Ann: Macquarie Conference Presentation, page-11

In the half year there was explanation around the primary ponds being overfilled and the intermediate and harvest ponds being underfilled - see p16 of their presentation. They had pumped enough brine in to the system but didn't have it distributed correctly. An overfilled pond has lower surface area to volume ratio and is therefore less efficient at concentrating the brine. An underfilled harvest pond doesn't have enough brine to sustain the desired production rate.

So there has been a lot of moving brine around to get all ponds evaporating correctly (I think the "evaporating correctly" bit is where the "20% more area under evaporation" terminology has come from) and following that there is a bit of waiting (slower production rate) while the concentrations re-establish at the right levels.

So why did they get the volumes out of kilter?

1. Their spreadsheet error was one factor they pointed to in the half year, although it got no mention at the recent conference call.

2. Understanding the volume in each pond was obviously another factor. In the conference call RS took some time explaining how the ponds were built following the contour of the land - about a 1% gradient - with no attempt to level off the bottom of the ponds thereby saving big money in their construction. When they started operation, some of the ponds might have been half a metre deep on one side and 2 1/2 deep on the other. As the salt has precipitated, the wind has blown it around and appears to have levelled off the bottoms - no bad thing, as evaporating/concentrating efficiency will have improved as a result of this shallowing of the deep areas, but it seems to have got them a little bit out of shape on their volume measurements. Hence the bathymetric survey to get accurate numbers.

3. In the Q1 conference call, there was lot of emphasis placed on the brine transfer systems - limitations in transfer capacity may have been a factor in having too much brine in the primary ponds. Hence the investment in additional pumping rather than over reliance on flow through the channels.

With a couple of experienced people watching over the ponds full time, good measurement techniques in place, and enough pumps to more actively manage the brine movements, I don't think well see a repeat of these problems - we just have to sit through a few months of strong cash flows until we can graduate to extremely strong cashflows...