Banter and general comments, page-24848

Hello all,

I just wanted to take a moment to clear up some confusion and misconceptions going around regarding the Yahua offtake as well as provide some verifiable evidence the pit water is clearing extremely fast, and is likely clear by now as reported by @Anonymous6969 (post: 66978620)

The history of Yahua offtake:

01/12/17- CXO announces 1MT over 5 years DSO binding offtake with Yahua. It's price was linked to 6% concentrate with a floor and ceiling price. There was a $20m conditional prepayment facility attached as well as an undertaking to renegotiate in good faith should CXO choose to move downstream and produce concentrate. The offtake ended on the earlier of CXO providing 1MT DSO or 5 years.



01/04/19 - CXO announces revised binding offtake with Yahua for 300kt over 4 years total of 5.5% concentrate based on pricing linked to 6% concentrate with a floor and ceiling price.

There are three other interesting points about this offtake:

1. The floor and ceiling price is only for the first 2 years
   
2. As part of the offtake agreement, CXO granted Yahua first right of refusal for the greater of 300kt or 50% of annual forecast
3. The offtake ends on the latter(?) of CXO suppling 300kt to Yahua or 30/11/23

As has been pointed out they probably should technically have used the word later, but it can be inferred from context this was their intent - otherwise they would have simply said "this offtake agreement ends on 30 November 2023"... this is further reinforced by the fact 01/04/19 - 30/11/23 is less than the 4 year contract term. It is important to remember this is only a media release, not the binding offtake which you can be sure is accurate.

17/02/22 - Yahua announced a Supplementary Agreement to the April 2019 Offtake Agreement.
http://www.cninfo.com.cn/new/disclosure/detail?stockCode=002497&announcementId=1212385260&orgId=9900015673&announcementTime=2022-02-17

An English translation is as follows:

"At present, Core Australia has started mine construction as planned, and it is expected that in the fourth quarter of this year, it will provide the company with lithium concentrate according to the agreement. On February 16, 2022, Yahua International and Lithium Development, a wholly-owned subsidiary of Core Australia, signed the The Supplementary Agreement to the Offtake Agreement, the supplementary agreement adjusted the reference price and maximum price of lithium concentrate in the original agreement, and re-agreed on the relevant terms of the delivery of products at FOB prices. In the future, if the Australian Core company intends to expand the production of the project and have additional products that can be sold to Yahua International, the two parties will further discuss the purchase and sale agreement for additional products"

Stephen Biggins was asked about this during an interview with Crux Investor on 04/03/22 where he stated:

Q) Yahua announced recently that they signed an updated offtake agreement with you guys but you haven't mentioned that, was it not significant?

A) Uh there was some commercially sensitive terms that we resolved with Yahua as we've done from time to time in the four or five years we've had the relationship with Yahua. Um, so yeah we're quite happy with where we've got to with that.

Q) Okay so nothing- it's a course a business, nothing significant just tweaks?

A) Correct it's about sort of aligning the agreement up to reflect the current markets.

Conclusion

So in a nutshell we have an unknown contract price, tied in some unknown manner to SC6 with an unknown floor and ceiling price - but at a level that made Steve Biggins "quite happy" in Mid-Feb 2022 (which lithium prices first started going parabolic).

In exchange Yahua retain right of refusal to additional quantities we may produce until the end of the offtake. The floor and ceiling price is for 2 years - likely from the date of "commercial production" per the Ganfeng offtake but we cannot be sure.

This clause is likely how Yahua came to acquire the additional 18.5kt.

Yahua has also prepaid us $20m (ref: DFS) which I do not believe has been repaid, so you'll need to factor that in to the expected revenue from the 18.5kt sale. I understand how the number of unknowns can be frightening but we need to trust Steve acted in our best interest during re-negotiations. Either way it is unlikely that we are going to be selling Spodumene to Yahua at anywhere near the prices Sayona is selling 50% of their supply to Piedmont.

Also it is important to retain perspective and remember that it is because of their investment in the early stages that CXO is in the position it is today. Any discount to market Yahua gets now is their reward for taking a gamble on, what was at the time, a relatively high risk explorer/developer.

Water in the pit

Please see below gif from between 10/03/23 and 20/03/23 (photos taken in 5 day increments).
I apologise, there was cloud cover on the 25th and 30th so I cannot get more up to date photos than that.
But if you extrapolate the drain rate - it is likely the pit is empty or nearly empty by now.