Ann: Investor Webinar, page-65

agree on this hydroxide plant. I had actually thought the hydroxide plant was just an easy (and smart) give away by CXO to the NT govt to secure EFA funding given govts dream of Aussie processing and was necessary to get fed/NY EFA funding. I honestly hadn't thought we were going to ever actually build it (and SB hasn't seemed to focus on it in responses to questions - he batted away the investor question on it as subject to feasibility and in the future). in any event we don't really need it as we have decent margins and a great first project without processing and we are almost in production. In order to get a hydroxide plant away:
1. 30 percent will need to be equity (so 200m from cxo) and 500m from debt. we won't want 500m on our balance sheet so it's got to be project financed and that's tough
2. Nt is tough to even get basic infra financed (power, roads, the aaco Darwin ab struggled for ten years - now shut). that's why the govt had that northern Australia push because debt wouldn't touch the North.
3. revenue income stream is currently from two Chinese offtakers (dont get me wrong I'm all for Chinese offtake but I'm sure aussie banks will discount them)
4. our offtakes aren't even long enough for that kind of financing - need ten years or so to re-negotiate?
5. look at the North American lithium story - 400/500/600m? spent in processing kit and now in receivership

personally I think the only way we would get a project like this plant away would be if Chinese lenders came in - 500m is nothing for them but Canberra china relations will prevent that.

happy to be proven wrong - maybe the numbers are so special it's a no brainer. but it's a tough project to get away.

i liked the story of cxo as a low capex play and I just hope they focus on getting finniss away and then look to expand the resourxe exploring barrow creek and anningie as they said on one of the podcasts they have been so busy on finniss they haven't done so much on barrow creek and Anningie. agree love this team - SB on that lithium broadcast was just first class - good responses on construction delay risks - covid/borders/covid and seems to be all over the tech risk around getting the resource out (even a dumb non geo like me understood that gravity processing that seems to reduce technical risk). it just makes it all sound more like iron ore - dig it up and offload at a big margin.