Ann: Becoming a substantial holder, page-667

@spid81 - whilst you do present a valid risk in relation to the conversion of binding term sheet agreements into binding offtake contracts, which is a conditions subsequent within the US$20m debt finance facility (refer to my earlier post on 14.08.21) not a conditions precedent as you have suggested, your conjecture about the timing is way off the mark and has the potential to mislead investors and potential investors, IMO.

It's been made clear that both agreements are binding unless either of conditions (1), (2) or (3) are not met - see below. Let's take apart all three:

(1)Financing: has been secured in-principal in relation to the US$20m debt facility, with formal shareholder approval in the coming month being needed to round-out the equity financing. I'd suggest there's little risk that formal shareholder approval will not eventuate. Happy to hear your thoughts if you disagree with me on this point.

(2) Construction & Commissioning of Project: this is now in progress, as other posters have alluded to and as mentioned in the Webinar. Of course there'll always be construction/commissioning execution risk for any project. Again happy to hear your thoughts as to why you see this risk being any greater for the Lindi Jumbo project relative to the level of risk that would be applicable on the construction/commissioning of any other mining project.

(3) Agreement on Pricing: this is the key one, IMO. It clearly states that pricing won't be formally agreed upon until 6 months prior to first shipment. Hence, being 9 -12 months away from production as at today, these term sheets won't be converted to binding contract until approximately 6 - 9 months from now. To suggest that negotiations are falling behind on the premise that WKT have yet to convert these to binding contract is therefore false.

Secondly in relation to Graphite pricing - the pricing with these two buyers will be determined with reference to prevailing market prices, plus / minus quality / size provisions and discounts. So I find it hard to believe how one could raise the argument that this pricing alone would deter these two buyers from signing binding contracts. If you could expand on your argument as to why you think this is the case, I'd be more than happy to hear you out as always.

Lastly, there's a key line in both term sheets - 'This Agreement will be binding unless". We should take this to mean that the term sheets are legally binding, unless either of the three conditions are not met. There is no scope for the buyers to otherwise back out of their legal obligations to WKT, unless (3) is not met (given that (1) and (2) relate to WKT as the seller).

On the matter of product quality and testing (again a valid risk for any mining project including the scale and scope of pilot testing and the like) - are you suggesting that you have better knowledge compared to CRDB Bank who would have done significant due diligence on the Lindi Jumbo Project to provide WKT with an in-principal agreement?


Slide 36 - Investor Presentation 25 Oct 2019


Slide 37 - Investor Presentation 25 Oct 2019

Cheers,

Lorenzo