Hi BW,What did you make of the last quarterly, in particular the...

Hi BW,

What did you make of the last quarterly, in particular the last paragraph regarding the DFS?
Extract:
Definitive Feasibility Study (DFS) Update
Andromeda has undertaken significant work on the DFS and has made considerable progress since
securing its major paints and coatings product (Great White PRM™) offtake agreement in June 2021, as
well as its previously announced premium ceramic product (Great White CRM™) offtake agreement in
March 2021.
Andromeda’s offtake agreement with Jiangsu Mineral Sources International Trading Co. Ltd (MSI) has
provided the Company with the opportunity to produce and sell a higher value Great White PRM™
product in addition to Great White CRM™. This diversified product mix has required some fundamental
changes to the single product Pre-Feasibility Study (PFS) released in June 2020. To facilitate the production
of both Great White CRM™ and Great White PRM™, significant changes have been made to the mine
plan, processing plant and transport logistics. As such, the DFS is not a simple update nor capable of
simple comparatives to the PFS, but a new bottom-up study which has required and continues to require
significant work and analysis to understand the optimal development pathway and product mix.
As foreshadowed in Andromeda’s 21 June 2021 ASX Announcement Diversified Product Strategy for
Great White Kaolin Project, one key consequence of incorporating the flexibility to produce the higher
value Great White PRM™ product in addition to Great White CRM™ product, is increased upfront capital
expenditure to account for a multi-product processing plant. Whilst this change increases the upfront
expenditure requirement, the overall project economics may benefit from several factors including:
 Stronger early operational cash flow from the incorporation of a second and higher value refined
product (Great White PRM™);
 A processing plant optimised to produce a diversity of products for different applications,
currently being studied by the Company;
 Full control over product production quality to ensure consistent premium grades;
 The potential early inclusion of a lower capital expenditure Direct Shipping Ore (DSO) production
component. Andromeda has made considerable progress with potential DSO offtake partners
over the last three months and the inclusion of DSO would provide early cash flow, which could
be deployed to help fund the capital cost of the process plant; and
 Potentially more attractive finance terms (if debt finance is required) due to the existence of
binding offtake agreements and lower project risk due to the diversified product base.
Andromeda is continuing to work through various development scenarios, the optimal product mix
balance, the timing of any DSO inclusion, further offtake opportunities and the optimisation of costs to
balance risk, funding, Internal Rate of Return (IRR) and Net Present Value (NPV).
The announced potential acquisition of Minotaur, and resultant consolidated and simplified ownership
structure of Great White, has potential to provide Andromeda with full development optionality and
greater project funding alternatives.
Consolidating the ownership of Great White (and Natural Nanotech) provides Andromeda with the
optionality to explore several different project development scenarios not previously considered in the
PFS or existing DFS. The Andromeda team is now focused on understanding which potential development
scenarios unlock the greatest value for Andromeda (and accepting Minotaur) shareholders. To fully
understand, optimise and incorporate these scenarios into the DFS, further time is required.
In addition to the progress made on the DFS and the announced proposed acquisition of Minotaur,
Andromeda has continued to pursue some if its other initiatives.
Currently, additional studies are underway on other higher value products including High Purity Alumina
(HPA), Halloysite Rheology Modifier (concrete) and cosmetics. Whilst it was not Andromeda’s intention to
incorporate these products into the DFS due to their early-stage nature, the studies are progressing well,
and the extended DFS completion date may allow incorporation of one or more of these.

Cheers,

GS