ASX Today, page-44885

I'd like to share my thoughts about debt and dividends.

It is a fact I believe, that neither the Ford debt facility, nor the LGES Convertible Notes have any associated covenants that normally apply to projects like Kathleen Valley. Where covenants are included in project debt facility agreements, minimum debt servicing ratios and other balance sheet covenants and restrictions usually mean that it's a real challenge for management to pay dividends in the early years after production has commenced.

While LTR has a fair chunk of debt, the convertible note portion is effectively equity, and repayments on the Ford facility are quite light in early years with a large repayment at maturity after 5 years from "first supply" (that is maturity in 2029). Our management has been astute not to overcommit to debt repayments and to replace restrictive bank debt resulting in no covenants whatsoever. Dividends are therefore at the board's discretion (not the banks).

I anticipate that when ramp up is successful, a new term debt facility will be negotiated to repay Ford perhaps around year 3. The term debt facility should have a simple maturity/repayment structure that allows debt to become a permanent part of the balance sheet structure like any mature business. These factors would allow management to make earlier and more liberal dividends as cash flows permit.

I read on these threads that Goldman Sachs forecasts a $0.09 annual dividend within a couple of years. If that comes to pass it will be awesome for us LTHs and it would be a testimony to our management having exercised sound financial management.

Regards

DF