Ann: EXPLORATION UPDATE , page-37

I can see many reasons why STB is not rushing into securing any off-take (selling its product). These are just some of them:

1. The demand for potash is expected to outstrip supply, so there is no danger of not being able to sell the product.

2. KCL price has bottomed and the price is beginning to turn around. Any off takes will be made with some reference to this low price thus missing out on the potential for further increases. Why promise to sell umbrellas on a clear day, when one can sell them on a rainy day for twice the amount?

3. Off-take is usually at the BFS stage where it is done to satisfy the requirements of debt financiers. STB with its low capex may not need much debt financing if it can get equity to finance the capex. The coming roadshows may just be for this purpose.

4. STB total resource and production volume are still unknown. If it can prove a 3bt resource and produce 8mtpa, it is a big producer and can attract clients of a different sort from a small producer. At this point, big clients are not interested in an upstart.

5. Without off-takes, STB is a more attractive takeover target because predators usually have their own clients to service. They want a company free of encumbrances.