Ann: Change of Director's Interest Notice, page-17

They sent me this - think of it what you will...

Hi Ken

Thought I would update you regarding recent price action.

First let me address the director selling shares. Whilst this is not the right look and unlucky coincides with index inclusion and share price underperformance, there is only a small window after the annual report has been published, a director can sell shares. This was well flagged internally as Tony needed funds for personal reasons.

Second is the hangover after the ASX 300 inclusion on 15th of September. Prior to this date we saw hedge funds buying Alpha ahead of this event, in anticipation/hope they would sell into the passive buying on the 15th at a profit. This strategy is called index rebalancing. And they execute this strategy across all index add and delete stocks, it’s a probability game, some work some don’t.

Why it doesn’t work and Alpha has been sold off aggressively over past few days is when the passive buying on the 15th is met with natural selling. There isn’t enough buy volume to match off the natural sell volume and the hedge funds trading alpha (index rebalancing strategy) volume. The hedge funds are not fundamental owners, it’s purely a trade for the event, they have to sell the next day regardless of price if they are left holding stock. This is what I believed has happened. Some of our mature holders have used the passive buy volume on the 15th for the asx 300 inclusion and sold into the liquidity leaving the hedge funds long alpha who then have to cut. The hedge funds selling Monday (cutting the trade) has caused panic and additional margin selling + director spooking things a perfect storm.

Fundamentals internally are strong and hope to have a positive update regarding the downstream sapphire business soon.