11.66
Uley 2	Probable	3,191	11.95
	Total	4,003	11.89

JORC 2012 Mineral Resource Estimate (MRE), November 2021
Resource	Classification	Tonnes	TGC	Density	TGC
		(kt)	(%)	(t/m3)	(kt)
Uley 3	Inferred	900	6.6	2.1	59
	Uley 3 Total	900	6.6	2.1	59
Uley 2	Measured	800	15.6	2.1	125
	Indicated	4,200	10.4	2.1	435
	Inferred	1,300	10.5	2.2	137
	Uley 2 Total	6,300	11.1	2.1	697
Uley Project Total	TOTAL	7,200	10.5	2.1	757

Schedule of Tenements (ASX Listing Rule 5.3.3)

Tenement	Tenement Type	Interest1	Changes during the Quarter
ML5561	Mining Licence	100%	Nil
ML5562	Mining Licence	100%	Nil
RL66	Retention Licence	100%	Nil
RL67	Retention Licence	100%	Nil
EL62242	Exploration Licence	100%	Nil

1.All interests are registered in the name of the company's subsidiary, Quantum Graphite Operations Pty Ltd and held as at the end of the quarter.

2.An application has been lodged for the renewal of EL6224.

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QUANTUM GRAPHITE

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Corporate Information and Announcements

As at 30 June 2022 the company had 294,431,800 ordinary shares and 28,571,429 unlisted options on issue and 1,610 shareholders. The top 20 shareholders held 58.98% of the issued ordinary shares in the company.

As at 30 June 2022 the company held cash at bank of $1,004,703.

As at 29 July 2022 the company held cash at bank of $4,622,120. This report should be read in conjunction with all prior announcements made by the Company and available at http://quantumgraphite.com/investors.

The pro forma Appendix 5B (Mining exploration entity and oil and gas exploration entity quarterly report) is attached to this report.

Competent Persons Statement

The Company confirms that it is not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters relating to Mineral Resources is based on, and fairly represent, the Mineral Resources and information and supporting documentation extracted from the reports prepared by a competent person in compliance with the JORC Code (2012 edition) and released to the ASX (including under the company's previous code, VXL on 17 December 2014, 5 May 2015 and 15 May 2015 respectively).

Forward Looking Statements

All statements other than statements of historical fact included in this announcement including, without limitation, statements regarding future plans and objectives of are forward-looking statements. When used in this announcement, forward-looking statements can be identified by words such as 'may', 'could', 'believes', 'estimates', 'targets', 'expects' or 'intends' and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this announcement, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the company, its directors and management of QGL, that could cause QGL' actual results to differ materially from the results expressed or anticipated in these statements.

QGL cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this announcement will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. QGL does not undertake to update or revise forward- looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this announcement, except where required by applicable law.

FOR FURTHER INFORMATION CONTACT:

Company Secretary

Quantum Graphite Limited

1. [e-mail]

About The Quantum Sunlands Partnership

QSP is a joint venture between the Company and The Sunlands Co. Ltd for the manufacture of coarse natural flake based thermal storage media. The coarse flake will be exclusively sourced from the Company's Uley mine. The finished media will be fitted within Sunlands Co.'s long duration energy storage cells.

https://www.sunlandsco.com/

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