Australian Vanadium Agree to $217 Million Merger, Creating Leading Australian Vanadium Developer

Australian Vanadium Limited (ASX: AVL) and Technology Metals Australia Limited (ASX: TMT) have announced a proposed merger via a scheme of arrangement that will consolidate their adjoining vanadium projects in Western Australia into a single integrated operation. The merger aims to create significant synergies and unlock value by combining the companies' world-class vanadium resources and leveraging economies of scale.

About Australian Vanadium

AVL is focused on vanadium resource development and producing vanadium electrolyte for vanadium flow batteries. Its flagship Australian Vanadium Project in Western Australia hosts a global vanadium resource of 239Mt at 0.73% V2O5.

TMT’s main asset is the Murchison Technology Metals Project in Western Australia, which has a high-grade vanadium resource of 153Mt at 0.8% V2O5 and is one of the highest-grade undeveloped vanadium projects globally.

The proposed merger will create the leading ASX-listed, pure-play vanadium developer, focused exclusively on realising these strategically located projects in a Tier 1 mining jurisdiction.

Benefits of the Merger

The merger provides a unique opportunity to create significant synergies and unlock value by combining AVL and TMT's adjoining projects across the same vanadium mineralization into one integrated operation with a 25+ year mine life.

Key benefits include:

• Operational synergies by optimizing mine design, processing, product blending, infrastructure, logistics, offtake and financing
• Improved economics via combined scale, blending higher and lower grade material and shared infrastructure
• Funding synergies via increased scale and asset base to support future capital raisings and project financing
• Removal of duplicated corporate costs
• Enhanced profile as the leading ASX-listed pure play vanadium developer
• Strengthened platform for potential future downstream processing into vanadium electrolyte and VRFBs

The merger ratio implies an offer price of A$0.324 per TMT share, representing a 27% premium to TMT’s 30-day VWAP. TMT shareholders will receive 12 new AVL shares for each TMT share held, equating to 42% ownership of the merged entity.

AVL is conducting a A$15-20 million placement to fund the merged company's activities during the merger process. Major TMT shareholder Resource Capital Fund VII LP has committed to subscribe for A$15 million of the placement.

TMT Board Unanimously Recommends the Offer

The merger offer is unanimously recommended by the TMT Board, in the absence of a superior proposal. TMT Directors also intend to vote all shares they control in favor of the scheme, subject to Independent Expert concluding the deal is in shareholders' best interests.

TMT's major shareholder Resource Capital Fund VII LP has confirmed it intends to vote its 18% stake in support of the scheme, subject to no superior proposal and the Independent Expert continuing to conclude the scheme is in shareholders' best interests.

Compelling Strategic Rationale

The merger provides a unique opportunity to consolidate AVL and TMT’s adjoining projects across the same vanadium mineralization into a single integrated operation. Combining the projects will enable significant operational and cost synergies, providing a platform to enhance shareholder value.

Other key aspects supporting the strategic rationale include:

• Transformational scale with over 250Mt combined vanadium resources, representing one of the largest undeveloped vanadium projects globally
• Allows optimal integrated mine design, processing scheduling and product blending
• Shared infrastructure and facilities to reduce opex and capex
• Consolidated permitting, approvals, offtake and financing processes
• Enhanced funding capacity to support large project capex requirements
• Positions the merged entity to produce vanadium electrolyte and VRFBs in Australia
• Continued exposure to supportive vanadium demand fundamentals as decarbonization accelerates

The combination assembles a highly experienced board and management team to lead project development and realize synergies. AVL CEO Graham Arvidson will continue in this role for the merged group.

TMT Managing Director Ian Prentice will join the executive team, focusing initially on delivering integration benefits. TMT Non-Executive Director Jo Gaines will also join the merged company's board, strengthening technical expertise.

Attractive Vanadium Market Fundamentals

The merger comes at an opportune time to capture an anticipated recovery in vanadium prices on the back of strong demand growth.

Vanadium demand is expected to grow 6-8% per annum, driven by increased requirements for high-strength steel in construction and growing deployment of vanadium redox flow batteries (VRFBs) in large-scale energy storage applications.

VRFBs are emerging as a key technology to support grid stability as renewable energy penetration rises. Their large scale storage capabilities, long lifespans, project footprint and safety profile make them an attractive solution versus alternatives such as lithium-ion batteries.

Wood Mackenzie forecasts vanadium demand in VRFB applications to grow at a 17% CAGR to 2030 as renewable energy capacity expands globally.

Conclusion

The proposed merger of AVL and TMT creates a unique opportunity to consolidate two companies with adjoining world-class vanadium resources across the same mineralized structure in Western Australia into a single integrated project.

Combining the assets provides significant potential to unlock value and synergies, establishing the merged entity as the leading ASX-listed pure play vanadium developer.

The deal has compelling strategic merit, bringing together complementary resources and leveraging economies of scale in mine design, processing, infrastructure, logistics and financing.

The merger is unanimously recommended by the TMT Board and major shareholder RCF has confirmed its voting intention to support the scheme, providing a strong endorsement.

The vanadium market outlook remains attractive, with demand growth forecast from expanding high-strength steel use and VRFB adoption to support renewable energy growth.

With a strengthened platform, enhanced scale and cash position, the merged group will be well positioned to fast track development of its world-class vanadium resources and capture an anticipated recovery in vanadium prices.

The deal offers investors exposure to substantial synergies that can be realized from the integration while maintaining leverage to supportive long-term vanadium demand drivers.