Ann: Appendix 2A - Exercise of Options, page-15

Ok, given there was an article on WAK in the weekends paper, am assuming there's going to be more chat about them in the coming week.

So let me summarise the position as I understand it:

1) WAK (WA Kaolin) has a lower value product which sells for some $321/t as it has no halloysite whereas ADN with the halloysite has a premium product which goes for between $700-$4500+/t

2) WAK has debt of $28.3M and an NPV of $256M - its also been extensively drilled so that resource is both defined and the upside from the tenements to be expected capped - ie: we shouldn't expect an great increase to the NPV from the resource. WAKs plan is to get more of the resource out of the ground in a shorter time (increased production) through a more economic process (process plant shifted from port to minesite eliminating trucking expense, economies of scale and potential wetplant).

3) WAK got an IRR of 47% but the proceeds of profits are already flagged to go into the expansion projects, rather than being returned to shareholders (ie: the 200 to 400ktpa and then the wetplant).

4) WAK is looking to eat ADNs lunch due to an increased interest in kaolin due to ADN and Wombats excellent work (nice heavy lifting there Wombat - those are some pretty big financial barbells you're using!) which is understandable, but whilst its a nice enough tuna sandwich (and it looks to me like it is) its not the seafood platter which ADN is.

I don't see anything wrong with WAK - it looks like a solid enough investment. But that's a very cutesie comparator table, and one that perhaps ADN would be well served doing its own version of (maybe with an explanation that not all kaolin projects are equal re halloysite) upon whatever DFS stage announcements they put out.