Lava Blue Ltd PO Box 279 A.C.N. 605 427 478 Fyshwick, ACT

2609

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October 28, 2020 LAVA BLUE INVESTOR UPDATE

Dear Shareholders,

- Fund Raising update - Mini-Plant progress - Licencees and Collaborations - CIM Manganese Permits Field Work - Grants and Rebates

Since we wrote to you at the end of July Lava Blue has been progressing the two main elements of our business plan, which is to become a primary producer of premium High Purity Alumina, and to secure income from licencing agreements over the suite of intellectual property we are developing. To achieve both of those ends we are developing the Lava Blue HPA Mini-Plant in Brisbane, for which purpose we launched a $2.5 million fund raising program in August. Simultaneously we have continued to explore all opportunities for grant funding support to leverage investor capital, and we have maintained and built on our portfolio of mineral properties in the North Queensland mineral province. Fund-Raising Since we commenced fund raising for the Mini-Plant project we have had a steady stream of professional investors join the ranks of the Company’s shareholders. At the time of writing nearly $1.5 million has been subscribed by existing and new investors. We have many on-going discussions with professional investors, fund managers and stock brokers and we will continue the fund raising program until we reach our target or the Directors deem we have secured sufficient funding of all types to deliver the current program. The Mini-Plant Project Lava Blue has sufficient funds at bank to commence construction of the Redlands facility and commit deposits to procurement of mini-plant components. Surveys of the block at Redlands have been completed and a long-term lease from Queensland University of Technology has been drafted. Completion of the lease is expected soon after the caretaker period ends following the Queensland elections on October 31. The site of the Lava Blue facility is roughly outlined in the image Google Earth image below. Other research facilities are being planned for siting around the Lava Blue facility.

Lava Blue Ltd PO Box 279 A.C.N. 605 427 478 Fyshwick, ACT

2609

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The Redlands Agricultural Research Station is about 25km south east of Brisbane City and provides a unique setting for the Energy Science Research Park being developed by QUT, including koala inhabited forest and platypus in the creeks. An update on progress with the mini-plant will be provided at the AGM. Licensees and Collaborations In July an ASX listed company, for whom Lava Blue manufactured HPA under contract early in 2020, appointed an independent reviewer to provide an opinion on the value of the Lava Blue HPA process. That report was completed in September and the MD of the company that commissioned the report confirmed that the report was favourable. Various approaches to developing this commercial relationship further are under discussion between the parties. Lave Blue has been in discussions with a substantial European company that contacted us about our process. This has progressed to an advanced MoU drafted by the parties with completion expected soon. More details will be released at the AGM. An approach from a second Australian resources company in July has also resulted in a contract to manufacture HPA from their material. That work has commenced and the 50% first payment was received. That contract will complete in November with delivery of the HPA samples and a report on the outcomes of the work. Lava Blue has been approached by the Council of Scientific and Industry Research (CSIR) of South Africa to discuss a possible collaboration around related high purity minerals processing research underway there. We intend to explore this approach with CSIR during an international online meeting scheduled for early November.

Lava Blue Ltd PO Box 279 A.C.N. 605 427 478 Fyshwick, ACT

2609

Page 3 of 5

HPA Projected Shortfall to 2028 (Source CRU and Altech Chemicals): The chart above

developed by the Commodities Research Unit and published by Altech Chemicals Ltd forecasts the shortfall in supply of HPA even if every one of the HPA developers in the

market that we are aware of reaches their targeted start up dates and volumes. All of the conditions that are creating the booming demand for HPA now, will still be in place and

more likely to be accelerating by 2028. Lava Blue is of the opinion that being a primary producer in its own right, combined with a limited network of select licencees, provides the best mix of exposure to the continued growth in this market, and security of income from our suite of intellectual property through diversity. Even if Lava Blue had three licencees and its own operations each producing 5,000 tonnes per annum by 2028, that would not be half of the currently predicted undersupply. More optimistic forecasts for HPA demand are quite plausible driven by new applications for HPA and larger than expected investments in battery manufacturing. Cloncurry Industrial Minerals Work Lava Blue completed the acquisition of Cloncurry Industrial Minerals Pty Ltd in March, adding high purity silica at Cloncurry and an advanced manganese prospect near Four Ways to its minerals portfolio. In July Lava Blue applied for a Collaborative Exploration Incentive grant from the Queensland Government to conduct further drilling and assessment of the high purity silica resource on HJ Reef. In this instance the CEI grant was unsuccessful. For the time being further field work at HJ Reef has been put on hold. At the same time a project underway at QUT is examining options for simple beneficiation of the hard crystalline rock quartz from the reef to understand opportunities for improving the raw material for a number of possible applications As well as controlling the HJ Reef, when Lava Blue acquired CIM it also controlled a granted exploration permit in north west Queensland which is highly prospective for manganese, another critical battery mineral.

Lava Blue Ltd PO Box 279 A.C.N. 605 427 478 Fyshwick, ACT

2609

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Two field trips led by Des Broom were undertaken to the Four Ways prospect in September and October and extensive manganese mineralization has been mapped at the surface.

Extensive fields of manganese nodules on the surface of the permits require further

investigation in the new year to determine the full extent of mineralization.

Photogeological studies, geophysical data and geological maps, and samples received from the field so far all suggest that the location of the surface manganese nodules has a high probability of concealing the presence of an ore body under cover. Lava Blue moved quickly to secure coverage of the features identified and has applied for a new permit surrounding the existing manganese prospect on three sides with granted permits and applications now covering more than 200 sq kms of the region.

Lava Blue Ltd PO Box 279 A.C.N. 605 427 478 Fyshwick, ACT

2609

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Directly to the west of the Lava Blue Four Ways permits Oz Minerals is conducting an extensive drilling campaign for Mt Isa style polymetallic deposits under a farm-in agreement with Red Metals. Directly to the south along strike of the major fault system covered by Lava Blue’s permits Rio Tinto has recently launched an exploration program. Lava Blue’s lead exploration geologist, Dr Brian Senior, was unable to get to the field due to COVID-19 travel restrictions, but will soon be in receipt of a larger set of samples collected from the field by Des Broom, some of which will be prepared for assaying by a commercial laboratory. Depending on assay results and detailed mapping of the discoveries from the field work, further exploration will be planned for mid next year on this exciting property. R&D Tax Rebate, Future Grant Funding and New Capital Raising Lava Blue has always sought opportunities to leverage the private capital it invests with suitable grants and rebates. As a result of expenditure on research and development completed during 2019-20 Lava Blue received an R&D Tax Rebate of more than $550,000 in August that was used to pay out all finance facilities that were used by the Company to maintain the research and development program and working capital requirements during the early months of the pandemic lock down. The company has commenced preparation of an application for an Accelerating Commercialisation grant aiming to secure support for some of the costs of purchase of specialized hardware for the mini-plant. Accelerating Commercialisation is a dollar for dollar matched grant scheme run by the Federal Government. In the delayed Federal Government’s national budget released in early October the announcement of the $1.5 billion advanced manufacturing strategy1 puts Lava Blue’s activities of using machine learning in the manufacture of high purity critical minerals at the center of the Government’s post COVID economic recovery objectives. We will very actively be exploring all opportunities for Federal government support. Feel free to contact me at any time to discuss any of the matters raised in this newsletter. Stay well, we will. Regards,

Michael McCann Managing Director 0412 281 637

1 https://www.industry.gov.au/news-media/modern-manufacturing-initiative-and-national-manufacturing-priorities-announced