Ann: Appointment of Jozsef Patarica as CEO and Managing Director, page-34

@2ic, love your work, and there is not a single thing in your most recent analysis I would disagree with. So, let me add a bit of 'colour', mostly by condensing previous info I have shared over the years. None of this is important or means anything to us today, just telling a story to give an understanding what being a junior start-up actually looks like. Always, they are trying to take the best decisions they can, with good intent, but limited resources. That hindsight isn't necessarily their friend is hardly surprising! Slagging off at LG now because he wasn't so good at one particular aspect decries all the excellent work he got to happen in the earlier stages. But to think he was the technical lead and therefore directly responsible for what happened is simply wrong; his job was to manage the journey, not dictate it. Including for this story, none of which was his call:

In the beginning (ie the GUN one, not STA), some sensible mining consultancy, totally switched on to @LongTony's vaguely verbalised concerns, said such a low head grade resource needed to be mined at high throughput rates, very efficiently, to get decent economics. They were all in favour of quickly relocatable track based dozer mining units that could do 3,200 t/hr each machine. There would be two, one feeding the plant and the other being relocated or excavator fed and PUMPING OVERBURDEN, because it was so expensive to doze the distances required to get decent access to the ore. This needed an extra bore, but the costs well worth it. It looked like a pretty good plan, because it was. In the 2nd beginning (the STA one), exactly the same philosophy is trundled out. Because it will work! I can't remember if consultancies changed, but this is pretty basic stuff and those guys are on to it.

Only issue was such a mining machine had not been built at that time. Oh. So, in the DFS stage, STA went to market for proposals. Earlier, Sedgman had come to the same conclusion in 2012 for GUN and had done the same thing. But STA had the benefit of the earlier proposal work and tried harder, so got ~15 proposals. Both GUN's and STA's processes concluded the same thing. Being that nothing close to such a machine existed and the one proposed to be developed by Calsun Projects, now iPUT Technologies, was the best one going, (with "daylight to second place", per the DFS team). Yes, that being a turnkey design construct engineering project company I am a founding director of, hence my insight to it all.

Nothing in the above is confidential at any level, it is all laid out in the various DFS's, with the only item being our company was not specifically named, because that is the prudent thing to do, for many obvious reasons. Heck, even nominating McMahon as preferred mining contractor meant nothing, given the later change to Minesite Construction Services, without explanation. A very sensible move, from my now detailed understanding of the topic, as I really like and respect the MCS guys. So, back to the story, what happened?

There was a hiatus while the money was found (brilliant work by LG in there), and the starter's gun finally went off. We expected they would take the previous DFS work and slog away at a negotiated contract with the preferred supplier of DMU's, to get the early work done to put the best possible machines on the ground. Instead, a full budget tendering process was entered into, without explanation (you get that). For the same thing. Two tracked DMU units, but now to do 3,500 t/hr.

No drama, we thought, we'll just win the sucker, as we are certain we can put a better value proposition on the table than any of our competitors, who we do understand fairly well. After a pretty intense proposal development period we are at all-but to submit and comes the news that their mining team, led by that sensible mining consultancy, had concluded three tracked machines were better than two, and they should be 1,700 t/hr capacity.

Unsurprisingly, that drop in capacity is a different machine, won't bore you with details, but we did get to the position of '3 for the price of 2'. So we created greater flexibility for similar economics. Still seems a smart plan, coming from sensible action-oriented on-the-ground strategy development, right...?

Here's the thing. The last mineral sand operation to be built was at Cataby and, of course, STA got as many of those folk as they could to come over from that just-completed project. Well, guess what they wanted to build...? Yep, another Cataby! Hence that sensible mining consultancy soon enough got instructed to stop looking at fully portable mine planning solutions and concentrate on using the known tech at promised-to-achieve much greater throughput than it ever had before. Feeling lucky, punks? Plenty of them were, and the issues Cataby were having were coming to the surface in this period, but deemed likely to be irrelevant to the Coburn site.

I love that quote of (paraphrasing) "no mine plan survives first contact with the ore". That they were deprived of purpose-developed tools to take into combat saw them starting from an unnecessarily difficult position. All that history, and teething issues, aside, will it work? Most probably, and it has worked, for periods. So we're good, right? I expect so, being completely rational about it. I do think they have a solid team on the job now, and LG's presence was hardly critical to their performance. That JP is there now has no potential downside, only upside, as he brings detailed lived experience of precisely the job we care about here, and he will stick his nose in in ways that work. LG never claimed, nor expected, to do that; not his forté. I like the guy, I admit it!

Just to be clear, there is no sour grapes here, I am just telling a story for the interest value to give a clue how stuff really works, and what to watch out for in any mine dev process. On our own journey, we have never won a major project without getting in front of the decision-makers during the tendering process and COVID, along with WA island state mindset, stopped that from happening when it mattered, cé la vie.

Rightly, or wrongly, we have continued developing that DMU to what is now the 4th digital prototype (www.iput.au/dozer). It is a much better performing machine now, and a good deal more pricey than what we first offered STA (despite that, it would have got the job done). But the payoff in performance of the most recent rendition is brilliant, just have to find the right site to apply it to; stay tuned on that one...

As a general comment on the STA SP, we are in the middle of a market rout in the small caps space, seems to be without historical precedent. We are not operating in a market that has a rational mindset. A great opportunity to catch a few falling knives and wait for them to float back up, hopefully not go under. The latter won't happen here as the worst case scenario (given an at least semi-proven operation) is that the efficiencies will not come and the operation reset to suit ore body realities. That story may yet be told, but it is only a possible lower cap on SP, not a wipe-out. All scenarios will see the SP well above CR when the wall of worry climbing thing happens. Not to say there won't be another kick down first. But we are not realistically looking at delisting here, so hanging on stopless to quality stocks in this market seems to be the order of the day...