Ann: Trading Halt, page-346

Well despite the ranting and raving that has gone on in the past few days, PLS is just doing what many Companies in many sectors have done in the past during tough times , batten down the hatches and keep balance sheet as strong as possible, cut costs where possible and wait out the storm...basically adapt and that will always have an impact on existing holders.

Its pointless dwelling on what might have been, nobody including Management can see exactly how the future will play out, but they do know what the current situation is and are dealing with it and have updated the market on the rapidly changing material situation as required.

The clues regarding a pending CR were given in the last update:

1: Spod prices were expected to be lower.
2: Production this quarter is also going to be lower than the previous guidance, as a result income will also be lower and costs per ton higher.
3: They are selling some from the current stockpile of which some is of a lower quality , hence will receive a lower price.
4:The above means our cash position this quarter will become untenable and needs to be dealt with if a partnership arrangement didn't go ahead, and it didnt.
Although cash from POSCO and resumption of higher production are likely in the next quarter they cant be taken as a given untill established.
5: Debt is an issue but only if you can't meet repayments and I don't see that as a major issue at this stage and we always have the option of selling down some of the mine if it was...not ideal but manageable and they wouldn't be proceeding with the POSCO deal if they weren't comfortable with the debt situation ..whatever we raise will likely have another $ 37m added to it from the POSCO pre payments.

The important thing for me is we have a minimum price on our offtake contracts, we will get our costs down when production returns to nameplate, our offtake partners are in the process of expanding their conversion plants, not going out of business and they will need Spodemene, they also need a long-term security of supply and running their suppliers into the ground isn't a guarantee that the resulting effect would favour them , it could favour their competition...

Add to that we are the only independent producer with a huge high quality supply of Spod, we still own 100% of it and we know there are buyers for at least part of it , which is a very good backstop should it be required. We are also on a path to being involved in a conversion facility with a large player and using our Spod...

Dilution is a bitch but insolvency is considerably worse, management had the option to sell a % of the mine at a huge discount in a poor market or raise cash, neither are ideal but I prefer the choice they have made.

For those of us who have bought in at higher prices it's tough but the general rule of investing in startups is there are no guarantees and dont invest more than you comfortably afford to lose or can't sit out untill better times return...for those who have bent the basic rules then it is a lesson that will serve you well in the future, what price we buy at and how much, is our problem not managements..for those who can sit it out or those on the sideline it will likely prove to be a very good investment over time...for those contemplating exiting then the choice is simple , can you find a better place to park your money going forward given what we know now and expect in the future...

For me the short term focus is getting next quarters production and consequent sales into their current guidance of 65-85000 T which achieves production efficiency and a solid income, or in other words rights the ship..

If there was going to be any corporate activity, then now is when it would likely happen, as the industry goes through consolidation , that possibility itself will likely but a base in for the shareprice when the dust settles...

Cheers Whisky