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Leading Edge Materials (TSX-V: LEM) CEO Blair Way on Romanian Exploration Alliance & Latest Test Results from the Woxna Graphite Project

August 24, 2018

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of Leading Edge Materials (TSX-V: LEM)(OTC: LEMIF), Mr. Blair Way. Blair, how are you this afternoon?

Blair Way: Hi, Gerardo. Great to catch up again.

Gerardo Del Real: Morning in your neck of the woods, correct?

Blair Way: That's true. It's a cool morning, but all good.

Gerardo Del Real: Listen, it's been several weeks since you and I caught up, lots to talk about. You've made some progress with your exploration alliance in Romania. I know it's early days there, and I know that you can only say so much, but you've also had some progress on the graphite front. So I'd like to start with Romania. Talk about what you can talk about there. Then I'd love to get your insight as to the latest news from the Woxna Graphite Project in Sweden.

Blair Way: For sure. Certainly Romania is a very exciting prospect for us. And as our press releases have detailed we've moved into where we actually have our agreement in place. So we're a 51% owner of a Romanian company now with the opportunity to earn in up to 90%. That work will involve activities on the ground looking at historic information and then taking the next steps after getting that information.

Part of those steps are also establishing an exploration permit, assuming it is warranted. And that will give us tenure on the ground. That's one of the reasons we've been a little coy or cautious in the information we disclosed. At present the land that we are accessing is not secure from a tenure point of view, but we're very confident that we can move forward through that process and will eventually have that security tenure. But the prospect is extremely exciting to us and we're really looking forward to, quite literally, digging in and getting a clear understanding of what we have in front of us.

Gerardo Del Real: Well, I know the due diligence the company and the board does. You have a world class of rare earth asset, frankly a couple. You have the Woxna Graphite Mine, which of course is fully constructed. It's permitted. You have all the processing, waste management, and infrastructure in place, and so if it's taken this long for you to legitimize the agreement with the Romanian company, and you're this cagey about wanting to talk about it I'll respect the privacy and hope that in a month's or a couple of months’ time we can talk about it. I'm sure that'll be worth the wait.

Let's pivot to graphite. You had some recent results out of Woxna. Can we talk about the status there and what we can look forward to hear the rest of the year? It's been a tough summer for most junior resource companies, Leading Edge not an exception, but a lot to look forward to.

Blair Way: For sure. The graphite work has always been something we've been beavering away at. We report on it as we feel it's appropriate for investors. Over the summer we've had a number of initiatives underway with regards to helping us better understand and define the equipment that ultimately we would need for a demonstration plant, so we can produce these larger quantities of value added material.

Obviously the Woxna plant can produce the large quantities of flotation graphite, which is your mid-90s concentrate. Our customers or potential customers that we're speaking to are looking for larger samples, and as these customers develop their anode chemistry we need to be able to provide them hundreds of kilos in order to do that. So, the results and the work we've been doing over the summer and prior to that in spring are starting to feed through.

We'll have more to follow, but that's on the spheronising initiatives where we've taken some of our spheronising work and internally we need to be confident that the equipment we spec can enable us to produce the products to the specifications the customers are asking for. They're all a little bit different, within similar parameters. We need to be able to demonstrate that internally, and then externally to our customers, same as the thermal purification. We want to understand as much as we can about that process because not only will the thermal purification help for our value-added battery materials, but also the byproducts that are the result of producing our spheronized graphite.

There's a fine grained portion of material that's produced that's not suitable for batteries, but by being able to purify that, that creates additional markets for our materials. Some of those markets actually may be out there now, and not necessarily in super large quantities, but it does enable us to also provide samples to those types of customers and that helps us better prepare and plan for the economics of producing our flotation graphite, converting it into battery graphite, and also converting the byproduct into a sellable and more valuable product.

It's an exciting time for the Woxna Graphite Project because we are getting so close to where we can produce these large meaningful samples, and actually get better clarity with some of these customers as they start to ramp up their businesses and are targeting building batteries in the next 12 to 24 months. Those are the sort of discussions that we are entertaining in parallel to the work that we're doing on the ground at Woxna.

Gerardo Del Real: And just to be clear, Blair, the end game there is to be able to deliver market ready lithium ion battery anode material. Is that correct?

Blair Way: That's correct. Obviously the anode is the actual copper coated with the anode material, the graphite compound, which is made with both natural and synthetic and a few other additives. So yes, we're targeting preparing that anode material as required for each customer. Some of the customers will have slightly different specifications. But that's our target yes, a totally value added anode material. We are looking at some of the coating technology, but those usually are more specific to the particular battery customer, so we'll work with those customers to ensure we can meet those requirements further down the track.

Gerardo Del Real: And your Woxna facility, it was granted an extension last year, right? That gives you an operating license until what, 2041?

Blair Way: That's correct, yes. It's a good vote of confidence from our perspective that the regulator's happy with the operation the way we've run it today. Obviously it's pretty scaled down activity because we only operate it as required. But part of that is also maintaining our ongoing environmental compliance, community relations, and those sort of things. So yeah, we're pretty happy to have that security in our license.

Obviously as our customers come on stream that puts us in a very strong position to be able to react quickly and clearly to those reactions. As the customer's demands go up we can ramp our production in parallel. We have to be careful not to be standing on the side of the road with a whole bunch of material we can't sell, but equally we don't want a customer standing on the side of the road looking for the materials that they can't supply. It's definitely an alignment that we have to ensure we maintain.

Gerardo Del Real: Well, I know the Northvolt Project is something that's picking up steam. They're being very selective about the commodities they source, but there's been a couple of deals recently announced that kind of lead me to believe that they're finally starting to come to the table and actually put pencil to paper and sign some contracts. So that has to bode well, being that there's not another junior in the space that's as advanced as Leading Edge Materials. When can we expect a decision in regards to the demonstration plant?

Blair Way: Well, I know that Northvolt has a lot on their plate, and they've certainly have been working with Nemaska and have signed them onboard for lithium. Lithium is clearly one of the more difficult commodities for them to get their hands on, so that's been a priority from my understanding with them. They've also broken ground and actually started construction on their demonstration plant. They have a lot of moving parts in their business, but as their demonstration plant starts to ramp up that's our first opportunity to get to actually present them some of the material that they're going to need for their anode.

And as they develop their anode chemistry we're confident that we can be part of that process. We have regular discussions with them. It really is the timing, and I guess unfortunately or sadly for us, the graphite's a little further down their priority list compared to, say, lithium. But it's understandable. Cobalt will also come in to play for them, so hopefully there's an opportunity there as well. But we have a good relationship with them. We continue discussions and are optimistic in the future we'll have more to talk about on that front.

Gerardo Del Real: Blair, I look forward to having you back on. Thank you again for the update. It was necessary and timely. I know the summer doldrums as I mentioned up top have been tough on almost everybody. We're almost past that. Labor Day's right around the corner, and it should be an exciting last few months of the year here.

Blair Way: For sure. It's a shame to be hoping for the end of summer. But from our perspective and a market perspective, it will be good to see the end of summer. Labor Day everyone gets back to school, back to work. We can look to maybe catch up after Labor Day, and we can talk further as we've had a number of initiatives on the ground with regard to the company and look forward to being able to share some of that in September.

Gerardo Del Real: Sounds good, Blair. I'll hold you to it. Thank you.

Blair Way: Thanks, Gerardo. It's always great to catch up.

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