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Magnis Resources’ Quarterly Report To 30 September 2018

Magnis Resources (ASX:MNS) (“Magnis” or the “Company”) is pleased to present its Quarterly Activities Report for the period ended 30 September 2018.

Magnis Resources (ASX:MNS) (“Magnis” or the “Company”) is pleased to present its Quarterly Activities Report for the period ended 30 September 2018.

Magnis Resources Limited is to be renamed Magnis Energy Technologies Ltd effective with the ASX on Monday 5th November 2018, following shareholder approval at the Annual General Meeting held last Friday 26th October 2018. The change of name is to better capture the operations and value the Company is creating now and in the future. As Magnis scales up its lithium-ion battery manufacturing operations, it has become apparent from meetings with stakeholders, potential investors and partners, that a change of Company name to better reflect current operations is warranted. Any name change will not impact on the future development of its high-quality flake graphite project in Tanzania.

The ASX trading and quoting code for Magnis will remain the same as ASX:MNS.

Magnis has announced its participation in global consortiums, including ownership, to operate lithium-ion battery gigafactories in Australia, the USA and Germany. As a member of these consortiums, Magnis’ role will be to provide raw materials and associated technologies to assist in the production process. The Company continues to develop the Nachu Graphite Project towards the mining and processing of the ore into high purity flake graphite for use in various industries, including batteries for storing electrical energy.

The major activities announced during the past quarter are summarised in this report.

Battery Results with partner C4V

Early in the quarter, Magnis and exclusive partner, Charge CCCV (“C4V”) noted that joint testing programs on the commencement of lithium-ion battery manufacturing are well advanced. Magnis and C4V have made significant progress in qualifying patented next generation materials for leading battery performance and commercial supply chain partners.

Recent test programs utilising silicon enhanced graphite anode materials have delivered major advances in both anode performance and the cost of its manufacture. In particular, the patented nanostructure silicon composite material can now be manufactured at a significantly lower equivalent cost to graphite after allowance for its increased capacity.

Supply chain qualification for commercial integration benefits include:

• First cycle lithiation capacity of 623+ mAh/g, an 80% improvement on the energy density performance of existing graphite-based anode material;
• A first cycle efficiency of >89% without any pre-lithiation;
• Greater than 98% capacity retention after 35 cycles

In general terms, 80% more capacity translates to approximately 30% more distance covered by a vehicle using a similar battery pack size, when compared by dimensions. For example, an average Tesla battery has a range of approximately 450km and the results achieved here would allow the same size battery pack to achieve 600km.

The Company has received significant levels of interest from leading anode suppliers for the silicon graphite anode blend. Samples and results are currently being shared with these parties.

Original Equipment Manufacturers qualification began with battery cells being recently sent to OEM’s in the United States. Larger volumes of samples will be prepared for delivery and sent to European OEM’s.

Discussions to date have been promising and the Company expects to reach forms of agreements before the end of the calendar year.

Magnis and C4V Generation 1 and Generation 2 cathode technologies have received interest from groups within the battery industry and potential new entrants to date. Generation 1 cathodes, which will be ready for mass production in the near term, do not require any cobalt or nickel and have much higher capacity than phosphate (such as LFP) or oxides (such as NMC, NCA, LMO). Generation 1 cathode BM-LMP has been tested on commercial size (several Ah) cylindrical as well as pouch form factors. Generation 2 is targeted towards higher energy density (~300Wh/kg) and higher temperature stability (no cooling until 65°C). Testing for Generation 2 remains ongoing and the Company will provide an update to shareholders as developments materialise.

New York State Gigafactory

Significant progress has been made by Imperium3 New York, Incorporated (iM3NY) with respect to start-up activities for the New York Gigafactory project in which Magnis has increased its indirect and direct shareholding to 46.4%.

Physical relocation including the disassembly, packaging and shipment of the acquired equipment from the previous battery manufacturing plant in North Carolina to the new iM3NY facility at the Huron Campus in Endicott, New York is complete.

Some 108 full-sized container and flat-bed truckloads were moved during the recent few months without incident and there was no damage to equipment and no safety incidents reported.

Meticulous care has been taken to ensure the plant and equipment traceability including tagging, recording and tracking every asset from the original auction item identifiers to iM3NY’s equipment and inventory tracking system and fixed asset tagging of items as they arrived in New York.

The three photos below show major items located at the Huron Campus recently received from North Carolina. Work on design and process engineering has commenced along with site preparations following the successful move of the battery manufacturing plant. Equipment manufacturers, engineers and the Imperium3 (iM3) New York team have been closely working together to meet the production time frames. Local government and environmental approvals are underway with all approvals expected in Q2 2019.

Figure 1 : Cell fabrication equipment at Huron Campus, New York.

Figure 2 : Automation robots and electrode processing equipment carefully packed and moved to Huron Campus, New York.

Figure 3 : Parts of fully automated cell formation lines with cumulative capacity of tens of thousands prismatic cells per day moved to Huron Campus, New York.

The equipment and inventory will remain in approximately 100,000sq feet of storage space while plans for the design and installation of production lines and facilities are developed over the next few months. Plans are geared towards the initial state of production during the latter stage of calendar quarter three next year in a more robust 300,000sq feet facility that is located within the adjacent storage facility on the former IBM manufacturing campus at Endicott.

Key personnel hiring will be undertaken over the next six months and the manufacturing system design will be tailored to accommodate high-volume production throughout.

Battery Sales Agreements and Partners

As announced to the ASX on 15 November 2017, a significant portion of the planned production has been presold via binding sales agreements to clients mainly in the automotive and renewables industry, with further agreements expected in the coming months.

Recently, several potential partners have held high level discussions regarding being involved with the New York battery plant through an investment. The board will assess all proposals as they are received and will update the market according.

Other NY Developments for Magnis Partner, C4V

C4V Delivers Lithium-ion Battery for Smart Grid Connected Environment

C4V achieved a major milestone in delivering its first battery towards a demonstration project that was approved under a New York State Government entity.

As announced to the ASX on 22 August 2018, the project relates to the development of a software system that combines renewable energy sources with lithium-ion batteries and demand management to create a low cost Distributed Energy Resource (DER) System. This system essentially assists in the integration of renewables into the power grid by mitigating instabilities arising from short-term fluctuations in renewable energy generation. This is of particular relevance to the New York State region, due to the large number of cloudy or overcast days that cause such short-term fluctuations.

Partners in this project include the New York State Government entities, Binghamton University, Ioxus and C4V.

C4V Solid State Battery Production

In a subsequent event to the end of the reporting period, the Company announced to the ASX on 2 October 2018, that C4V completed production of a working prototype of a Solid State Battery which was demonstrated at the 2018 NYBEST Conference in New York.

C4V’s new Solid State Battery, replaces more than 80% of the liquid electrolyte with a solid electrolyte. This effectively produces a lower cost battery that is higher capacity, higher density, higher performance, and with significantly reduced charging times than existing battery solutions. Further, C4V’s battery does not require cobalt which contributes to the reduction of costs and an increase in scalability of production without metals supply constraints.

The prototype Solid State Battery demonstrated in New York has volumetric capacities of 380Wh/kg and 700 Wh/L which is expected to increase to 400Wh/kg and 750 Wh/L through optimisation over the coming months prior to production for commercial availability by Q2 2019.

As an example of the capabilities of this battery in current implementations, the C4V Solid State Battery will be capable of delivering a 70% increase in range for electric vehicles when compared to other batteries, allowing an electric car with a current 400km range to be able to run 680km on the same single charge. C4V is working alongside commercial supply chains to further refine and optimise compositions, chemical structure, particle morphologies, and electrode processing techniques to develop solutions for tailored applications including electric vehicles, grid backup solutions, aviation, and portable electronics.

Figure 4: C4V Third Generation Solid State Battery

Townsville Battery Plant

The Company updated the market and shareholders in late August that iM3 Townsville (“iM3 Townsville”), the subsidiary of Imperium3 Pty Ltd, has formally received government approvals for the $3.1M grant supporting the feasibility study into the establishment of a 15 GWh Lithium-ion Battery (LIB) manufacturing plant in Townsville, Queensland.

The Jobs and Regional Growth Fund Assistance Agreement for the Feasibility Study into the Townsville Battery Manufacturing Facility was formally signed by iM3 Townsville directors and the State of Queensland, acting through the Department of State Development, Manufacturing, Infrastructure and Planning.

The feasibility study for the 15 GWh LIB manufacturing plant in Townsville commenced following the agreement to fast track development in June this year. Initial work has focused on selection of equipment vendor partners and the development of the manufacturing design concept. In parallel, Townsville City Council has been compiling site information and discussions with major infrastructure providers and funders have commenced. From this work, iM3 Townsville has composed a Project Description Report that backgrounds key project details, including: site specifications, battery product specifications and the manufacturing process concept.

Feasibility Study lead construction partner Probuild has established project offices in Brisbane and Townsville from where the Feasibility Study will be delivered. Planning meetings with the main study participants were recently held to map out the feasibility study process and to establish project systems and schedule future work programs.

Imperium3 Pty Ltd is an Australian unlisted company, comprised of three equal shareholders, ASX listed Magnis Resources Limited, US based Charge CCCV (C4V) and Australian unlisted company Boston Energy and Innovation (BEI).

The $3.1M Assistance Agreement is confidential between iM3 Townsville and the Queensland Government. It should be noted the Assistance Agreement has several obligations on iM3 Townsville that must be delivered, to meet the key terms of the Assistance Agreement.

The Assistance Agreement defines three distinct payment milestones associated with the staged delivery of components of the feasibility study and supporting information with the aim to have the Feasibility work fully completed in the first half of 2019.

Dendrobium Joint Development Agreement

The Company signed a Joint Development Agreement (JDA) with Dendrobium Automotive Limited (DAL), Dendrobium Advanced Technologies Limited (DATL) and Charge CCCV LLC (C4V) to produce the next generation high performing batteries including semi-solid state batteries.

Under the agreement, a working group has been created to develop and produce the next generation high performance batteries using technology developed by C4V and Magnis. Areas of co-operation include battery packaging solutions, battery hybrid systems, battery management software, battery performance testing and battery development materials.

C4V’s Generation II and semi-solid state battery technologies are targeted for DAL. C4V has been at the forefront of developing and acquiring technologies that are drop-in to existing supply chains as well as manufacturing footprints to improve performance and reduce cost to make them commercially viable.

DAL is an electric vehicle (EV) and plug-in hybrid vehicle (‘PHEV’) development and production company with an all- electric hypercar (D-1), which was engineered to an advanced concept stage by Williams Advanced Engineering

Limited part of the Williams Formula1 Group, to demonstrate its advanced technologies through dynamic performance.

DATL is an advanced engineering company specialising in performance technology and component design and development including battery development and packaging systems for EV’s and PHEV’s.

Funding and Significant Investment

The Company announced in early September that AL Capital Holding (“ALC”) had invested $11.1M in Magnis for a 4.98% equity holding in the Company. The investment was via a placement of 30,000,000 shares issued at $0.37 per share.

A few weeks following this investment, ALC advised the market that it had increased its holdings in the Company with an initial substantial holding notice to indicate their investment holding had increased to 5.5% in Magnis through some on-market purchases. Magnis welcomes the ALC investment and support as it is a testament of the projects and technologies that the Company is attempting to develop.

The cash position for the Company at 30 September 2018 was A$8.5M. On 12 September 2018, the Company announced to the ASX that it had completed the transaction to acquire a 10% interest in battery technology group C4V. As part of the completed transaction, US$1M in cash was paid to C4V.

Director Appointment

Further to the recent news on the placement to ALC, The Hon. Warwick Smith, AM was appointed as a non-executive
director of the Company. Warwick is Executive Chairman of ALC.

Mr Smith has extensive public policy and commercial acumen and a wealth of experience from national and international business relations in a variety of industries including property, financial services, natural resources, energy, transportation, heavy machinery and equipment, health, media, technology and entertainment. He is currently a director of Seven Group Holdings (ASX: SVW) and director of Estia Health Ltd (ASX: EHE). He is currently Chairman of the Australia China Council, Chairman Emeritus of the Asia Society Australia and Global Trustee of the Asia Society, Chairman of the Advisory Board of the Australian Capital Equity Group of companies, and a director of Coates Hire, ANZ Bank China and Chair of ANZ Bank Thailand.

Tanzania – Nachu Graphite Project (NGP)

The NGP in Tanzania continues to progress. During the quarter, re-demarcation of the Special Mining Licence area for the NGP in order to be compliant with the new mining regulations requirements was completed. The pegging included setting two metre high posts and short trenches in the directions of the boundary and updating peg details to include owner, mineral and licence number information.

As part of Corporate Social Responsibility, the Company through its subsidiary, Uranex Tanzania Limited, prepared and presented maps to the Ruangwa District Authority. The maps highlight the location of all schools in the District and will assist with planning and fund distribution by authorities. An assessment of schools in terms of materials and infrastructure continued during the period with the support of the District school officers.

Click here to connect with Magnis Resources (ASX:MNS) for an Investor Presentation.

Source: drive.google.com

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Australia isn't a producer of graphite (yet), but three states in the country are home to millions of tonnes of reserves and resources.

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A form of carbon, graphite is a good conductor and is invaluable in electronics. It comes in three different forms, each with their own valuable applications in modern technology, making it a sought-after commodity without which supply lines for many industries around the world would grind to a halt.

Graphite isn't produced in Australia (yet), but the country sits on 1.05 million tonnes of ore reserves, and 7.14 million tonnes of economic demonstrated resources (EDR), as per 2017 government data — and those numbers are way up from the previously disclosed data from Canberra in 2013.

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Following international pressure, the Australian government has promised to reach net zero emissions by 2050.

In a last-minute commitment after months of debate, the Australian government has promised to reach net zero emissions by 2050, expecting to meet the goal largely through technology development.

The move comes following international pressure as Australia had previously refused to join countries in pledging to meet the target ahead of the United Nations' COP26 climate conference in Glasgow.

However, the plan unveiled on Tuesday (October 26), which includes a government investment of AU$20 billion, does not strengthen the target set for 2030, with Prime Minister Scott Morrison saying Australia is on track to beat its Paris Agreement goal, cutting emissions by 30 to 35 percent by that decade.


"We will do this the Australian way," Morrison said ahead of a press conference, announcing investments in new energy technologies like hydrogen and low-cost solar.

An Australian hydrogen industry could be worth more than AU$50 billion in 2050, according to the government. Meanwhile, expanding production and processing of metals like lithium, nickel, copper and uranium could together be worth around AU$85 billion in exports in 2050.

That said, Australia will continue to be heavily dependent on fossil fuels as the plan will not shut down coal or gas production. The country is a major coal player, with the third largest reserves in the world, but its reliance on coal-fired power makes it one of the world's largest carbon emitters per capita.

"We want our heavy industries, like mining, to stay open, remain competitive and adapt, so they remain viable for as long as global demand allows," Morrison said. "We will not support any mandate — domestic or international — to force closure of our resources or agricultural industries."

Australia's desire to achieve net zero emissions by 2050 is a step in the right direction, Prakash Sharma, Wood Mackenzie's Asia Pacific head of markets and transitions, said.

"Our analysis shows that Australia can reach net zero emissions by 2050," he said. The country's major trading partners — China, Japan and South Korea — are already in transition towards that goal.

According to Wood Mackenzie, nearly 83 percent of Australia's power generation will come from solar and wind by 2050, as compared to about 20 percent last year. Natural gas, bio energy, geothermal and small modular reactors will supply the remaining 17 percent in power output. Coal into power is expected to be phased out by 2035.

"Although the pathway requires complete transformation of its traditional energy and export sectors, there are significant opportunities to capitalise on and protect future revenues," Sharma said.

"This will require Australia to become a significant player in low-carbon hydrogen trade as well as being able to offer carbon storage and offset services."

Meanwhile, the Australian Conservation Foundation has welcomed the prime minister's commitment to reach net zero by 2050, but said the mid-century goal is only meaningful with deep cuts to climate pollution this decade.

"Unless the government sets the wheels in motion to cut our emissions in half by 2030, it is making climate change worse and turning its back on the opportunities," said Chief Executive Kelly O'Shanassy.

"Australia can become a global clean energy superpower in the next decade by replacing coal and gas with renewable energy," she added. "We have abundant clean energy, tools and talent, but we cannot delay any longer."

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

map showing Victoria, Australia

The state of Victoria completed an inquiry on cannabis earlier this year. Will it actually change anything for the drug?

In August, the government of Victoria, Australia, released the results of its inquiry into the use of cannabis, taking into account 1,475 written submissions, dozens of expert witnesses and two minority reports.

A few months on, Australia-focused cannabis investors are wondering whether the document's findings will have an impact on cannabis use in the state, or even in the country as a whole.

The short answer? Probably not. But there's more to the story than that.


Why did Victoria conduct a cannabis inquiry?

Back in May 2019, Victoria's Legislative Council Legal and Social Issues Committee agreed to complete an inquiry on cannabis in the state. Although it was initially due for completion in March 2020, the deadline was extended twice, first to March 2021 and then again to August 2021.

Chaired by Reason Party Member of Parliament Fiona Patten, whose party supports legalising cannabis, the committee broadly looked at two streams of cannabis policy reform. One, the legalisation of cannabis for adult personal use, and two, a legalised and regulated cannabis market.

The report puts forth 17 recommendations and 21 findings, but Patten said after its release that the Labor-heavy committee banded together to water down certain recommendations prior to the drafting of the report.

For example, according to reports from the Age, the first recommendation of legalising cannabis for adult personal use in Victoria became "Recommendation 1: That the Victorian Government investigates the impacts of legalising cannabis for adult personal use in Victoria."

Evidence from the inquiry suggests that legalising cannabis would keep young and vulnerable people out of the criminal justice system, with state parliament estimates suggesting Victoria would save AU$725 million over 10 years in police and justice costs.

Key highlights from Victoria's cannabis inquiry

Recommendations from the report broadly fall several categories: investigating a legalised and regulated market; health and safety; and education for minors.

Here's a wrap up of the main items the Victorian government was told to look at:

  • Investigate the impact of legalising cannabis for adult personal use in Victoria.
  • Consider referring an inquiry to Victorian Law Reform Commission to investigate state and Commonwealth laws inhibiting legislation and regulation of the cannabis market.
  • Provide ongoing funding to alcohol and drug sector organisations for drug diversion programs, and further funding to areas in regional and rural Victoria.
  • Implement a road safety campaign about the dangers of driving under the influence of cannabis.
  • Look at alternative testing methods for "drug driving," as current methods mean THC can be detected in a person's system long after being "affected by the drug," especially in the case of medicinal cannabis patients.
  • Advocate to the National Cabinet to remove unnecessary barriers for accessing medicinal cannabis.
  • Seek expert help on school drug education, avoid stigmatising users and promote help-seeking behaviour.

Minority reports included in Victoria's inquiry

Liberal Democrat David Limbrick, who participated in the inquiry, was "extremely disappointed" with the last-minute changes mentioned above and submitted a minority report in favour of legalisation.

It broadly supports the public policy Liberal Democrats have towards cannabis which is: "The Liberal Democrats support the legalisation of use, cultivation, processing, possession, transport and sale of cannabis, with protection of minors and penalties for driving while impaired."

A second minority report is also included — it comes from the Liberals and Nationals, both of which are firmly against legalising cannabis in order to protect public health and children. Signed by three members, it states that legalising cannabis only provides ready access and no deterrent to prevent cannabis use. They further wrote:

"The Liberals and Nationals support drug education programs warning of the harms of illicit substances, we support diversion programs that help get people off drugs, and we support other support services for those addicted to drugs. However, we do not support legalising cannabis."

Victoria Police Assistant Commissioner Glenn Weir told the inquiry in June that the use, cultivation and trafficking of marijuana causes "significant harm," and said he is firmly opposed to legalisation.

Will the inquiry impact cannabis legalisation in Australia?

Any hopes of legalisation were quickly dashed after the report's release by Victorian Premier Dan Andrews, whose focus is on job creation and economic recovery from the coronavirus pandemic.

Speaking to reporters after it came out, he said he has "no intention" of legalising cannabis.

"If you want to know why, then have a look at the sections in the mental health royal commission that talk about dual diagnosis, drug-induced psychosis," he told reporters outside parliament.

"Others have a different view, they're entitled to have a different view, but as the leader of the government I've just made the government's position very clear."

The lack of support by major state parties for the Victorian inquiry may speak to a wider delay nationally for supporting decriminalising and legalising cannabis. Combined with the narrow defeat of the cannabis legalisation referendum in New Zealand, it does not look like legalisation is likely anytime soon.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.