AVZ Peer Transparency, page-89

Good afternoon @dossantd et al,

Yes, I also read that paragraph from Andy Miller and I believe his comment was general in nature & brought about by the three false notions that;

a) all mines in the DRC promote and practice humanitarian abuse of some description, including child labour and human trafficking.

b) the country is too politically unstable and corrupt (unlike Chile, Argentina, USA, etc. etc. ....yeah right!) and perhaps even;

c) Ebola is wreaking havoc on the population & stifling any business growth.

However, if you delve a little deeper then you will find that none of the above notions have prevented unprecedented investment appetite in the DRC (US$12.26 billion by the Chinese alone over the last 13-14 years). http://www.aei.org/china-global-investment-tracker/

And let's not forget that this unprecedented investment appetite occurred during some horrible years of political conflict, turmoil and corruptness. However President Tshisekedi, his party and their newly formed coalition with Kabila's party suddenly have a golden opportunity to debate and decide what's best for their nation in a civil and democratic manner, provide better internal checks and balances and ultimately transform the DRC into a relatively prosperous and democratic African nation (given it's status as one of the most resource rich nations on the planet and certainly in terms of battery metals).

Let's also not forget that Tshisekedi (who's father was in the political wilderness for years whilst campaigning against Kabila) is all about his people's welfare. As he recently stated "We do not have the power to repair our history. We do have the responsibility, and now the opportunity, to correct our future." http://www.pamojausa.org/

And with this in mind, part of Tshisekedi's mission is to ensure a less corrupt government, and ensure that real progress is made in the areas of business investment, healthcare support and security - all designed to ultimately benefit the lives of the DRC's 80m+ population.

Thus I think Andy Miller (and no doubt a few other analysts and the likes of BHP and RIO) are making or have made general statements on the state of the country that have more to do with DRC's appalling political and humanitarian history, rather than understanding the incredible opportunity that now awaits the DRC and it's much improved and newly formed coalition govt, the 80m+ citizens they represent and overall business investment.

In any case, a greater than 90% 'country risk' discount has already been applied to AVZ's current market value i.e. vs it's Aussie peers. Yet it's these very same Aussie peers (excluding Greenbushes) who IMO present the far bigger risk for Lithium investors right now, given the current oversupply narrative, cost and quality issues and the short/medium term price outlook - especially for lower quality SC and LCE.

Finally, Andy Miller's boss Simon Moores yesterday wrote 'Lithium ion battery capacity in the pipeline has grown over 50% since November 2018 to 2.2TWh. Important to note however that not all cells can be used in EVs. So much more tier 1 will be needed.'

Ok, now let's break this 2.2TWh figure down.

Firstly, this revised figure is a massive 10% increase on Benchmark's previous pipeline forecast of ~1.95TWh that they provided only LAST MONTH. i.e. ~250GWh of buildout capacity has been added to the pipeline in less than 60 days, and therefore this growth on top of their previous exponential forecast is well... exponentially exponential.

So are we now realistically looking at least 3-4 TWh of battery capacity in the pipeline by the end of 2020?
Secondly, 2.2TWh is the equivalent of 44 million NEVs with an average battery size of 50kWh. And since approx. 50,000 t LCE is required for every 1 million NEVs produced, then the world's EV makers will require ~2.2 million tonnes of LCE by 2028 - based on Benchmark's current pipeline estimates.

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Wow, just wow if that proves to be the case for a conservative forecast, as due to the current additions to the pipeline each and every month, I am now thinking that 4-5TWh will be the revised pipeline figure by the time Manono enters production in 2021/2022.

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And oh, the irony and contradiction in Benchmark's (Andy vs Simon) very own words i.e. 'Limited appetite' vs 'So much more Tier 1 will be needed'

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So Andy, I ask you where will all this Tier 1 (raw material) come from?

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Given that;

a) it appears the majority of producers are unable to consistently supply Tier 1 in the short / medium term, and their Tier 2-3 offerings are penalised to the extent that there is no margin for error in their attempts to produce and supply Tier 1 and;

b) further exploration / development requires higher prices and until this happens companies aren't incentivised to discover new projects.

The simple and economic long term answer is; in part from the world's largest Measured and Indicated Tier 1 Lithium deposit that is Manono.

GLTA

Cheers
Elpha