Ann: AUZ to acquire 100% of Sconi Cobalt-Nickel-Scandium Project, page-36

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Faisal1475

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10/09/17

20:35

Post #: 27117399
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Originally posted by Newbie2015 ↑

Good evening all, I got in touch with Ben Bell via email. Here is his response to my questions.

""
Subject: RE: Proud Shareholder

Good afternoon Mohit

Thank you for your email and I apologise for not replying earlier.

Regarding your questions below, please allow me to answer them as best I can.

Options being considered for funding the projects?
The typical way these projects are funded is by forward selling the final product, which in this case is the cobalt sulphate and nickel sulphate, and the scandium oxide.

Take FMG, for example. When Andrew Forest took over the company 2003, FMG only had $1.1 million cash-in-bank (30 June 2003). Yet, Andrew Forest laid out a plan that required $1.1 billion of capital expenditure (see his 2003 AGM presentation).

So has did a company like FMG with just over a million dollars in cash build a multi-billion dollar empire? It borrowed about half the required money from banks and had its customers pay for the other half (see FMG announcement of 5 March 2004 for example).

This is one option available to AUZ. We debt fund half the cost of the project and forward sell a percentage of the future product to customer, who in turn finances the other half of the project. This way we avoid heavy dilution of existing shareholders.

Update on the Mining Lease application for Flemington Project submitted in April this year?
The Mining Application is currently with the New South Wales Department.

I am proposing to update shareholders on the progress of this application in the next 4 – 6 weeks, when the Quarterly Activities report is released.

Rest assured it is progressing as per plan.

Will you be releasing the updated NPVs for both projects with recent commodity prices? I see the NPV values thrown around on online forums and social media that do not justify the value of the projects in current market.

The ASX prohibits companies from releasing NPVs unless it has been generated via an updated Pre-Feasibility or Feasibility Study. We aren’t allowed to just insert updated commodity prices and release the new figures unfortunately.

At the conservative prices used in our previously announcement studies, the NPV of Sconi was around $800 million and Flemington at $400 million.

The Flemington NPV will grow, of course, as we delineate a larger Mineral Resource.

I have attached a summary slide in case you may be interested. It just condenses all the available public data on Sconi and Syerston into a simple table.

As you can see, deposit AUZ and CLQ have very similar deposits, our market cap is vastly different. In fact AUZ is currently valued at about 5% of CLQ. At some point in the future, this imbalance will surely correct itself. Most probably in AUZ shareholder’s favour.

Kind regards

Ben

Benjamin Bell
Managing Director

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Hi Newbie2015

Great post. Thanks for sharing. Just a quick question. Pls ignore my ignorance
Is the NPV $800 ML per yr for the entire miming life ?

Last edited by Faisal1475: 10/09/17

AUZ Price at posting: 1.6¢ Sentiment: Buy Disclosure: Held
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Ann: AUZ to acquire 100% of Sconi Cobalt-Nickel-Scandium Project, page-36

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