Ann: Joint Venture with Ganfeng - Overview, page-79

"Ganfeng got an incredible deal for $65m + their commitment to fund half of development"

I think they are funding all the capex (especially after their in-house EPC team review the plans (thanks jadaj)) - giving us a free carry for our 50%...

However they are also:

• underwriting 50% of our Phase 1 offtake on presumably attractive terms (or we don't pay Macquarie Bank!!)
• which in all likelihood becomes 100% of our Phase 1 offtake for the foreseeable future
• providing extensive industry experience to guide us through mine construction and development
• our best chance to ramp up to Phase 2
• our best chance to move to downstream processing in order to service the European market (shipping our spod to China for processing erodes the economic advantages of our resource location and quality).
• change the perception of our lithium (and gold) operations
• Look at what happened to the Mt Holland Project in the 2 years after SQM did a very similar deal - with SQM paying $50 million and sole funding $80 million development for 50% of a larger resource but at depth. Wesfarmers subsequently paid $776m to buy the remaining 50%. Would Wesfarmers have valued 50% at anything like that if itwas still 100% KDR?? [Another 2 years later, Mt Holland is now preparing to start construction later this year].

The role of Ganfeng is to enable us to realise our remaining 50% of the NPV in the project on a free carry; without further dilution; by fast-tracking and de-risking the technical side (remember the teething problems at Pilgangoora - both mines?).

We've just hitched a ride with the fastest-moving player in the lithium space. There is no one better for us to maximize FFX shareholder value (the FFX Board's goal!!!). So far, so good.