Ann: Quarterly Activities/Appendix 5B Cash Flow Report, page-24

I thought the investor webinar was very reassuring. Bruce doesn't seem to be shirking away from any of the issues he was questioned on.

• Mining throughput rates ahead of BFS - June exit run-rate close to 1Mt (equals 2.5-3Mt per qtr)
• Recovery and grades in-line/ahead of BFS
• Cumulative concentrate products ahead of BFS
• June qtr cashflow substantially impacted by transition from pre-pay to more standard payment terms (specifically from the Zircon concentrate customers)
• Yansteel payment terms seem to be pretty much on receipt of bill of lading
• On an accrual basis, the June quarter was essentially operationally break even
• Expected to be operationally cashflow break-even in current qtr
• Although no discussion in the qtr report, the Company (more specifically KMS) is taking action on a number of fronts to reign in costs. I suspect there are political/community sensitivity issues as to why the quarterly remained mostly silent on the cost-cutting initiatives
• Bruce seems very confident in identifying a remedy to the oversize issue, but needs to ensure the process of correctly understanding the problem is followed first.
• While the market obviously prefers to know the answer yesterday, Bruce seems committed to making the optimal decision, and in order to do this the full data set must be collected and analysed.
• This means testing the various components of oversize to determine which, if any, component has Valuable Heavy Minerals (VHM) and whether liberating that VHM makes economic sense. This also needs to be tested more than once to ensure the results are reliable.
• It also requires waiting for drill results from areas ahead of the mine plan to understand the nature of the oversize and see if it is a temporary or structural issue.
• All of this information can then be used to ensure the best solution is chosen. Bruce seems to think it will be a combination of making some modifications to the existing DMU and potentially adding in some preliminary stages (scrubbing, crushing??). Overall it does not seem to be that big a deal. It is more the market's impatience for the solution that is creating most of the noise.

I suspect in 6-12 months time we will look back and realise many smaller retail holders were panicked into throwing the baby out with the bathwater.