Ann: Transaction Update, page-144

Your questions that need answering concerned ;

1) The lower quality of the blended product and the extended life of a combined mine.

FWIW I feel current information available to shareholders which​

— does not answer LOM,​

— does not factor in any Yarrabubba considerations​

— and does not opine on opex costs ​

— ( Plus anything else)​

.. is not sufficient to draw any solid conclusions upon.​

Beyond this?

Your questions 2 and 3 related to transportation costs and mining credits;
2) Before Mining Credits based on ore separated at the CMB plant. AVL has a 53.14% higher opex than TMT.
TMTs ilmenite separates and reports to the non-magnetic circuits and AVLs do not.
This is proven by AVL shipping their 900,000 tonne FE / Ti / V205 Concentrate to Geraldton processing facility 454kms away from the mine site.
If AVLs titanium separated during the CMB plant they would not have to ship 900,000 tonnes if would be more like TMTs at 96,5000.
TMT is shipping 12,500 tonnes of V205 and 96,500 tonnes of ilmenite to the port.

3. Based on the above trucking, AVL has assumed a 0.79 cent Diesel price for 90% more trucking than TMT mining strategy. TMT via their integration study used $1.66 / L of Diesel. Based on this both companies will have some fuel inflation however AVL fuel costs should nearly double to somewhere in the $2.xx region.

Please see below graphic showing AVLs new estimated opex whereby Transport was 34% of the total opex.

I remember you posting about diesel costs on AVL thread and I’ve tried to work out your workings but I honestly don’t have a maths head, and the only point that occurs to me related to the subject of fuel costs is to ask if this is something the contractor usually estimates and quotes on ?
And how is it that the discrepancy you cite is so significant?
Again I believe more information is required and hope the expert review will add to all shareholders’ understanding.

Beyond these three issued you believed there were five other questions that need to be addressed before a proposed merger should be voted on:

4) CAPEX
AVLs forecast capex is 13.53% higher than TMTs and for that capex, 14% less tonnes is produced impacting final revenue.
- Notes AVL has no contingency either for cost blowouts

5) the fact your personal (revised) OPEX figures indicate TMT on its’ own would have 300% more free cash per year than AVL at $10 per pound V205.
!!

6) your figures show - based on trucking costs “AVL will therefore have to offset 90% more emissions via their business strategy.”

7)The need to ship waste product to Geraldton would - by your figures - indicate “AVL is losing money at $10 per pound. AVL indicated optimization testwork in their 2022 BFS to try and separate the iron and titanium.
The assumption is it has been unsuccessful to date as their has been no updates to the market.”

And finally
8) Your figures indicate “AVL would have to realize an average sales price of $15 per pound V205 for 25 years at 11,2000 tonnes on average.”

That’s a hefty swag of issues :

1) A combined mine would have lower quality​

2) AVL operating costs appear to be significantly higher ​

3) Transportation costs (including waste ore) under AVL current proposals are very high.​

4) You estimate AVL capex is higher for lower production ..​

​

5)Your estimates show TMT would end up with 300% more free cash pa if it was to go it alone​

6) Your estimates are that an independent AVL would need to offset 90% higher emissions than AVL​

7) (combines point 3): Transportation costs need to be disclosed along with results of tests on Ti separation.​

8) You believe AVL costs are such it would require average sales of $15 per pound for a quarter of a century just to break even?​

Is there anything I have missed?

Based on this alone - if correct - it appears the merger proposal is scandalous at a ratio of 42% of the combined product for TMT and 58% for AVL (previous to the last AVL raise).

And I find it hard to believe that - assuming your figures are correct - these points were the only factors used in developing the merger proposal.

I disagree that you have provided a ‘checkmate’ answer, but I am grateful to you for clarifying your thoughts/workings, and your points make me even keener to see how the expert opinion addresses your issues and what else is considered to be relevant.

cheers