Settlement/purchase options, page-167

Please excuse if any of this has been misheard or misinterpreted.

Morning session:

Tony Lethlean on stand for over 2.5 hours, questioned by Q.

1. There was talk about a Quasar's marketing plan from OCtober 2014. The term "concentrate logistics" was mentioned. Also mentioned of a strategy to deliver to China and India required a substantial inventory.
It would be highly advantageous for concentrate to be stockpiled. Lethlean said he "had to go along with it" although AGS were concerned about cashflow. Something about port of Shanghai and CGNPG was mentioned as a potential buyer of uranium? Also mentioned something about "further shipping costs".
Q marketing strategy was a good strategy for optimising price but it would affect balance sheet of AGS. AGS balance sheet was already under stress in July 2014.

2. SJ went to lenders (ie. ANZ). Lethlean was delegated to assist with the equity/capital raise side of things. AGS tried a few equity investors or brokers (more on this later when SJ takes stand in afternoon). They were:
- Ur Oz securities (or something along those lines, I can't find them on google, so I've got the spelling wrong)
- Cannacord Genuity
- Petra Capital
- Lodge Partners
They informed AGS it would be hard to raise money if there was no cashflow.

3. Q's marketing plan was that they weren't proposing no sales until 2017, just that some long term sales won't be until then. Some sales could come by mid 2015.

4. Q said that the litigation that AGS took out pushed out the production time line. Lethlean said it wouldn't have as the mine site is unaffected and still going ahead. AGS boycotted some JV meetings due to the litigations and Q said that "wouldn't a lack of JV meetings affect the timeline?". Also some of the previous litigation (eg. mining agreement with Native title holders) would affect permits. "How can they go mining without permit" asked Q of Lethlean.

5. Lethlean said SJ was "on top of" mine site activity. He received a number of reports.

6. Q asserts that AGS hired Dragmann to make Q uncomfortable so Q could sell out. Q says that Dragmann advised AGS to make as many litigations as possible. The Dragmann primary strategy was how we could get 75% back. IG and SJ were the ones dealing with Dragmann.

Dragmann fees:
retainer fee of $150,000
success fee of $4 million
Think their rate was something around $20k-$30k per month. As of June 2014, they were owed $1.2 million.

7. When did AGS decide to sell 25%? It was discussed early 2014.
AGS did discuss selling 25% at board meetings while still trying to get back 75%.
When did AGS decide to give up tactic of getting 75% and sell 25%? Q2 2014

8. Q asserts IG didn't want to participate in rights issue because marketing rights belong to Q
Marketing rights were first discussed in August 2014 in board meetings. Lethlean said it was always an ongoing discussion

9. 18th Nov 2014, AGS seeked extension of 28 days whether to contribute. AGS didn't ask the market for money until Dec 2014. Q asks why didn't they go to market before 18th Nov? Lethlean said they were looking at options and getting a financial plan ready.

10. The time of uranium production to cash is 6 months? There is a "lag time".

11. In SJ cashflow forecasts, Dragmann fee of $934k was left out. U price of $40.63 US was incorrect (was around $35 US).

12. Lethlean is director of Alkane (IG is 25% shareholder). Lethlean also associated with BBY Ltd which went out of business on the Monday just past. Was it relevant or just to make Lethlean look bad?