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Ann: Appendix 4C - quarterly-LWP.AX, page-45

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tmc19

164 Posts.

05/11/16

15:32

Post #: 20395049
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Originally posted by Michaeljob ↑

With the claimed recent interest from a “US-based company that expressed interest in a potential license or Joint Venture partner in North America, to commercialise and manufacture LWP’s low-cost flyash ceramic proppants.” It is worth reviewing the companies previously stated timeline to commercialisation. Given that the discussion commenced September 2016 then shareholders could anticipate that the agreement might come to fruition by September 2018. Given that the company has been stating that commercialisation is just around the corner for such a long time I find it extremely unlikely that shareholders will dip into their pockets to refill the companies coffers for the next 24 months given that there have already been raises to cover past JV’s. Even if they could raise enough to cover working capital I see it as very unlikely that they will be able to squeeze funds to cover obligations for any JV. Counting down until the doors close IMO, let’s see if the directors can wangle one last CR…….

2 November 2016
LWP commenced early stage discussions 6 weeks ago with a US-based company that expressed interest in a potential license or Joint Venture partner in North America, to commercialise and manufacture LWP’s low-cost flyash ceramic proppants.
13 April 2016
A typical process of securing a potential partner is set our below, and this can take up to approximately 24 months. LWP is at different stages of the process with a number of parties:

Step 1: LWP receives interest from a potential licensee/JV partner in a specific geographical region.

Step 2: Both parties enter in to a non-disclosure agreement and commence preliminary discussions on the opportunity within that geographical region.

Step 3: LWP conducts financial and operational due diligence on the potential licensee (a single greenfield proppant plant typically represents an upfront capital investment of A$30-70 million ranging on the annual output plus LWP’s upfront licence fee).

Step 4: LWP conducts initial lab trials with up to 100 kilograms of flyash, to assess suitability of the coal fired power plant nearest to the potential proppant plant which is typically located within the shale play or anticipated local market. The testing period typically takes between 30-90 days to optimise the mix and design and sintering curve specific for those raw materials.

Step 5: Final negotiation of commercial agreements including upfront licence fee plus ongoing royalty agreement and responsibilities (i.e., joint-venture partner, minor partner, or consulting on the new plant).

Step 6: LWP then would source around 10 tonnes of material for trials at the Brisbane Pilot Plant facility to ensure that the mix design will operate under scale-up conditions and to demonstrate the process with the prospective licensee. This testing period typically would take between 30-90 days.

Step 7: Modification of an existing manufacturing facility or Greenfields facility (12-18 month build) and then commence receiving royalty payments after sales.

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Only being at Step 6 or 7 could possibly justify them going for another CR. Even then there would need to be a lot of transparency on who the JV partner was and a lot of details on the construct of the JV. LWP have not show this level of detail before and never will IMO.
LWP Price at posting: 0.3¢ Sentiment: Hold Disclosure: Held
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