Ann: ESS: Scheme of Arrangement Update, page-114

I offer a short story as to why I think a lot of investors are off track in the markets.

I held BRB based on an honest MD, great upside on an undervalued resource, and it went nowhere for a long time. That was opportunity cost and a painful exercise despite the obvious undervaluation. There was even a bonanza discovery of Li and yet the share price managed to drop hideously in 2020 and stayed weak for years. It remained weak for years due to the lack of commercialization. "Show me the money". The value is not in the ground ffs; it is about the ability to monetize the assets.

Let that sink in for it is so important for investors to understand. Peter Cook came along (brilliant deal maker, put there I assume) who sold Manna Li for over $80M overall and then made a deal with a fantastic company in RMS. Lessons learned that apply here too. It appeared he was selling good assets too cheap but I did not make money (again) on that stock until he did that. I am in the market to make money so that is a good thing right?

The bitching and moaning that accompanied the life-line PCook threw BRB investors was loud and persistent. I was attacked a little for liking the deal and it got heated because holders thought they were being robbed somehow. NO, they were being thrown a banquet during a famine. Ditto ESS. BRB was 17c when I did a site visit and report for them; and it sold for 2.82 RMS shares now valuing a BRB share at 56cps.

That has upside just as DVP has upside so it is a win win. The independent valuation report on DVP is clearly an academic exercise, based on no business acumen, as outlined in detail by Bill in his recent presentation. The market price for DVP is proof of concept at nearly double the valuation.

I analyze markets and mining companies for a living, and make my income from investing and trading mainly. Misunderstanding costs a lot of investors dearly. My hope in sharing this is for ESS holders to look at this differently. ESS was about to face massive dilution and funding risk only to go down a route that could have led to failure (massive strip ratio = bad plan). In the right hands it can be a highly profitable project. Is the addition of business acumen "unfair" to ESS holders? Was that in the valuation? Did the valuer understand the structure of DVP? Was he just covering his ass with a low valuation so he could not be accused of overvaluation? If so he overdid it IMO. There are a lot of reasons that only some companies grow substantially but it comes down to management + commercial deposits.

The mining services is an awesome bit of structure aimed at several strategic aims, that de-risk DVP, and it in-itself is de-risked as well. It sets up DVP to commercialize its assets without massive dilution because they have cash-flow, and to have the staff (dream team) on hand to run mines like the ESS asset, Woodlawn, SS and more to come at optimum levels. The pressure it removes enables DVP to make the right moves rather than under duress as happens a lot in the industry at present. This really is a special company in that regard.

ESS holders, who don't understand the mining business, that assume in situ valuation based on spot price represents the value of a company should not be investing in shares full stop. I don't mean to be unkind but they are a risk to themselves. Go back and listen to Bill in his presentation as there is a plethora of signals he has genuine mining business acumen and contacts in the industry and with finance to get the job done. Without that ESS just has hope that somebody like Cook or Beament (etc) comes along and converts potential into reality. THAT is the key here.

Cheers and avagoodweegend (but don't spray poison on yourself ffs) CW