AMERICAN BATTERY TECHNOLOGY Co

The Company is engaged in the construction of a recycling plant to recycle end-of-life lithium-ion batteries and in the exploration of its lithium-bearing claystone unpatented mining claims. To do so, the Company owns or holds long-term leases on multiple properties, all located within the United States, along with leases on laboratory facilities that support our research and development functions. In addition, the Company holds rights to certain assets, which facilitate the effective use of our properties. We believe that all of our properties and facilities are well maintained, effectively used, and are adequate to operate our business. Information regarding significant properties operated by us is outlined below.

Corporate Headquarters

The Company currently leases executive offices located at 100 Washington Street, Suite 100 in Reno, Nevada, USA. The office space consists of approximately 5,831 square feet and the lease expires November 30, 2024. The Company is currently in negotiations to an extension or renewal.

Recycling Operations

McCarran, Nevada

The Company closed on the purchase of the recycling facility in August 2023, and in tandem, the Company has developed new facility and technology-specific environmental, safety, operational standards and procedures, and is in the process of recruiting, hiring, and training of new staff in preparation for operations.

This facility is in the Tahoe-Reno Industrial Center, located at 2500 Peru Drive, McCarran, Nevada, and was previously utilized for the recycling of lead-acid batteries, and was already equipped with much of the infrastructure and utility equipment necessary to implement the Company’s recycling processes, including the electrical distribution, HVAC, compressed air, water treatment, material handling, analytical quality control, and operational control rooms.

The facility houses the Company’s first-of-kind integrated battery recycling system which utilizes a strategic de-manufacturing and targeted chemical extraction train in order to recover battery materials with high yields, low cost, and with a low environmental footprint. These processes are fundamentally different than conventional methods of battery recycling, which utilize high temperature furnaces, such as smelting, or non-strategic shredding or grinding systems. The Company’s system results in battery metals separation, recovery and purification of high-value, battery-grade products with less environmental impact and greater potential cost efficiencies than conventional methods.

As the Company ramps up operations of its integrated recycling processes, the facility will be commissioned in phases. In the first phase, which was commissioned in the fourth quarter of fiscal 2024, battery materials are recycled into products including copper, aluminum, steel, a lithium intermediate, and a black mass intermediate material. In the second phase, expected to be commissioned in fiscal year 2025, this lithium intermediate will be further refined into a battery grade lithium hydroxide product, and the black mass intermediate material will be further refined into battery grade nickel, cobalt, manganese, and lithium hydroxide products.

Fernley, Nevada (held-for-sale)

On August 14, 2020, the Company purchased approximately 12.44 acres of undeveloped industrial land in Fernley, Nevada in a Qualified Opportunity Zone (QOZ). The Company began construction before prioritizing the new location in McCarran, Nevada. During the quarter ended June 30, 2024, Management and the Board of Directors approved a plan to sell the Fernley facility and the Company has classified the facility and land as held for sale. See Note 7 of the consolidated financial statements for further details.

Feedstock Storage – Fernley, Nevada (held-for-sale)

On July 23, 2021, the Company purchased 11.55 acres of industrial-zoned land in Fernley, Nevada. The Company intended to construct a supplemental storage facility for recycled battery feedstock on this site. The City of Fernley has approved the City Use Permit for the site. During the quarter ended June 30, 2024, Management and the Board of Directors approved a plan to sell the land and the Company has classified the facility as held for sale. See Note 7 of the consolidated financial statements for further details.

Land for Supplemental Storage – McCarran, Nevada

On June 28, 2021, the Company purchased approximately 13.87 acres of industrial-zoned land in McCarran, Nevada. The Company intends to construct a supplemental storage facility to store feedstock on this site.

Water Rights

To date, the Company has purchased water rights in the City of Fernley, Nevada for $3.8 million. The Company allocated approximately $0.1 million of water rights to the Company’s Fernley plant which is now classified as held-for-sale. The remaining water rights are intangible assets the Company can use in the future or make available for sale. These water rights have an indefinite life and are recorded within intangible assets on the consolidated balance sheet. See Note 9 of the consolidated financial statements for further details.

Laboratory Facilities

To support the development of both its lithium-ion battery recycling and battery metal extraction technologies, the Company operates out of two laboratory facilities: The Center for Applied Research at the University of Nevada, Reno in Reno, Nevada and Greentown Labs in Somerville, Massachusetts. The Company has developed long-standing partnerships with the operators of these facilities and all leases are in good standing.

Nevada Center for Applied Research - Reno, Nevada

The Company leases laboratory and office space from the University of Nevada, Reno. As of June 30, 2024, the Company occupies five laboratories totaling over 3,000 square feet. All laboratories and offices are housed within the Nevada Center for Applied Research (NCAR). The laboratory space is used to advance the Company’s in-house, first-of-kind developed battery metals extraction technologies for both the recycling of spent batteries and for the manufacturing of primary battery metals from domestic-based resources.

Greentown Labs - Somerville, Massachusetts

The Company occupies office and wet chemistry laboratory space in Greentown Labs, which is the largest clean technology incubator in North America. The Company has access to both desk and lab space at the facility. The Company was afforded this opportunity by winning the Greentown Labs Circularity Challenge, an accelerator program for start-ups developed in partnership with BASF, one of the world’s leading chemical companies.

Tonopah Flats Lithium Exploration Project

The Company currently holds the rights to 517 Unpatented Lode Claims near Tonopah, Nevada. In addition, the Company maintains an office to oversee these claims and the associated activity in Tonopah, Nevada.

On September 1, 2021, the Company signed an exploration agreement with 1317038 Nevada Ltd., which gave the Company exclusive access to explore 305 Unpatented Lode Claims in the Tonopah Mining District (“Tonopah Flats”) in Nye and Esmeralda Counties, Nevada. The agreement gave the Company the right to explore the claims for critical battery materials. The agreement also gave the Company the option to purchase the Claims upon expiration of the exploration agreement. The Company completed its preliminary surface sampling of the property in February 2022 and proceeded with an exploration drilling program. In July 2022, the Company exercised the option to acquire the rights to those claims.

In addition to signing the exploration agreement mentioned above, the Company also staked additional claims in the region surrounding the claims included in the agreement. In total, the Company holds approximately 10,340 acres in the region that it intends to explore for economic lithium deposits.

The Company began surface sampling of these claims in the Summer of 2021, and subsequently performed additional subsurface drilling programs at depths of up to 1,430 feet totaling over 12,000 feet of exploration covering approximately 65% of its claims. The results of these initial successful exploration programs led to the development and publication of a third-party Qualified Person (QP) audited SK-1300 compliant Inferred Resource Report in February 2023. Based on the results, the Company disclosed its intention to continue the exploration of the deposit.

On July 22, 2023, the Company began a third exploration program to advance its Tonopah Flats Lithium Project. This drill program includes core infill and step out drilling to support the evolution of its domestic resource with the goal of upgrading to a ‘measured and indicated’ resource classification. The Company selected and engaged KB Drilling for the collection of infill and step out samples for this latest drill program, which consists of sample collections from 8 additional drill holes and includes 6,500 feet of total drilling.

On April 24, 2024, the Company announced the completion of the “Amended Resource Estimate and Initial Assessment with Project Economics for the Tonopah Flats Lithium Project, Esmeralda and Nye Counties, Nevada, USA” (“Amended IA”) and the publication of the S-K 1300 Technical Report Summary (“TRS”) disclosing mineral resources, including an initial economic assessment, for the Tonopah Flats Lithium Project. The TRS was completed by RESPEC Company LLC (“RESPEC”), a qualified person, in compliance with Item 1300 of Regulation S-K and with an effective date of April 5, 2024.

Geology, Infrastructure, and Permitting

Property Area and Claim Type

The area where Tonopah Flats Lithium Exploration Project is located is known for its unique sedimentary claystone resources. The Tonopah Flats property consists of 517 unpatented Federal lode mining claims covering approximately 10,680 acres and is centered at 38.1099° North Latitude and 117.3479° West Longitude. The Company owns 100% of the claims comprising the Tonopah Flats property. Ownership of the unpatented mining lode claims is in the name of the holder (locator), subject to the paramount title of the United States of America. Under the Mining Law of 1872, the locator has the right to explore, develop, and mine minerals on unpatented mining lode claims without payments of production royalties to the U.S. government. The 517 unpatented lode claims include rights to all locatable subsurface minerals.

The project is located approximately seven miles northwest of Tonopah in Esmeralda and Nye Counties, Nevada and is intersected by Highway 6. The project has other necessary infrastructure nearby including access to power, additional road access, and water. In addition, there is an available workforce in Tonopah and the surrounding area.

The Company has been conducting geological mapping, sampling, geochemical analysis, and proprietary extraction trials to characterize these resources and to quantify the performance of the lithium extraction and manufacturing operations.

Mineral Resource Estimate

The mineral resources for Tonopah Flats described and tabulated in our Amended IA report (full copy provided here: https://americanbatterytechnology.com/projects/tonopah-flats) are classified as Measured, Indicated, and Inferred in accordance with the SEC SK1300 New Mining Disclosure Rule and were estimated to reflect potential open-pit extraction. These resources were constrained with an optimization and cutoff grade satisfactory to meet the requirement of reasonable prospects for economic extraction. The pit shells created using these optimization parameters were further constrained to limit the project resources to a grade of 300ppm within claystone only, which was done as a conservative measure to avoid extremely low cutoff grades despite economics. It should be noted that without the grade constraint, the resulting pit shell using these parameters would be larger than has been used for the resources reported herein.

The table below summarizes the Tonopah Flats lithium resources:

a) The estimate of mineral resources was performed by RESPEC.

b) Tonopah Flats resources are classified as Measured, Indicated, and Inferred.

c) Mineral resources comprised all model blocks at a 300ppm ton Li cutoff that lie within an optimized pit.

d) The estimated mineral resources include data from the 29 sampled holes.

e) Lithium Hydroxide Monohydrate (LHM) tons were calculated using a factor of 6.0459 relative to Li.

f) Mineral resources that are not mineral reserves do not have demonstrated economic viability.

g) The effective date of the estimate is December 21, 2023.

h) Rounding may result in apparent discrepancies between tons, grade, and contained metal content.

Price trends throughout 2022 and early 2023 reflected an average market price that was much higher than averages over previous years. The second half of 2023 and early 2024 saw the stabilization of market prices. There is some risk that a significant commodity price drop would change the economic inputs to the pit constraints used to report this resource. As a result, a conservative cutoff concentration of 300 ppm Li within the optimized pit is used in this analysis. It should be noted that without this grade constraint, the resulting pit shell using these parameters would be larger than has been used for the resources reported herein.

Capital and Operating Costs

Mining capital and mine operating costs were estimated by RESPEC. Process capital and process operating costs were estimated by the Company and Woods Process Services, LLC. The project capital estimate includes a total of $785.4 million in initial (years 1 through 3) capital, and $258.8 million in sustaining capital throughout the mine life, based on an owner mining fleet of equipment. This totals $1.04 billion for the 50-year mine life. Capital and operating costs have an accuracy of plus or minus 50%.

Net operating costs are estimated to be $15.45/ton processed or $5,720 per ton of LHM. The life of mine operating cost summary is presented in the table below.

Initial Economic Assessment (“IA”)

RESPEC completed an IA by creating a cash-flow model based on the production schedule and resulting revenue stream in accordance with the costs presented. Only measured and indicated mineral resources were used to create the revenue stream and inferred resources were assumed to be waste. The IA limits the project to a mine life of 50 years for approximately 597 million tons with an average of 4,111 ppm LHM grade processed and a recovery of 65.7%. With $785.4 million in initial capital costs, processing costs of $4,302/ton of LHM, overall operating costs of $5,720/ton of LHM produced, and average annual production of 33,000 tons of LHM, RESPEC estimates a $10.05 billion after-tax net present value (NPV) at a 5% discount rate. At a discount rate of 10%, the after-tax net NPV is $4.67 billion. The project has a 69.8% Internal Rate of Return (IRR) and 2.3-year payback of initial capital. The IA is preliminary in nature and includes only measured and indicated material. There is no certainty that the conclusions reached in the IA will be realized. Mineral resources that are not categorized as reserves do not have demonstrated economic viability.

Mineral Rights and Annual Property Holding Costs

Ownership of the unpatented mining lode claims is in the name of the holder (locator), subject to the paramount title of the United States of America, under the administration of the U.S. Bureau of Land Management (“BLM”). Under the Mining Law of 1872, which governs the location of unpatented mining lode claims on federal lands, the locator has the right to explore, develop, and mine minerals on unpatented mining lode claims without payments of production royalties to the U.S. government, and subject to the surface management regulation of the BLM. The 517 unpatented lode claims include rights to all locatable subsurface minerals. Currently, annual claim-maintenance fees of $165 per claim are the only Federal payments related to unpatented mining lode claims. The annual property holding costs, including claim fees and county recording fees total $91,569 which include Annual Federal Claim Fees of $85,305 and Annual County Recording Fees of $6,264. Surface rights sufficient to explore, develop, and mine minerals on the unpatented mining lode claims are inherent to the claims as long as the claims are maintained in good standing. The surface rights are subject to all applicable state and federal environmental regulations.

Significant Encumbrances and Permitting

The Tonopah Flats property is owned 100% by the Company with no significant encumbrances or agreements such as leases, options, or purchase payments known and there are no royalties associated with the property. Tonopah Flats is currently operated as a mid-stage project with studies advancing for mineral resources, metallurgy and processing, engineering and economics, and environmental permitting. Key BLM permits and bonding for these activities are in place and include:

The BLM Nevada State Office currently holds BLM cash bond number 4969389 with the Company as principal, in the amount of $59,646. The bond provides surface reclamation coverage for operations conducted by the Company at the Tonopah Flats property. The total projected surface disturbance for the exploration permits as of November 2023 is approximately 4.47 acres. The Company is currently in compliance with all issued permits.

Internal Controls

We have internal controls for reviewing and documenting the information supporting the exploration, describing the methods used, and ensuring the validity of the results. These internal control processes were not materially impacted by the adoption of S-K 1300. Information that is utilized to conduct exploration is prepared and certified by appropriate QPs and is subject to our internal review process, which includes review by a QP. The QP and management agree on the reasonableness of the criteria for the purposes of the exploration. Calculations using these criteria are reviewed and validated by the QP. We recognize the risks inherent in exploration, such as the geological complexity, interpretation and extrapolation of data, changes in operating approach, macroeconomic conditions and new data, among others. Overestimated resources resulting from these risks could have a material effect on future profitability.

A map of the project is included in Figure 1 below.

Figure 1: Tonopah Flats Lithium Exploration Project