Ann: Quarterly Activities and Cashflow Report 31 March 2019, page-30

g’day earl.

there is no article or announcement where it states the deal is off the table. Last we heard in I believe Ann 6/12/2018, CXO and Ruifu were working on executing binding offtake agreements, which we were told were expected to be completed in Q1 2019 (now past). As seen on page 14 of the DFS preso Ann 17/4/2019, we are told the offtake terms with Ruifu are still to be finalised.

Now that the DFS has been announced, perhaps those terms finally can be finalised. However, you would have to think that there would be quite a reduction from the original terms of $US35mil for 150,000tpa for up to 5 years (for a maximum total of 750,000t), given that as per the DFS we only have 180,000t in reserves available to give them, and given that after factoring in the increased offtake commitment with Yahua and the decrease in annual production from 225,000tpa to 180,000tpa, at best we can only offer Ruifu 105,000tpa (for the first 4 years anyway).

But who knows? Maybe Ruifu might take the gamble that we will definitely have 600,000t to supply them over 5 years? (I am confident we will). After all, Yahua entered into a binding offtake agreement and offered $US20 mil in prepayment facility to us at a time when all we had was a 1.8MT resource, of which none of it was in a reserve or even measured category, and just 0.49MT was in the indicated category.

But I think the length of time it has taken to execute a binding agreement with Ruifu, the fact that the narrative around Ruifu and offtake partner and finance has perhaps subtly changed or at least quietnened a bit, and the fact that on a purely reserves basis (but perhaps not on a resource basis) we don’t meet the total tonnage (at this very moment) that Ruifu wanted, and we can’t meet the tpa they wanted, doubt has crept in re the Ruifu deal getting done.

But you are right: nowhere have we been told that the deal is off the table. And if the deal is still on the table, given our cash status and the fact that we are closing in on our FID, you would think management would be doing everything to get the deal done in the next month or two.

As management have said, the announcement of the DFS paves the way for the company to now advance offtake discussions

Fingers crossed. Let’s see what happens

IMO

GLTAH