Ann: Financial Report for 30 June 2018, page-21

Just a few negatives that stood out for me.

1) The timeline to full commercial production from Stage 1 remains vague.

“The Group will continue with commissioning activities with ramp up to the plant’s overall production capacity and mineral recoveries expected to be reached incrementally during the 2019 financial year.”

2) The report was very top heavy in the discussion of remuneration, some 11 and a bit pages.

3) General and admin expenses have increased to ~$9.9 million for the year. These expenses might be reasonable when the mine is at full production but in the meantime put pressure on cashflow.

4) $A currency depreciation has increased the dollar value of the company’s secured debt from $124,364,000 to $130,965,000, ie by $6.6 million. Also the coupon rate on this debt is 12% per annum with interest payable quarterly in arrears, so currently about ~$15.7 million per annum. Once again as full production is reached these expenses become manageable, but while the company is in ramp up they put pressure on operating cash flow.

5) Also I didn’t like that fact that the A$79.6 million equity investment from POSCO may be applied to fund working capital, rather than just stage 2 funding.

Still early stages but so far the company has grossed $3.975 million from lithium sales.

This gross profit number is one investors should keep track of as operations move forward. Esh