Lithium, page-1436

ANOTHER CHINA TRIP - PART 3

Part 1 discussed the various groups involved in Lithium and part 2 discussed how management personalities can play a big part in success.

If the story ended there it would be tough enough. The reality is that most success stories involve multiple MOU partners. That means we have to consider how those personalities and agenda's interact together.

For example, you need to cover mining construction capabilities, chemical processing opportunities, financing, and of course off-take partners. Bringing that all together in a cohesive format is quite difficult. You have to ensure that the whole story is cohesive and not fragmented to the point of being impractical.

In the case of China that gets all the more complex. If established correctly, partners will compliment one another. An example would be a Chinese off-take partner would be more confident with a well know Chinese group handling finance than some western group they have never heard of. A Chinese battery manufacturer could gain more confidence from a Chinese miner or processor they know.

Some in the west believe that you need MOU partners that will fight over the project and force the price up. That can work at the off-take or customer level but is also fraught with dangers. People invest in stories they believe in, not to create a future battle of wills. Believe that the best Chinese partners are unsophisticated or stupid at your own peril.

Once groups are identified you have to ensure those personalities can work together and bring them together with western management. You need to encourage a team approach rather than a number of individual groups where mistrust can fester.

In the same way multiple financiers should be avoided and Chinese shareholder groups can be a recipe for disaster. Every personality that comes to the table must mesh together. An investor group may be easy but they bring multiple personalities and different agendas.

Chinese industry works in layers that feed from the top down. An MOU can fall apart if you don't also have their associated wealth fund on side. It's easier for us to do that introduction than the MOU partner as we know the project well and are trusted. For this reason our group has always discussed positives and negatives openly. That has established a level of trust we are very proud of. By discussing negatives openly we can also discuss how they should be tackled. The days of the Chinese throwing money at projects without DD are over. So we give them the DD with the workarounds and keep the project moving.

When all is said and done, a great deal is great for all that are involved......and a great deal is great for investors.

END.