Ann: A$35M capital raising to expedite lithium business - Brazil, page-109

I think it’s possible for LRS to get Cloud 9 to production and simultaneously continue exploration in Brazil and Argentina, but it will require close attention from CG to get it right. We need a simple operation for the first few years of production at cloud 9, which produces positive cash flows which can be used to fund lithium exploration.

Look at what happened to ADN last week with a disasterous DFS and issues with delays as well as offtakes and even more fundamental issues with a lack of clarity over what products will actually be produced from their Kaol/Hallo play. If management fails to get the basics right and over complicates Cloud 9, then I agree it could become a drag on our SP.

IMO we need to have a 2 stage approach with Cloud 9.

Stage 1: Simple DSO product which produces quick cash for a more simple Kaol product which also requires minimal capital expenditure in terms of mining operations and processing plant.

Stage 2: A plan for a more advanced product which will need additional capital expenditure but also have greater upside in terms of sale price. Stage 2 may consider uses such as those anticipated by our R&D project for methane emissions - but this will depend massively on whether our CSIRO partners can prove that our Halloysite reduced methane emissions for cows.

I don’t think people realise the potential upside in LRS if our R&D project proves a drop in methane emissions. Very easily we could be a multi billion dollar company if we are successful. Imagine the price that local and foreign governments would be willing to pay if we have a patented product which can produce a large drop in agricultural emissions.

IF we prove the base case, it’s likely we would have global attention on our company + Aus govt would be all over the news and spruiking our scientific breakthrough. This would likely lead to government grants and would also mean our market cap would be well into the billions.

Of course there’s a significant chance that our scientific research fails to prove the base case. But the upside for investors is the chance that it’s actually successful.