Alliance Mineral Assets Limited announced that it has, on 26 April 2019, entered into a non-binding memorandum of understanding (MOU) with Jiangxi Special Electric Motor Co. Ltd. (Jiangte) to develop the terms on which the parties will cooperate in a 50:50 joint venture to produce and sell battery- grade lithium hydroxide (Hydroxide JV or Joint Venture). The Hydroxide JV provides a unique opportunity for Alliance to participate in the downstream lithium products market within the next 6 to 12 months, without incurring capital costs and exposure to the risk associated with the construction of a conversion facility.

Strategic benefits of Hydroxide JV to Alliance include: Access to a nearly-completed lithium hydroxide circuit with an existing conversion facility (commissioning of hydroxide circuit to commence in September 2019); Exposure to a diversified, downstream customer base; Alliance to further benefit directly from its own high-quality Bald Hill lithium concentrate; Profit margin per tonne of spodumene concentrate expected to improve significantly when processed under the Joint Venture compared to selling raw spodumene concentrate; Further strengthens the relationship between Alliance and Jiangte, with both companies working together to build relationships with downstream customers and partners. MOU and Hydroxide JV Highlights:Alliance will continue to own and operate the Bald Hill Mine and will supply the spodumene to the Joint Venture with the cost of production and transport recovered from sales of lithium hydroxide; Jiangte will continue to own and operate its lithium hydroxide and lithium carbonate converter in Yichun, Jiangxi Province, China (Converter) following its completion. Alliance is not required to fund any of the capital cost of the Converter; Spodumene contributed by Alliance will be processed at the Converter to produce lithium hydroxide which will be sold by the Joint Venture to third-parties; The Joint Venture will work to develop long-term downstream partnerships for battery-grade lithium hydroxide and/or lithium carbonate; Alliance and Jiangte will share equally in the margin from the sales of lithium hydroxide after recovering respective costs of spodumene production and conversion costs, with the specific terms of cost recovery to be formalised in the JV Agreement; Concentrate requirements of the Joint Venture for 2019 and 2020 are expected to represent only 20% of Bald Hill production.

However, once fully operational, the Converter will process approximately 100,000t of spodumene per annum, capable of producing up to 15,000tpa of lithium hydroxide; The Company's existing offtake arrangement with Jiangxi Bao Jiang Lithium Industrial Limited (JBJLIL)(2) remains unaffected and Alliance will continue offtake negotiations with third-parties for the remaining, unallocated Bald Hill spodumene concentrate of up to 80,000tpa in 2019 and up to 90,000tpa in 2020; The parties will work towards executing a formal binding agreement in relation to the Joint Venture by 30 June 2019 (JV Agreement).