Ann: Cleansing Notice - Share Placement, page-28

I'm not sure I agree with the 'doubtful intellect' comment @Watmania but I think a lot of lithium investors learnt some lessons over the last 5 years. There was an expectation that the hype generated in 2016 would flow over to every lithium hopeful that would come after. If you think about it, the companies that managed to get some form of sustained benefit out of that rise were those that had started their exploration program years earlier (PLS, A40, AJM, GXY etc) and this is for good reason, but even that initial rise was largely based on sentiment and not science. The market had got ahead ahead of industry and the actual ability to deliver lithium based products at a rate that could sustain the enormous share prices that some of those companies had managed to reach. Unfortunately, as investors saw the potential of lithium, so did potential suitors that could mine it, and the resultant flood on entrants into the sector meant that there was no shortage of supply, which made prices plummet, finance hard to find, and ultimately lead to tough market conditions. The investors that bought up big initially only got the timing wrong - their thesis was sound. Lithium is a mineral with a massive future but the companies that will thrive from it will need to ensure that they understand the industry, are highly profitable, keep their costs low and are able to negotiate favourable sales and finance terms. Not all the big companies around right now will be able to sustain themselves over the next few years as price slowly recover.......bring on CXO.

CXO is a near term producer that has excellent supply economics, very low CAPEX and a high grade product from a stable political region. The company may not have the biggest deposit, but if we can get a 10+ year mine life, then the size of the deposit matters less. The limitation of a profitable operation is not the deposit, it is the size and cost of the ability to process and to get it cheaply to the customer. Take our deposit, we could have a 100mt resource, but if we can only process 175,000tpa, the resource is not the limiting factor. There is plenty of value in a company that has a 20-30mt resource, with a high quality product that will generate greater sales revenue or at least stable demand as the product is sought after compared to those of a lower grade. The CXO operation can generate 160mil AUD per year at name plate production.....the question now is how long that this be done for? 10+ years makes it well more than a billion dollar enterprise.

The hype that started in 2016 without the industry to back it up is about to start again. The difference now is that industry is actually ready (or will be over the next few years) meaning that when the dubbed lithium 2.0 starts (some would argue it has already), there should be more of a sustained run in growth for successful companies as prices and demand will only rise. If we start production at the end of 2021/start of 2022, we should be in the sweet spot - prices should be better, demand should be better, profits should be better, and yep you guessed it, the SP WILL be better.

We have built a really good base over the last couple of days and volume is good - we also have great depth building. We are primed for some positive announcements and when you look at the depth, if those investors want in when the news breaks, we will see the lost ground over the last few weeks get recovered quickly. I am not sure I fully understand the decision to raise when management did, but at least it is out of the way now. I am hoping that the sophisticated investors selling is slowing (we have probably churned through approx 20% of the issued shares by now), and if retail investors don't dump as well when the SPP shares are issued, then the worst could be behind us. We know that some retail investor will dump, but hopefully the ratio is about the same.

Most of the lithium companies have seen their share prices recover a bit of late - we are due, we just need the announcements to get us going although we may see a slight recovery over the next week if we don't get an announcement. I really hope to see the revised DFS by the end of the month, but if managements track record holds, they have typically missed their own deadlines for such announcements. Whilst I am hoping for the resource upgrade and the DFS to drop in quick succession, I think we will more likely see the resource upgrade by the end of the month and the DFS in July. Either way, it won't matter to the SP if we have the goods.