Ann: Quarterly Activities Report, page-18

Hahaa.... G14, you haven't got a couple of questions for me. Lol. You have SEVEN!

1. Of course, it makes sense for BSM to go downstream. Graphite technology is where the real money exists. Its in their agenda but they're still at the "toddler" stage of graphite production, IMO. Timmy may have his trainer wheels off after 4 years but I'm not totally convinced. BSM's graphite has been tested and certified as suitable for expandable graphite and Urbix would not have chosen have signed a MOU with BSM if their graphite lacked the crystallinity that it requires for high purification. But, I don't see BSM being able to achieve it anytime soon and definitely not on their own without Urbix and not without a lot of money for a JV. Look how long it has taken to prove that they can produce and sell quality flake graphite!

2. At previous production rates, graphite prices would need to double for BSM to even breakeven. The plant was always going to be too small. Output struggled to even achieve nameplate let alone positive cashflow. Sure graphite prices could go higher in the future. But never give BMI forecasted prices any credence. They are based on assumptions and history shows they have been wrong time and again.

No one knows how good PW and the team are at negotiating prices, nor will we ever know. I really can't see a shortage impacting the industry anytime soon. We're only just starting to see the light at the end of the tunnel of the CoVid pandemic. Of course, higher prices will help BSM... but they will also help a lot of competitors and graphite wannabes in their quest to get into production. There are always other existing companies that can crank up production rates to fill any future shortages too. Bass isn't even in production so their resource size is a rather moot point other than to prove that they have the deposit size to accommodate Stage 2 rates.

3. Yes, their graphite has been proven suitable for the EV market. But they wouldn't have the supply volume to be able to sell direct to the EV market but would have to go through an agent.

4. Of course, there is a chance that BSM can reduce mining costs, but I wouldn't take that chance yet by putting money on it. Hydraulic mining using high pressure water jets is used successfully in mining but the chance of it being useful in graphite mining? That is the $64,000 question. And, BSM wouldn't have been able to put it to the test due to CoVid.

Its their processing costs that drastically require slashing, btw. The only way is to implement some sort of proprietary technology like their neighbour Tirupati have patented. It essentially increases head grade by about 50% by removing unwanted sand before it enters the screens and mills. They can actually make money from the sand as a saleable by-product too.

5. "Expensive to mine" resources may become profitable for privately owned western companies, yes. Publicly-listed graphite projects are already finding it hard, if not impossible, to get funding. Whether graphite becomes a critical resource or not (when its actually extremely abundant), publicly-listed companies are behind-the-eight-ball. Corporate costs are the killer and investors know this fact. I see the US maybe reigniting a graphite industry... especially given the world's backing away from our reliance on China.

6. The Graphmada resource is not too expensive to mine and it is a quality asset to a certain degree. But a resource is not what makes a successful company... its all the pieces of the puzzle that does. Its graphite is too expensive to process due to its low grade with the current plant size. The resource is actually hosted in soft saprolite regolith which is easily mined and at shallow depths. Its not hosted in deep hard rock so its easy dig. There are low-grade profitable graphite mines and Madagascar has been producing quality premium flake graphite for decades. Its the processing side that is impacted by the low grade. Whilst flake size is more important than grade and "Grade is Not King" because product concentrate purity can be improved... flake size cannot. However, low head grade does impact throughput. The high volume of host material having to go into the plant reduces output rates. Bass needs to counter the issue and it can be done (aka Tirupati process) but I doubt that have been able to address this on a practical level given the current CoVid restrictions.

7. The one survival life-raft BSM has at its disposal is the financial backing of Bizzell Capital Markets. As much as one might despise the potential conflict of interest apparent, it's what will help the company get financial backing... if and when BSM can produce a viable proposal for Stage 2 based on a 12-month feasibility study. CAPEX size and forecasted NPV will be the ultimate determinant of investment probability. I couldn't even hazard at a guess as to what that will be and how the DFS will stand up. One thing is for sure, at least the metrics and data in their DFS will be based on actual production and not just lab met tests and assumptive data. It will at least be accurate. I don't think anyone can offer a credible opinion on their chances of getting funding without their DFS. I don't have a crystal ball and besides I gave this company the benefit of my doubt for way too long and got burnt. Graphite is on the nose, difficult to produce and BSMarketing came at a cost of market distrust. Bass needs to somehow survive a lot of headwinds now.