Ann: Managing Director and CEO Transition, page-169

A not-so-dirty secret of commodity trading is that an offtaker will regularly pay a premium on the share price to help the owner pump the stock and recoup that premium and more by way of the offtake contract, whose full details on the pricing “based on market price” rarely disclosed and with discounts buried in the product spec penalties.

In this particular situation, it appears the Korean front-group was caught out and taking a loss on account of not being able to secure the end-offtaker.

In the absence of mgmt clarity, I can only speculate the following:

- Dubbo product mix too high in titanium to warrant an REE focused offtaker putting up 100% of the required equity cheque / financing guarantees. I can see the prospective end-offtaker stating (quite fairly) that only 50% of the production is of interest and that their financing commitments only go so far as 50% of capex with onus on the company / korean front-group to find the balance with few takers

- Korean front-group did not observe protocol and let the deal be run by the appointed industry leads who have govt mandate. Pissing those people off and going direct to Hyundai / others would damage the ability of obtaining the complex network of approvals needed for a project of this size / complexity. Final decision maker here is the Korean govt, not the actual chaebol and there need to be 30+ MOUs just executed within the Korean side for something like this to get approval.

- Hyundai Auto is not able to take direct REE offtake and doingso would destabilise it’s own supply relationships. China has all the leverage at the moment, esp with Malaysia having recently put Lynas on notice over enviro concerns of their processing plants there. Toyota another auto manufacturer that has backed out of similar projects / situations and decided to stay insulated from any backlash by letting JOGMEC and Mitsubishi do the deal-making

- Korea under Moon is pursuing a rapprochement with China and does not want to unnecessarily piss China off. [ not speculation ]

- Korea is terrible at international M&A and they know it. Previous waves of outbound investment were fraught with corruption and mismanagement. (Know any successful cases of Korean JVs abroad?) and there is still a tremendous amount of caution / trepidation amongst the govt and major corporates to doing anything international beyond sales and minority investments.

- Neither Australia nor Korea want REE processing onshore. [ not speculation ]. Look up Bayan Ovoo in China and see the true cost of being a “mine to metals” producer.

- This is a very complex / costly project. And the financing / approval scheme is (not surprisingly) very convoluted esp with Korea Inc. It’s greatest value (arguably) is on paper.

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why was my previous post (above) removed? I state clearly it’s speculation. Shareholders / posters have a right to state assertions when they are caveated as such