Hannans Ltd - Expansion of lithium battery recycling footprint to major European EV markets

Hannans Ltd (ASX: HNR) (Hannans or the Company) is pleased to advise it has executed a heads of agreement (Greenhouse Agreement) with private company Greenhouse Investments Ltd (Greenhouse) effectively granting Hannans the right to enter the lithium battery (LiB) recycling markets in the United Kingdom, Ireland, Italy, and the Balkans (Greenhouse Transaction).

In addition, Hannans has secured Greenhouse's market intelligence and relationships in these regions. The Greenhouse Agreement more than doubles Hannans addressable market for scrap and end-of-life batteries. Late 2021 Hannans executed an agreement with Critical Metals Ltd (Critical) providing it with a right to commercialise a LiB recycling technology in Sweden, Norway, Finland, and Denmark4 , and by combining these territories with the United Kingdom, Ireland, Italy, and the Balkans Hannans has established tremendous leverage to the rapidly growing European LiB recycling sector, and specifically countries with the highest penetration rate of electric vehicles.

5 Damian Hicks, Executive Director of Hannans said, 'We are extremely pleased to deliver this increase in size and scope of our recycling opportunity for Hannans shareholders. It is abundantly clear that Europe needs a scalable, safe, and sustainable, lithium battery recycling solution. We believe the technology we will hold sublicences to will help stakeholders in our licenced jurisdictions meet their circular economy ambitions and legal obligations to recycle. We are now focused on increasing Hannans business development activities and forming long-term mutually beneficial relationships with the European lithium battery supply chain participants.'

Transaction Background

The background to the Greenhouse Agreement is that Greenhouse holds a non-exclusive license in the UK and Ireland, and an exclusive license in Italy and the Balkans, for a base lithium battery recycling technology6 . Greenhouse has agreed to grant Hannans a sub-license to commercialise the base technology in the UK and Ireland. Responsibility for the carriage of business in the UK and Ireland will now rest with Hannans. In addition, Greenhouse has granted Hannans the sole and exclusive right (but not the obligation) to fund all LiB recycling projects potentially developed by Greenhouse in Italy and the Balkans in the future. The consideration for funding each project will be equity in the project, to be negotiated on a case-by-case basis at arms-length. The agreement with Greenhouse remains subject to the satisfaction of the conditions precedent set out in further detail below.

UK, Ireland, Italy, and the Balkans

There are currently seven LiB factories planned for construction in the UK, Italy, and the Balkans. 7 These territories are forecast to have more than 30,000t 8 of end-of-life batteries available for recycling by 2030. Greenhouse has been actively seeking to establish relationships with potential suppliers of battery feedstock in these countries and will pass to Hannans the benefit of these relationships, discussions, and initiatives. By way of example, Greenhouse recently executed a memorandum of understanding (MoU) with a wholly owned subsidiary of leading south-eastern European steel scrap recycler and green steel producer Metalfer9 . The MoU contemplates a 50:50 joint venture to recycle all forms of lithium-ion batteries including but not limited to electric vehicle batteries arising from end of life vehicles and battery packs, giga factory production waste and scrap batteries through to consumer and commercial battery recycling. If Greenhouse and Metalfer make a positive investment decision to develop a recycling facility, Hannans has the sole and exclusive right (but not an obligation) to fund Greenhouse's portion of the costs in consideration for an equity stake in the project at normal commercial rates, on arm's length terms.

Consideration and Timing

Upon satisfaction of the conditions precedent, including Hannans shareholder approval and ASX approvals, Hannans will issue 539,583,879 fully paid ordinary shares to Greenhouse10. A meeting of Hannans shareholders will be called late March / early April 2022 (General Meeting) to consider the requisite approvals relating to the transaction, including approval for the purposes of ASX Listing Rule 11.1.2 for the change in Hannans' activities because of the transaction

LiB Recycling Technology

Neometals Ltd (ASX:NMT) is licensor of the base technology which is being commercialised globally by Primobius GmbH. The base technology the subject of the Greenhouse Agreement is the same technology that Hannans will commercialise in the Nordic region. 11 Neometals is Hannans largest shareholder with 32.43%.12

Capital Raising and Consolidation of Capital

As part of the re-compliance transaction, the Company is required to undertake a consolidation of capital on a 1.2:1 basis (Consolidation). The Company will seek shareholder approval for the Consolidation at the General Meeting. Hannans proposes undertaking a $2.5 million capital raising (with oversubscriptions available for an additional $1 million) at a price of 3.5 cents per share to fund its expansion plans and to meet ASX conditions for recomplying with Chapters 1 and 2 of the Listing Rules. The capital raising will be completed by way of a general offer to the public, with existing Hannans shareholders given a priority right to subscribe for new shares under the offer.

There is no cap on the priority right and the offer may therefore be fully subscribed by existing Hannans shareholders (up to the maximum subscription of $3.5m).

If funds more than the maximum amount to be raised are received solely from Hannans shareholders on the register on the priority offer record date, the scale back process will be: (a) Applicants who were not registered Hannans shareholders on the record date will not be allocated any shares under the offer; (b) Applicants who were registered Hannans shareholders on the record date will each receive a minimum allocation of $2,000 (being the minimum individual subscription amount under the offer).

Background

The Greenhouse Agreement is with private company Greenhouse Investments Ltd (Greenhouse). Greenhouse holds a non-exclusive licence for the United Kingdom and Ireland, and an exclusive license in Italy and the Balkans to commercialise a patented, proprietary technology to safely recover battery metals from offspecification and end-of-life lithium-ion batteries (Technology). The Technology is owned by ACN 630 589 507 Pty Ltd, a wholly owned subsidiary of Neometals Ltd.

The Greenhouse Agreement contemplates Greenhouse issuing an exclusive sub-licence to Hannans to commercialise the Technology in the UK and Ireland and further, provide Hannans the exclusive right to fund commercialisation of Greenhouse's future LiB recycling facilities in Italy and the Balkans in consideration for project equity

Trading in Hannans

Subject to ASX approval, it is anticipated that Hannans shares will continue trading through to the General Meeting. It is noted however that if ASX suspends Hannans' securities from trading for any reason during this period, Hannans' securities will remain suspended until the Company satisfies ASX conditions for reinstatement/re-compliance. If Hannans shareholders approve both the Greenhouse Agreement and the change in nature of Hannans primary activity (from minerals exploration to lithium battery recycling) Hannans shares will be briefly suspended from trading until Hannans has satisfied the ASX conditions for reinstatement.

Contact:

Mariana Bermudez

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