Ann: Clean TeQ Sunrise Project - Modification 6 Approval, page-27

MINE SITE OBSTRUCTION OF ORE The announcement answers some questions raised earlier about obstruction of facilities over the orebody. We will still need to see the location of the process facilities.

I had contacted IR about the issue after it was raised, but their answer was vague and did not resolve the question sufficiently to inform the readership. The answer was vague: They said that the final layout was not decided, and that CLQ would take all factors into consideration, words to that effect.

We can conclude from this ann that CLQ could fully answer because it depended on governmental approvals, which they do not control. It is likely that they have a plan to max out the orebody with the layout of the plant, but similarly cannot tell us the final plan, because it depends on approvals by the local jurisdiction.

“MARGINALITY” of cost increase…a 30% increase to labor is a big number, but it is a marginal and incremental difference in the big picture. They already told us that capex is going to
be higher than previously believed. So now it is going to be a little more higher than the number we didn't know, which was going to be bigger than the other number.

Increase to capex from 1.1 billion to 1.2 billion would be “marginal”. It is even more marginal, if it means an increase from 1.4 billion to 1.5 billion


TIME IS MONEY Presumeably CLQ will go for a 30% increase in labor…provided it means that the project will be completed significantly faster. Speed to production matters.

We cannot exactly correlate labor cost to construction time, but we are safe to assume that thelieve the increase costs will be offset by the additional revenue from the earlier production income. We are not in a position to do a calculation.
But CLQ is, and this is what they have decided to do. I am reminded of the sign in the contractor’s shop:
“There are three types of jobs: GOOD, FAST, and CHEAP. You can select any two of the th
Sunrise is going to be FAST; we hope it is going to be GOOD; but it is not going to be CHEAP.

HOW FAST ? Time, money, and labor are somewhat interchangeable in this situation. But time is the most inflexible, there is only so much of it. How much time can they save ?

The clue is that the labor is going up 30%. Could the speed of construction be compressed 30% ?

I don’t know. There is a calculus going on at CLQ of the increased labor versus the incremental income from the earlier sales and commission date.

The consensus was that the Finance/FID would be 2Q or 3Q 2018; plus two years to build, so mine commission in 2020….maybe early 2020, but no earlier. Today’s announcement allows for the reasonable speculation, previously considered unreasonable and impossible and a flight of fantasy by Sallywoofs, that Clean Teq will achieve production at Sunrise by year-end 2019, or early 2020.

They may not do it, but they sure are trying like hell.

TAKE YOUR SEATS This announcement is like the theater management flashing the house lights, telling the audience to take their seats, because the show is about to start in two minutes.

It is so much harder to find your seat when the show has already started. You miss the opening scene, and you have to climb your way over the other people who are already watching comfortably.