Carbine Tungsten : Quarterly Activities Report - December 2016 Qtr

Quarterly Activities Report

For the Quarter Ended 31 December 2016 Carbine Tungsten Limited ACN 115 009 106 Registered Office: Level 2, 420 Collins Street, Melbourne VIC 3000; Tel [phone] Principal Place of Business: 6888 Mulligan Highway, Mt Carbine QLD 4872; Tel: [phone]; Fax: [phone] (ASX: CNQ)

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HIGHLIGHTS

• Carbine Tungsten Limited ("Carbine" or "the Company") progressing diversification and restructuring plan.
• All resolutions successfully passed by the majority of the Company's shareholders at Carbine's Annual General Meeting held on 24 November 2016.
• Applications for 10 lithium brine exploration concessions have been lodged on behalf of Carbine in Chile.
• Carbine engages German Mining Networks as investment advisory.
• Carbine agrees potential quarry buyout process.
• Tungsten market activity and strategic demand prospects improving. EXECUTIVE SUMMARY

  The Company has been actively progressing its diversification plans as outlined to the market in the Chairman's Report within the Company's 2016 Annual Report.

  The Company was pleased to receive the successful support of its shareholders, in passing all of the resolutions, at the Company's Annual General Meeting held in Melbourne on 24 November 2016. The Company wishes to thank its shareholders for their ongoing support as it transitions with its exciting diversification plans, whilst still retaining its core tungsten asset in a shovel-ready project status awaiting tungsten market prospects to improve. The most recent of these transitional strategies, being the development of lithium brine exploration prospects in the mining friendly country of Chile, has seen exciting initial results which has prompted a key focus point for the Company's activities.

  The Company has also appointed German Mining Networks as a marketing advisory company to promote its activities within the European marketplace and potentially support financing activities.

  The conciliation process undertaken with Mt Carbine Quarries Pty Ltd has led to an agreement by which the parties intend to appoint their respective lawyers to oversee the potential buyout arrangements for Mt Carbine Quarries Pty Ltd who are conducting quarry activities at the Mt Carbine mine site. The Company has also commenced its annual wet season pumping and management activities at the Mt Carbine mine site in Far North Queensland.

  Carbine is continuing its R&D activities with respect to the Mt Carbine Tungsten Project and has sent samples to South Africa for scheelite recovery testing from the Atom Exchange Technology ("AXT") process. The results of the test work have been delayed, predominantly due to the testing laboratory facilities being relocated to much larger premises. The Company's interest and potential agency options for the AXT mineral processing technology remain open. Carbine is actively preparing its application for its 2016 R&D tax refund.

  The tungsten market prospects are undergoing a potential realignment. This is due mainly to the global shifts and geopolitical actions being actioned and foreshadowed by the new government administration in the USA. The military and industrial uses of tungsten combined with the prospect of the western world's potential decreased reliance on manufactured items and steel products from China hold out the prospect of a renewed appetite and imperative for non-Chinese sourced tungsten supply. Some market analysts have speculated that China has been heavily subsidising the tungsten price for quite some time in order to support their price advantages in selling finished manufactured goods and particularly steel products. As the global changes in both military alliances and strategic dependences take hold, the need for independent tungsten supply is highly likely to change and any current price distortions may disappear resulting in tungsten price increases. Recent reports that President Putin of Russia has specifically ordered the production funding and development of new tungsten mining facilities in Russia indicate there are changing strategic and positive value movements within the global tungsten market.

  Carbine continues its ongoing long-term relationship with Mitsubishi Corporation RtM Japan Ltd.

  EXPLORATION, DEVELOPMENT AND CORPORATE ACTIVITIES QUARTER ENDED 31 DECEMBER 2016 EXPLORATION LITHIUM ACTIVITIES

  APPLICATION FOR CONCESSIONS OVER LITHIUM-PROSPECTIVE SALARS IN CHILE

  Carbine has previously announced a diversification program that is aimed at reducing the risk of its exposure to one metal commodity (tungsten). The main focus of this diversification program will be gold and lithium.

  Carbine is pleased to announce that as part of its diversification program it has applied for 10 exploration concessions for lithium over two

  salars (internal drainage basins) in the

  Atacama Desert in northern Chile. These applications follow a successful reconnaissance sampling of various salars that highlighted the prospectivity of these salars for lithium brine. The concessions are well situated to existing infrastructure being close to the Pan American highway and lithium processing infrastructure at the port of Antofagusta. A drilling campaign is planned to sample brines within these salars.

  The Company is focused on lithium brines as a source of lithium since it is also pursuing a new technology (the AXT process) that holds promise of producing lithium metal directly from lithium-bearing solutions at low operating cost.

  Location of salars in

  Northern Chile

  Example of salar (basin with internal drainage)

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  Sampling site on one of the salars WHY CHILE?

  Chile contains 27% of the global reserves of lithium and contributes to more than 50% of global production.

  All major international miners are active in Chile:

  • BHP Billiton, Anglo American, Rio Tinto, Xstrata, Teck Cominco, Kinross, Phelps Dodge, Barrick Gold and Newmont.

    Clear legislation and well-established procedures with favourable mining royalty regime. Chilean mining law permits:

  • 100% foreign ownership.

  • Legal protection of mining concessions.

  • Concessions granted on a first come first served basis.

  • Independent judicial system.

  • Clear foreign investment framework.

    One of South America's most stable and prosperous nations:

  • Over 150 years of mining history with well-defined mining and environmental regulations.

  • Consistently one of Latin America's fastest growing economies.

  • Open market economy, high level of foreign trade and maco-economic stability.

  2017 EXPLORATION STRATEGY

• Test existing applications for lithium brines by shallow drilling.

• Continue prospecting reconnaissance to sample salars not already sampled.

• Anticipate applications for more ground.