Recovery of Lithium Hydroxide, page-52

Overseas and under the weather at the moment, so my input is delayed.

Bit of a mixed announcement for me. Seems likely that someone knew something was coming with the buying last week, which I'm not happy about. Also not keen on huge changes to the process so late in the DFS. It is good to see they have identified the risk, but implicit in making the change is admitting that the old business model may not have worked, which is unsettling.

On the other hand, it sounds like a good move from a cost and risk perspective and is a good sign of the team thinking ahead. If the sodium sulphate issue is going to be as big as it sounds, I hope the R&D can find another way to make lithium carbonate. It would be good for them to have options of chemicals, and I hope further research is being done into lithium chloride.

I'm surprised they can change the pilot plant without a delay and it doesn't seem to be impacting the P1 timeline much (we were already expecting it with the pilot plant in June quarter).

Hydroxide demand is set to grow faster than carbonate, but most new hard rock supply is going to hydroxide, so I doubt that premium over carbonate will last. However, if the new process is cost competitive, it won't matter.

Ultimately, if it is what the customers want then it is what they need to make. One of Joe's comments at the AGM was that they were spending more time in Japan than China because of the focus on quality, and that would fit with hydroxide demand, as the Japanese are leading that usage.

The potential to license the tech our is interesting, and possibly explains why they won't show the flowsheet in the Roskill presentation. You need to sign a confidentiality agreement to find out how it works, which means they're worried about it being nicked. That wasn't a problem with L-Max because lepidolite use is limited, but if the tech is applicable to spodumene refining, that is a different ball game.

Someone(s) seems to like it, hence the buying in recent days. However, I can't shake the feeling of being in a car on a dark night that suddenly swerves to avoid a wall. You're happy the driver turned when they did, but you have to wonder how close you were to catastrophe, and whether the corner should have been seen earlier.

I don't want to sound alarmist and I'm not being down on the team, it's just the third big change from the PFS, and the second additional process added in. We've gone from a 2500t lithium carbonate plant with sodium silicate and potash, added in sodium sulphate, moved up to 5000t, swapped sodium silicate for less than half the volume of amorphous silica, added feldspar as a concentrator byproduct and now moved to lithium hydroxide and dropped sodium sulphate.

The FS process is about discovery and planning viability, so these things are bound to happen, but the more changes that are made, the more it invalidates the original PFS and, from my perspective, the investment.

As long as they nail down a business model and get rolling, it's fine. It's just a lot of changes.

Bring on the pilot plant operation. If that works well, even with this new process bolted on late in the piece, then I'd say we can put this down to prudent management and celebrate.

Cheers