Ann: AGM Presentation, page-50

I'm hoping you are correct that trucking is the biggest problem because if this is the case, E25 is on-track to be quite profitable. I completely agree trucking is a significant cost, but is is also one that is modelled within the cost base and would appear not to differ materially from the PFS estimates.

From the Annual report we know haulage costs were $847k through to 30 June 2021. Accounting standards require the accountants use accruals to match this P&L cost to actual trucking activity. This cost should therefore match actual activity to 30 June, not cash paid. While the first shipment didn't sail until 14 July, the 16 June announcement around trucking confirmed a ship laycan for a late June loading window. This indicates an intention to have ideally all, or at least most of ore for the first shipment at port by 30 June.

Unfortunately the Ore at port by 30 June isn't known. Using a 33.1% dmtu grade, trucking costs would have been A$0.97/dmtu if the full 26.5kt was at port by 30 June (I've used 26.5 because E25 later confirmed both shipments totalled 53k). If a lower 20kt was at port by 30 June, the cost is higher at A$1.28/dmtu. It would be logistically difficult for the ore at port to be much below 20kt at 30 June and for the ship to have sailed by 14 July.

Previously port costs were estimated at $12/t which will add A$0.36/dmtu to the logistics cost. The May 2020 costings at A$4.45/dmtu (which were then revised lower) allowed for A$1.63/dmtu in logistics costs (or US$1.14/dmtu @ 0.70). A$1.28+A$0.36=A$1.64/dmtu. This aligns to the PFS and if more than 20kt was at port by 30 June, has actual trucking costs coming in under the PFS.

Also, the Dec 2020 DFS also quoted $42/t as a trucking estimate. At an ore grade of 33.1% this becomes A$1.27/dmtu which is aligned to the estimate above derived from the AR. Overall it looks like the logistics of trucking to the port is slightly under US$1/dmtu. This is able to be a long-term part of the cost structure of a profitable operation.

We should have a much better idea when the half year report comes out because that will have six months of operations and little ambiguity around ore at port - there won't be much at 31 Dec 2021.