Ann: Extension to Voluntary Suspension, page-8

Hello. These are big projects with big CAPEX. US$182M or AUS$286M for Module 1; which was calculated 12 months ago, despite many costs continuing to escalate. I struggle making sense of this based on US$518/t total operating costs and the recent US$1,050/t revenue estimate . For Module 1, this works out to be around US$25M in cashflow per year, which is a payback of at least 7 years. Therefore, it looks like it will depend on the proposed funding arrangement, if this eventuates. I struggle to make sense of an ordinary funding arrangement, such as 40% equity and 8% to 10% interest rate on the debt funding. Maybe if POSCO extend a low interest rate loan for 80% of the capital costs it will be reasonable.

3% royalty = EBITDA of $44m less $2m withholding tax less $7m depreciation less $2m interest expense less 16% government profit share x 30% tax = US$19m NPAT add back $7m depreciation = US$26m per year cash flow.