Ann: Goulamina Drilling Returns Positive Results, page-569

Hi all,

Thought I would do a quick profitability analysis. All stats are from documentation i.e. based on company announcements. Still all imo and dyor etc. See below:



Basically it compares BGS with other hard rock, ASX listed near term producers. I have tried to be as fair and unbiased as possible with the comparison, mostly because it was for my own personal use lol. Use at your own discretion, dyor etc.

I have pulled all info from the study as shown above. I have used a uniform spod price of 1000USD. Note that the price for 2018 will be over $1000USD/t - this is confirmed by announcements from both GXY and ORE. This price wont last forever but so far all pessimistic/lukewarm analysis of the lithium sector have been torn apart and rewritten over the past couple of years.

Important points to note for BGS holders:

- I have used the shoddy metrics from the October PFS for costings. Any improvement on cost will enhance profitability in a huge way. And the costings WILL improve.
- Australian producers taxed at 30% plus WA 5% royalty. BGS taxed at 25% for first 15 years with 6% (3% royalty plus 3% additional tax).
- This calculation is based on a 2 mtpa plant without cost adjustment for scale (I used the 1mpta cost/t from the PFS slide update).

Important points to consider when comparing BGS to these stocks:

-

We are the only lithium company in this group to not have funding organised. This imo is the greatest hurdle for the project and once passed, will mean a significant rerate. In the current macro environment, imo the question is not whether we will be funded, it will be on what terms. Personally I expect better than a 50/50 JV and I expect the announcement before the end of Q3 2018 at the latest.​

- TAW and AJM have locked in 2018 prices at 880 and 990 respectively. But they will be producing earlier than everyone else so I think giving them a 1000usd price assumption is fair.​

- TAW/PLS/AJM are producing next year. This gives them around an extra 18mths to build and bank profits.​

- I used PLS cash cost for the first 15 years, not the lom average cost.​

- Yes PLS is going to upgrade to a 5mt, yes KDR is going to build a refinery, yes AJM is upgrading to a 3mt etc etc, got it. Notice I haven't used biased numbers for BGS either - only the poor figures from our recent PFS. BGS could build a 4-5mt plant in the future too - but that is not here or now. KDR's refinery share is not funded - 200m is a lot of money. This is just looking at what these companies will initially produce.​

Main point​

Compare the ratio of Net Profit to Market Cap, and you will see we are a hum dinger. This is based on 33mt, 2mtpa plant, no VAT concessions, no PFS upgrade, no upside. Imo all of these companies will do well in 2018 but BGS should kill the market if they are able to arrange finance for this project. Imo talks will happen after we have updated our JORC and PFS. We want to be in the best possible bargaining position before we do any company changing deals.

Super excited to see BGS rerate several times next year. Size, profitability, feasibility and general de-risking of the project should improve dramatically over the next year and there are not many lithium companies out there that can look forward to such a huge change in valuation.