Ann: First production delivered on schedule at Kathleen Valley, page-190

I recall that during the conference, Tony Ottaviano mentioned that while the estimates have already been published, they prefer to provide actual figures once production begins. This approach makes sense due to the flexibility provided by the four (4) embedded optimisation levers, which allow them to adjust to market conditions efficiently and effectively.

Consequently, the product specifications and associated production costs will vary and can be adjusted to maximise financial outcomes. During the ramp-up phase, costs are expected to fluctuate, and LTR has incorporated the below four (4) key optimisation levers to ensure resilience going forward:

1. Mine Plan: A dynamic mine plan that focuses on minimising development work and accessing ore early.

2. Cost Optimisation: Strategies to optimise costs and remain competitive throughout various price cycles.

3. Product Specifications: The ability to adjust product grades based on market and customer demands, allowing for shifts in production costs to align with what is most cost-effective and achieve higher pricing.

4. Scalable Plant: The plant has built-in capacity for expansion, offering a low-cost pathway for growth. With most circuits already prepared for expansion and ongoing improvements like ore sorting, future optimisations will require minimal capital, enhancing throughput and profitability.

For completeness, LTR has already published their estimated 10-year average production cost of AUD $651/dmt of SC6 (breakdown below):

However there are two things to note here:
1. This assumes the Company will be producing SC6, which is possible, but management will decide which provides the optimal cost structure.
2. Estimated costs of AUD $651/dmt SC6 is lower when compared to PLS which I believe is around AUD $713 to $760 per tonne but I could be mistake (I don't follow PLS). If correct, this would further strengthen LTR's competitive advantage but I'd defer to the expertise of others on the forum who are more familiar with PLS cost structure.

So what does this all mean? Plainly, LTR is fantastic at cost optimisation and whilst we may see higher costs come through in Q3 results, I well and truly expect a solid and profitable performance in Q4, on time as expected. I would not be too worried about production costs and we have already hit the bottom in terms of spot pricing. There may even be a possibility of profit as early as Q3 but we will see - IMO only getting better from here.

If spot spodumene is currently $780 USD or $1,150 AUD, there should be some decent room for profit at current pricing even with higher initial costs prior to optimisation.

		10 Year Average ($/dmt SC6)
1	Mining	$449
2	Processing	$157
3	G&A (site and processing)	$39
4	Transport and logistics	$89
5	Tantalum credit	-$60
6	Inventory movement	-$23
7		$651

Cheers,
CK