AGY (ASX) General Comments &amp; Banter

Hi all

I agree with some of the comments on here about needing to moderate SP expectations on the PEA release. Don't get me wrong I am a LT holder and don't intend to sell any time soon but IMO the overall market sentiment is what is controlling things at the moment and unfortunately like it not the overall sentiment is not good currently.

I have been reading on the forum peoples worries about the resource being too small, delays with OT partner not confirming product is OK, unrealistic expectations of how how long (quick) it will take once we get the go ahead for commercialisation etc so I have been doing some research over the past week or so so I can compare AGY's PEA details when they come out to what I regard as our closest peer Orocobre (ORE). Now before someone jumps on me as upramping, down ramping, cross promoting either stock I am not saying at all AGY will be ORE or have their MC etc...as they are totally different projects on different salars and ORE has other projects as well. I am simply using the data available from ORE's ASX announcements to get a feel for how AGY has gone so far in comparison to the way ORE got into production and the difficulties and unknowns that ORE encountered on that journey. Where possible I have included extracts from ORE's ASX announcements to back up my research.

Firstly IMO people have been concentrating too much on the size of AGY's resource. JZ definitely thinks its big enough to be commercial and he has even stated that he is comfortable with it and doesn't see a need to do any extra drilling at the moment. IMO it was a big achievement getting it all and more into the indicated category with no inferred. We also know that it can be increased by adding new land, where we can get it, but from reading alot of other ASX lithium brine company announcements most others have drilled down to 200m minimum depth (we only did one hole to 147m and most to 100m) and some are even drilling down to 400- 600m and we already know our resource is still open at depth so when the time comes I feel drilling deeper can increase the resource size. ORE for example increased their initial JORC by 4.2 times by deeper drilling and adding more land. Again not saying we will get anywhere near that but shows how much deeper drilling and more land could possibly increase the JORC if needed. Having said that to me the more important number we should be looking at is what tonnes pa of LCE can our resource produce with what mine life. To get an idea of this we 1st need to know the expected lithium recovery rate. I have read other companies announcements saying South American brine has a recovery of 50 - 60% on average but interesting while reading through ORE's announcements I actually found they stated they had a 75% recovery rate (see extract from ORE announcement below..I snip the header in separately to give the date of it).

Now again I know ORE has higher grade lithium from their salar and less impurities so we may not achieve that rate but between 50 - 75% recovery seems to be the norm so I expect AGY will come in between there somewhere (hoping near the higher level ) so I did a table below of what tonnes pa we could potentially produce from our current resource with recovery rates varying from 50% to 75% and a mine lift of 10 and 15 years....IMO a mine life greater than 15 years isn't necessarily a better thing as the way that technology has been rapidly changing who knows if they will even need lithium in batteries in 15 years time. Based on the table below depending on what % recovery and mine life the potential production is from about 8,200 tonnes pa to 18,400 tonnes pa. Now I know no more than anyone else but after research I personally would like to see AGY's PEA have a rate of between 10,000-12,000 tonnes pa as that gives a good sized project and looking at the table below that does sound reasonable from our current resource. At this level look at BTH's post of the NPV calc.

The next thing people seem worried about is how long it's taking our potential OT'er to confirm the product is ok. Well see the extract from ORE's 31 March 2015 quarterly activities report below. It varied from 1 week up to 6 months for some of their potential customers "depending on specific customer requirements" . I think we provided 1st samples to our potential OT'er about 3 months ago so it is not unusual for them to take a while to get final approval as there is lots of back and forth with more samples and feed back in the process.

Lastly I saw comments today that some people seem to be disappointed when JZ said in that video that commercial production was about 2 years away. Really you think they can ramp up production by the end of next year? I think those expectations are totally unrealistic personally. Even when commercial production starts I'm sure it will be a ramp up period not just hit the name plate number from day 1. The below is also from the ORE report dated 2 Feb 2014 on their plant commissioning.

It took them 7 years to get to stage 1 production. That was targeted for 17,500 tonnes pa but if you look at the other following extracts from ORE reports it took them alot longer to ramp up and even in the last year I added up their production figures from all their quarterly announcements and for the year to 30 Sep 2018 they still only had production of just over 12,500 tonnes which is far short of the name plate 17,500 tonnes and they don't disclose how much was BG and how much was technical grade.

Again I am not having a go at ORE here at all just trying to put realistic expectations in AGY holders minds of how long realistically it could take AGY to ramp up. Having said that we have only been going really for 2.5 years now and already we have BG grade, a decent number of ponds and an industrial sized pilot plant running as we used the "about ass" fast track approach (as MM calls it) rather than the slower traditional method so I expect AGY will get into commercial production quicker than ORE was able too.

The other interesting things I picked up from reading the ORE reports is that their DFS was based on BG LCE with a sale price of just USD$6,160 per tonne (what is currently today...much higher), they expected to be in production by 2012 but 1st production was actually Q2 2015 and even as at 30 Sep 2018 they were still not yet at the name plate level of 17,500 tonnes pa.

Below is also a pic of what I believe was their pilot plant and test ponds. Shows how much more advanced our industrial scale pilot plant and ponds are when compared to the same stage.

Anyway as I said I am not trying to influence anyone either way or put ORE down at all (personally although I don't own any of their shares I think they have a great project and have come a long way and provide a great example for AGY too). I am just providing some of the research I did recently to see how AGY is going compared to how its big brother got into production and IMO JZ's fast track approach will shed years off the timeline.

Look forward to seeing how it all pans out in the PEA when its released and like others have said I expect some will find negativity in it no matter what.