Valence Industries Uley Graphite Grade Increases to 11.7%

Valence Industries has announced a material increase in the average graphite grade at the proposed Uley Pit 2, following the completion of the infill drilling campaign in August 2014.

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The campaign was designed to support the revised Feasibility Study for the proposed expansion of graphite mining, production and manufacturing by Valence Industries.

The drilling campaign focused on three key areas – the upgrade of mineral resource confidence levels, provision of enhanced geotechnical and other data for the Uley Pit 2 design, and samples for further metallurgical work to refine the new process plant design.

The company advised that it has achieved all three goals:

– Maiden ore reserve and pit design work is expected before the end of November.

– The updated plant design will be included in the Feasibility Study, scheduled for release in December 2014.

– Metallurgy samples have been taken with results to be incorporated in the Feasibility Study.

The updated JORC 2012 Mineral Resource for Uley Pit 2 is:

Summary Table

Uley Pit 2 in-situ Mineral Resource

Resource        Tonnage Graphitic  Contained Graphite

Classification    (Mt)   Carbon (%)  (‘000 tonnes)

Measured          0.34       17.92        60

Indicated          1.85       11.84        220

Inferred            0.85        8.89          80

Total                 3.04       11.69        360

In addition to the in-situ resource, Valence has existing stockpiles of 174,000 tonnes at an average grade of 6.23% graphitic carbon (gC) (JORC 2012 Mineral Resource).

The company said that the significant increase in the in-situ average resource grade is attributable, in part, to the very high grade Arterial FlakeTM graphite contained in the pegmatitic intrusions previously undiscovered on the Uley GraphiteTM tenements.

The 40% increase in average graphite grade provides important benefits to the Company’s production program:

– The higher grades of graphite present in broad Arterial Flake(TM) veins are expected to allow selective mining of the Uley 2 Pit, to yield higher-grade run-of-mine material for processing at the adjacent Uley Graphite processing facility.

– Higher input grades are also expected to lead to better process outcomes, in terms of higher average graphite flake sizes, due to the reduced extent of physical processing required for the higher-grade material during the production process.

– The details of the expected benefits relating to the improved average grade will be incorporated in the revised Feasibility Study, due for release in December 2014.

In addition to the updated mineral resource, the Company has estimated a significant initial Exploration Target immediately to the south of Uley Pit 21, in accordance with s17 of the JORC Code:

Valence Industries – Uley Pit 2 Extension – Exploration Target

Tonnes of graphite – 9.0Mt to 12.0Mt

Grade of Graphitic Carbon – 9% gC to 12% gC

The Exploration Target is located on the land owned by Valence Industries and on its RL66 and RL67 (as well as its underlying EL4778). The Exploration Target is based only on the immediate extensions to Uley Pit 2 and takes no account of other tenement areas held by Valence Industries or the remaining ~122km2 area of EL4778.

The area known as the Uley Pit 2 Extension will be drilled during November and December 2014, with results from that drilling program expected in early 2015.

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