Ann: September Quarterly Report, page-11

I did a big breakdown of costs based on the updated BFS from Base resources (not iron ore, but in Madagascar / Toliara) and I think I may have referenced Hawsons also (is iron ore, but not in Madagascar).

I'm just about to jump into a call for work, but I'll find it shortly.

All of the equipment and process are well proven, to the point where everything we need to purchase is a catalogue item (nothing custom). I highly doubt we will buy second hand gear, and heavy duty equipment is expensive.

Madagascar is a third world / developing country, and Bekisopa is pretty remote so everything will need to be brought in and set up. Of course the company can start small and grow / evolve over time as funds and requirements dictate.

The AUD has also fallen against the USD since I did those estimates.

In saying that, getting things done in Madagascar should be at least 5x cheaper than in Australia.

Anyways, I'll be happy for people to review those numbers and challenge what I've done.

$50m would be unbelievable if we could get away with it. That would likely mean sub 200m shares on issue by the time we start making money.

Ok, thanks for the correction.

I don't think I have excessive optimism, I would say it is more ignorance than optimism.

4 X $5/t = $20/t @ 2,000,000t = -$40,000,000

$170m - $40m = $130m USD = $200m AUD

Still compelling given the prospects, especially as operations scale.

I've tried to be conservative in all of the numbers I have used, but if you have other sources or references I'll be happy to revise based on those.

When you say you would use $100AUD, where do you get this number from? Or are you saying use that as the baseline number and anything on top of that is cream?

My view is if the startup costs are under $200m and the company can pay that back on the first 3 years at 2Mt production rate, then it should be compelling enough to be able to raise the funds.

Of course things like offtake agreements will further bolster the business case.