Ann: Corporate Presentation, page-117

Just to have a little fun while waiting for the DFS to drop in, I have been thinking about possible annual production rates if MNB were to increase to maximum output much earlier. Lower down I put the reasoning into a spreadsheet to arrive at a potential overall increase in tonnage.

Firstly as hinted at in the recent announcement MOU and presentation, here’s why the production could increase to the maximum 150,000tpa from the get go:
1. The original Scoping Study (SS) allowed for 1^st year production for small farmers of 50,000t while the market is developed (then increasing to 100,000t and 150,000t for years 2 and 3 and so on to 450,000tpa).
2. MNB has stated they received interest from large acre farm lands, which Chuk has stated “These relatively newcommercial farms could easily take the 50,000tpa themselves” which I agree with.
3. The recent offtake for 100,000tpa for the battery manufacturer.

Together, 1 to 3 adds up to 200,000t in the first year. However, unless MNB increase the plant size during the construction, they will not be able to satisfy this demand in year one, unless they can increase production by a third. Perhaps they were not running 24/7 in the SS figures? Anyway, for the purpose of this exercise, I’ll reduce the first year production to 150,000t total.

So having reasonably outlined the ‘why’ for the increased production from the 1^st year, let’s take a look at the following 8 years, which covers the initial SS ramping up to maximum production of 450,000tpa.
1. The SS increased production by 50,000tpa for nine years to arrive at 450,000tpa maximum. So I have kept that scenario. This will support MNB’s initial “Grow to Eat, Grow to Sell, Grow to Export” vision.
2. Large acre farmlands I have kept at a steady 50,000tpa – Although this could likely increase.
3. Battery offtake at 100,000tpa, which I have also kept steady – But again this could well increase also.

To summarise:

At years 2, 4and 7 MNB would need to upgrade the manufacturing facilities to produce moreproduct.
This was planned in the SS to handle production increases for years 4 and 7. So they would need to expand a third time to allow over 450,000tpa from years 7 to 9 so production could increase to 600,000tpa. This could easily be afforded from profits.

To further thisto Life of Mine (LOM), MNB used LOM of 21 years, which would produce thefollowing (Page 3 of the SS):



Thus:



Even keeping the large acreage farms and battery offtake at conservative steady levels over the 21 years LOM, we still have a 39% increase in sales/revenue, which will be at a similar OPEX to the rest of the operation (unless I’ve missed something).

This would add significant value to the NPV.

Chuk what’s your feeling? Care to put a monetary value to this exercise?