Ann: Investor Presentation August 2022, page-3

Interesting but strange move on the surface, HAS seeking funding to develop, but instead goes into $150M debt to buy 22% of Neo $150M is subordinated debt true, but Wyloo can still send in the receivers to HAS if the loan is not repaid in 3 years time, in which case Twiggy will own HAS and thus Yangibana. Of course HAS will not let it come to that, they will look to repay the loan by CR, re-sale of Neo, new finance elsewhere or renogtiation (ouch). Highly unlikely a mine not producing until 2025 will have generated enough free cash to make repayment. This is how con notes work?

The holder (Wyloo) has the choice to redeem $150M as shares at $5.50 or ask for cash back. If the share price runs well above $5.50 because HAS is successful and the RE price rises etc, Wyloo will probably exercise the option to convert to shares locking in a mark-to-market gain. If HAS ishare price stays lower Wyloo will ask for their cash back and just settle for the ~12.5%pa coupon payments. Those repayments mean probably more notes by end Year 3, about $200M will be owing as Undaunted says.

Con note holders rarely only opt for script repayment because companies usually underperform, markets fall, share price falls and the con note is 'out of the money'. If the company doesn;t have enough cash to repay notes and re-finance is not an option, shares usually fall a lot further as the market knows a CR to repay the con note is coming at note expiry. A company well out of the money needing to repay notes with an already falling price due to poor performance and/or markets, then fear of heavy dilution can become a vicious cycle of ever bigger dilution with an ever lower share price because not repaying the notes and 'waiting for the markets tto turn' is not an option.

Not saying HAS will struggle, just that this debt brings extra risk, including if Neo share price falls. Why would HAS enter into this debt for a 22% holding of a downstream processor before even securing their own funding? IMO it's a nod to one of the problems few want to talk about in the RE space... who to sell REO product to outside China? If finance and funding becomes politically tied to non-Chinese off-take (because chinese off-take means HAS is part of the Chinese supply chain and no use to the west looking for diversification) there are simply almost no western processors of mixed RE-carb or oxides even close to ready to take HAS production. All these new RE projects looking to sell to outside China, but nobody to sell it to? Neo is one of the very few Western downstream processors from my understanding... but they can only take so much off-take.

Joining the dots, a cross-holding in Neo might ensure an off-take for Yanibana to Neo. An off-take from Neo based in Europe would satisfy strategic financiers and funders to then commit getting HAS over the line and into development. Downstream investments may be profitable over time, but they are irrelevant from a financial return perspective when HAS lives or dies on funding, successfully developing and ramping Yangibana first. That's what I'm thinking but don't follow the stock closely. Could just be Twiggy stiching up other bunnies at the table as usual...

GLTAH