Ann: Optimisation Works Identifies Dry Milling Processing, page-9

So what are the positives that I see in today's announcement (and yes, arguably with my rose coloured glasses on, but there are positives in here):

• I think the biggest positive is that we now have a CEO who knows what he is doing and is asking the right questions. I would encourage holders to watch the "Ore's aint ores" video on the Hawsons website (https://hawsons.com.au/videos/ - go to Hawsons website, Investor Centre and then Videos). It shows the fundamental feature of Hawsons ore that makes it different. It's softness. The video is an oldie from the Carpentaria days, but still very relevant. Some who have held from the Carpentaria days might remember that in the early days a lot was made about how the Hawsons ore is different both in terms of its softness and how it separates along the grain not across the grain. Those combinations are what allows a different process than your usual magnetite process to work and achieve the right results with a simpler process. Tom Revy appears to be coming up with ideas, testing them himself, and then getting his theories verified by consultants. So whilst not DFS level proven, the potential improvements have some real merit and basis.

• The dry milling process cuts $200M from the capital costs for that part of the circuit alone and reduces operating costs by 25-30%. These are not insignificant savings and each part of the process where costs can be saved will have a direct impact on the economics of the project and the NPV.

• The potential savings that are not highlighted in the announcement, are the potential indirect savings associated with the dry milling process. Savings in water and tailings means lower capital costs in other aspects of the project.

• There are comments about the potential for a 100% dry solution. This would mean significant savings in terms of capital costs for things like the tailings dam as well as operating costs.

• Re-read the second last paragraph of the announcement. "Given the potential for material improvements to the economics of the project and increase in Project value .... Hawsons' objective is to integrate the full benefits of the potential improvements into the ultimate terms agreed with Strategic Investors". Management therefore are wanting to make sure they have done enough work on these improvements to maximise the benefits to shareholders, and ensure any agreement with strategic partners allows for the upside of these benefits to be shared with shareholders. The delays on the strategic investor process could therefore be more about making sure we know exactly what we are selling without giving it away and getting a fair deal that benefits the both the Strategic Investors and shareholders.

• Whilst news flow has been slow (which has been frustrating), when we see announcements like this and take into account that Tom Revy has only been in the role for around six months, you can see that he has been hard at work and de-risking the project and adding value by improving the economics of the project, both of which make it more likely that a strategic investor not just come on board, but also pay a fair price.

• Whilst I said news flow has been slow (and it has felt like that), now that I go back and look at the announcements, there has been an announcement in each of September, October and November. In September the process optimisation study was commenced and expected to focus on reducing water and capex. The October announcement advises that the study confirms potential reductions capital and operating costs and that the second phase of the optimisation works have commenced. The November announcement provides full details on how the reductions will be achieved for that part of the circuit. They have done what they said they were going to do and advises that there is potential for more capital and operating cost reductions.

• The September announcement also refers to viability of extracting by-products and stated "This work is likely to continue until the end of the year and has the potential to materially improve the Project’s financial return for shareholders". In the October announcement we were advised of a sand-based by-product for sale into the sand and construction industry. Whilst that could improve the economics, I would not expect sand would "materially improve the Project's financial return". Given the work regarding by-products was expected to continue to the end of the year, it makes me wonder if there more to come regarding by-products.

• Whilst there have been some periods of no news and we are all wanting to hear that we have landed a strategic partner, are we perhaps being a little to harsh about saying there is no news when we have received monthly updates for the last three months advising of significant progress in reducing capital and operating costs?