Ann: Quarterly Reports - March 2017, page-4

MT CATTLIN – OPERATIONS
Operations at Mt Cattlin remains Lost Time Incident (“LTI”) free since refurbishment and construction commenced. This achievement is particularly noteworthy given the aggressive ramp up of the plant during the quarter, which saw a transition from residual minor construction through to commissioning and production commencement. Mining operations continued to progress towards full production, with total material movement of 140,069 BCMs of waste, and 233,192 wet metric tonnes (“wmt”) of ore at 0.96% Li2O during the quarter. Material from both the mined ore that had been blasted prior to the care and maintenance period in 2013 and the new ore from blasting activities that have recommenced, have had a positive effect on plant recovery levels. Mining activities were concentrated on the northern and western sides of the pit, and run of mine ore stocks were as planned at the end of the quarter. During the quarter, ramp up and commissioning of the Mt Cattlin plant was substantially completed and with the plant reaching 90% of its designed nameplate capacity by the end of February. Shortly after the reporting period in early April, the plant achieved 100% of its throughput nameplate capacity of 210tph. During the ramp up period, ore throughput totalled 248,488 dry metric tonnes (“dmt”). With plant performance continuing to meet production expectations in a steadier state, the operational focus for the June quarter will be on fine-tuning the plant to increase recovery and output rates. To date, Mt Cattlin has produced 23,467 dmt of lithium concentrate for the current quarter and together with the 10,000 dmt produced in December 2016, a total of 34,000 dmt of product has been produced since recommissioning. In January, Mt Cattlin dispatched its first shipment of 9,755 dmt on NY Trader II. In February, the Mt Cattlin site and the Great Southern Region of Western Australia experienced a 50-year rain event and severe flooding in certain areas, resulting in the temporary suspension of mining activities, as well as certain key transport routes being cut off - however with strong site leadership and robust systems, there was limited impact to the dispatch of the second shipment of 13,700 dmt on the MV Blessing. Production for the next shipment has been at product quality and specifications above contract requirements, with mica and moisture levels recorded being well below contract requirements. With the third shipment in April on MV T. Prime, Mt Cattlin will complete its 2016 contract off take supply obligations priced at US$600 per tonne – thereafter, all subsequent shipments will be on 2017 pricing terms, which is US$830 per tonne for 5.5% grade lithium concentrate, rising to US$905 per tonne for 6.0% grade product. In addition, all prepayments advanced by the current customers will be repaid after the next shipment, meaning that for all future 2017 contract shipments, 100% of the revenue from lithium concentrate sales will flow to the Company. Scoping and design work has begun on refurbishing the mine’s fixed crushing circuit, with a view to re-starting in the third quarter this year, which will increase plant reliability and reduce input costs. Work continues to progress on finalising medium and long term water supply contracts, with suitable options becoming available for both timelines. These programs, in conjunction with planned exploration and drilling programs, are intended to extend the mine life and further increase process plant efficiency.