Ann: HIO BFS Expansion, page-72

Was about to snap up 410000 shares on offer at 17c but thought I should wait for another sell order of my other stock to get filled so that I can snap up all 760000 shares on offer at 17c in 1 go but someone did that before me. So, I ended up buying 300000 shares at 17.5c.

The announcement today is another miletone for HIO since the last CR to fully fund the BFS and the last financing deal with LDA Capital.

I have communicated with management a few times and suggested they should make sure the BFS look at all production options from 10mil tons to 15mil to 20mil and amazingly find they announced it today. Very very happy with that.

Why is it important to look at 20mil tons option? It is because when they do modelling on these production figures, say 10mil, 15mil, and 20mil options, they would know roughly which one will yield the best outcome and plan appropriately. They would know what each production scale will require in terms of CAPEX, and what each scale will reduce OPEX by how much. They will also get a good hold of tons of other factors involved (water, power, logistics, man power, scale of processing plant, trucking fleets,...). This is very very important to HIO's future success. This is where 2 big projects of similar scale with equally great resource can be so different 5 years or 10 years down the track. One can become a great success mining story and one goes down as a failed or a so-so project. It is this current BFS and planning stages that determine its future. Imagine if HIO is to stay with its previous plan of building a slurry pipeline from mine to Broken Hill rail station and sign the contract with rail service provider to transport its product to port Pirie for 10tons per year. And then 5 years later it wants to increase production to 20mil tons and also discover through another economics assessment that a direct slurry pipeline to the port is far more profitable? What should it do? Build another pipeline?

While CAPEX will increase by a substantial amount, OPEX will decrease very significantly. I imagine the slurry pipeline running 24/7. How much positive impact it has on OPEX?

The project is already super good at all PFS metrics and measures. Management wants to take it to a new higher level given the resource is now even more substantially higher. The fact they are going to look at an option of annual production of 20mil tons is very positive to me. This to me is almost a confirmmation of very solid number for the upcoming resource upgrade.

So, let's the expert do their jobs. It can only be better than previous PFS plans, numbers and metrics from here. The works involved in the BFS are far far more complicated/complex than anyone can think of. Let's them do their work.


I also suggested to management that out of 160 drill holes of the current drilling programe, they should have at least 3 drill holes in 2 other tenements each, so at least 6 drillholes, in other identified targets in the 2 other tenements so that in case of a take-over offer, we know where we stand. You dont want to sell an asset thinking it has 400mil tons resource to be later found out it has 1.4bil tons resource. The company has stated in the PEA (Preliminary Environmental Assessment) submited to the NSW mining department in 2017 that Hawsons Iron Project has Exploration Resource Target of 1.4bil tons. GXY sold 1/2 of its vast piece of land exploration right to POSCO thinking it has lower grade and lower resource 2 years ago. POSCO drilled the area and bring the area's resource to 4 times bigger and discovered the grade of that area was THE HIGHEST LITHIUM GRADE resource in the world, more than 1100mg/L Lithium grade from under 400mg/L if my memory is correct. A very very big big mistake. Adding salt to the injury, Lithium carbonate price has increased from under 50000CNY/ton to today price of 427500CNY/ton, more than 700% increase in price so far.