General Discussion Topics, page-146970

Because we are in a holding pattern and not much in the way of news is coming out, I decided to take a fresh look at NAL's DFS and make a few assumptions about the future.

The link to the DFS is here for anyone who wants to take a look and offer other viewpoints.
https://clients3.weblink.com.au/pdf/SYA/02654503.pdf

For those who just want my summary of what I think and not have to read all of the background info. Here it is. WE ARE BETTER NOW THAN THE 2.2b NPV THAT THE DFS CONTEMPLATED.

Ok, for those who want the background info here we go.

First off, the DFS is nearly 2 years old now, but it is the document that shows us our what we can achieve if we hit the targets that were described in the DFS. To that end, we have done a pretty good job of reaching, or exceeding those metrics.

Here are a few that I will point out.

Mill daily throughput 4200 - on target
Average feed grade 1.04% - above target
Tones produced 226,000 - about 20,000 tones short of target
LOM Recovery 67.4 - above target
Market Price US$1352 - below target
AISC A$1095 - above target but improving

I believe we should hit or exceed all of these targets this year.

So what does this tell us about our future. Well the DFS states if we hit our targets we can assume a A$2.2b NPV and as stated we are well on our way to achieving this today.

A few items that jump off the page to me that have changed since April of 2023.

Authier is no longer part of the picture. We originally thought that we needed to blend Authier grade with NAL to achieve the 1.04% grade contemplated in the DFS, however with better management and ore sorting we have achieved 1.15% without the additional cost of trucking ore from Authier over to NAL. This should reduce some of the cost that was originally stated in the DFS.

The original DFS was produced with the idea of producing 226,000 tones until 2026, and then producing an average of 185,000 for the LOM. The reason behind this was that we were to be an integrated mine and lithium carbonate refinery all in one. Recently this idea of completing the refinery at NAL has become less attractive to current management and therefore I see year 2027 - 2042 being the same or greater as 2023-2026... this adds and additional 640,000 tones of spodumene to the valuation that currently is not there.

If we monetize that it becomes an additional revenue of A$1.4b that we don't see in the current DFS.

So without any of the expansions that we have discussed at NAL we are looking at a healthy upgrade to the original A$2.2b NPV.

Looking forward at what a new NAL DFS might look like.

So as I have mentioned before just in the drill results we have thus far for NAL we are showing nearly a 3-fold increase in tones. At the quarterly call, one of the questions I asked was concerning what the BOD favored: 1. an extension of LOM or 2. increased production. The answer was that increasing the LOM would not increase shareholder value nearly as much as increasing production, and so they favored higher production. (this was the answer I was hoping they would give). So with a 3-fold (plus pending drill results) increase in production and not much else changing, we could be looking at nearly a $10 billion NPV for NAL.

There are a few things that make this even more interesting. First off the drill holes that we have seen are high grade, most of them are 1.5% and above. The DFS will show us how much improvement we have over what we have now but just looking at it as 2/3 1.5% and 1/3 1.15% you could guess as around 1.38%. And if that is not inviting enough for you the strip ratio that we currently have is 8:3... this means we send 8 trucks to the waste pile for every 3 trucks we send to the plant. This has been mentioned a a much smaller strip ratio on several occasions, some of that being that we do not need to remove overburden because many of the new results are in pit. If this were to reduce down to 5:3 from 8:3 that would be a huge cost savings and result in higher processing.

I think right now the market is getting ready to turn from a pricing standpoint and as this occurs many who have looked at NAL as a high cost curve provider will start taking a fresher look at what is happening at NAL and have to re-asses their thoughts.

Now we still have not even spoken of Moblan and that is another very big deal down the road a bit, but will be huge as well.

GLTAH

Split