ABSOLUTELY COMPELLING ECONOMICS

Recent information available is strongly pointing to a resource upgrade of 400mil tons to 600mil tons of concentrate. These facts are giving me that confidence:

- The company is committing extra $14mil to the BFS budget to look at the option of 20mtpa production. (If you dont have 400mil to 600mil tons resource you wouldnt dare to seriously plan to do 20mtpa production. Simple as that).


- KPS report identified 400mil tons resource, plus extra 150mil-250mil tons potential to be confirmed by the current drilling.

- Management informed us lately that the drilling programe still has not fully defined the boundary of the deposit yet.

- The company has hired 3rd party specialist to study the cost and the technical aspect of the underground slurry pipeline and the optimal port option for 20mtpa scenario.

- The latest quarterly again mentions that management is considering to bring in "a high quality JV partner" to help bring Hawsons to production. My interpretation is we are more likely have a huge deposit of 600mil tons or more that we are willing to bring a JV partner in to share the cake. It is so big that we don't need to have it all ourselves.


So, there are now 2 likely scenarios of resource figures: 400mil tons and 600mil tons. I believe 600mil tons resource is more likely to be the case than the 400mil. And that's what the KPS report also pointed to anyway.

Let's have a look at the lower case of 400mil tons resource scenario to see how this Hawsons project stack up.

There are 3 sets of different numbers available to us to work on:

- The 2017 PFS figures.
- The KPS report figures.
- The IIR report figures.

Let's look at all of them to see how each of them stacks up and how they correlate to each other under assumptions of Fe70% = USD $170/ton (coresponding with Fe62% = USD $120/ton), 20mtpa, LOM = 20 years,...