Ann: WAK - Dec 2022 Quarterly Activities Report and Appendix 5B, page-20

Wolfgang

When I wrote that I saw no reason to query your metrics, I had not checked my latest spreadsheet. I looked at it this afternoon, and the baseline per tonne selected was: $333 CIF price; $333 * 85% = $283 FOB price; EBIT margin 32% of $283 = $90.56; scaled down by 95% in steps to get lower assumptions to get lower EBIT per tonne in ten rows – to wit:

EBIT pt .. SP at .4mta
$90.56 ........ $0.3407
$86.03 ........ $0.3236
$81.73 ........ $0.3075
$77.64 ........ $0.2921
$73.76 ........ $0.2775
$70.07 ........ $0.2636
$66.57 ........ $0.2504
$63.24 ........ $0.2379
$60.08 ........ $0.2260
$57.08 ........ $0.2147
$54.22 ........ $0.2040
$51.51 ........ $0.1938

The SP was simply EBIT per tonn times 4mta in December 2025, devided by a generous share tally of 567,824,315 shares, times an EBIT multiplier of 7, discounted to Present Value by 7% a year for four years. The logic is that one should value the SP at .4mta capacity, not current kaolin output. The prices generated are pie in the sky, and bound to be wrong, but it tells me that one could buy at the current SP of circa 15c at low risk.

If the SP is not higher than 25c by 20 November 2023, none of the 25c options would be exercised, which on balance would be a positive for holders (less shares to get a slice of the pie). By selecting December 2025 as my base date for calculating shares, I also cover the expiry date of the 35c options, which are more likely to be taken up. However, if the options are not exercised, then the share tally that I used would be too large. Using a large tally to start with makes the model conservative.

That potential option money is not required to reach .4mta of K99 product (the basis of this analysis). Its usefulness would be to finance a Stage 3 plant, include wet processing and a slurry pipe to Wedin, and perhaps an investment in a metakaolin facility – that is, posities that I have ignored.

Anyhow, its all mumbo jumbo, and what will be will be.