Ugly Chart 10.5c, page-99

I'm liking how this is playing out. The BFS was what got me on board originally, but I think the level of scrutiny involved in the due diligence for the debt funding is a great thing to bulletproof this project.

Hopefully it is nearing an end and we can expect a nice bounce when the debt package is approved.
I'm not particularly bothered by the few months delay for the due diligence. Not many resource development projects where this level of independant due diligence is required/made public to so thoroughly derisk a project, which i view as also de-risking this as a long-term investment for me as a shareholder. I'd rather the hold-up now to identify and work around any fatal flaws than have them identified when in construction or operation.

Not bothered by the change in EPC contractor to SMS either, they have an excellent reputation and the fact that they are a major player worldwide, have prior experience in the process and technology, and being prepared to offer product quality and throughput guarantees takes away a lot of the process risk.

The key risk in the next few months for me is how much the overall CAPEX increases based on any changes identified in the due diligence and detailed design, if material i assume they will issue an further update to the BFS metrics once detailed design is complete. As it stands now the overall ECA debt component of US$70m of the BFS US$79m CAPEX means there won't be a great deal of dilution Hopefully any CR is after the approval of the debt component with a nice SP bounce making it more advantageous.

I can see a couple of things that have changed for the positive since the DFS - the change from the original proposed US$40m ECA application amount to US$60m should result in a decrease in overall interest rate for the project. The conservative US$23k/t sale price used in the BFS should result in a nice boost in early earnings if the Japanese 4N price stays at around US$28-30k/t as it has for the last couple of years - represents up to a ~50% increase in the BFS margin.

I also like the forecast demand for HPA, particularly 4N. Given that ATC will have the advantages of:
- being the largest global producer at 4kt/a,
- being the lowest cost producer by a significant margin
- having sufficient JORC reserves (1.2mt) to cover the 30 year mine life but additional resources (12mt) for several hundred year mine life (the original BFS mentioned a 65mt resource),

Its not hard to see progressive plant expansions/additional plants elsewhere on the cards once production has commenced, there have been a few hints at this in various presos/releases. Once the concept is proven for the first plant you would think development of any expansions would be a much quicker process from a the funding side. Looking at it, the 4Ha Johor site is probably constricted for room so any expansion would likely be elsewhere.