Ann: Minbos Restructures Board and Management Team, page-48

“The Yellow Phosphorus study has been completed and has been passed to our major shareholder, Shanghai Jayson, for evaluation and comment.”

They had to mention the P4 study even if we’re not going to see it yet, seems to me it’s a bit sensitive atm so they’ve just kicked it along with minimal comment while they negotiate probably at SJ’s request. Let’s face it, SJ need P4 - there is no cheaper place to make it, super cheap power, good phosphate supply, cheap labour, pro investment economic environment. Admittedly a 10 week study is not going to be too in depth, is only to a 50% cost accuracy, but will give an idea as to the project economics. I suspect Minbos would love to release the study, it would show what a cash cow this could be & we hold all the cards, syndicates like SJ very much need us.

Obviously it was good enough for SJ to take a Board position. I believe this to be the first step in setting up a JV, the extent of our involvement yet to be determined. Could be as small as just being a Phosphate supplier to taking a percentage in the whole operation. Although I posted yesterday it appears Minbos are playing off using their surplus product for P4 as against other offtakes, IMO it’s almost a certainty Minbos phosphate will be used in P4 production - this could be from stage 2 or even a possible stage 3. I think they’re pursuing a better deal than just providing offtake to SJ.

P4 production is certainly not our area of expertise, previous announcements have referred to a possible 3rd partner with P4 production experience. SJ are more into battery manufacture than the production of P4, I gather they just want to ensure cheap supply of raw materials. Hopefully after SJ and any possible production partner have perused the study, it will be released to the market. They put out a big announcement about undertaking the study, so I would expect just as much detail in what the study says.

Of course a P4 plant is not built overnight, I’d expect about 2 years from FID, so it’s still a fair way off, by then we might need stage 3 to cover. If they want to progress this any further they may have to lock in the Phosphate supply and possibly power supply through our agreements. The next stage would normally be PFS or DFS, but the Chinese being Chinese they may just go straight into construction, they don’t mess around with all the studies like the Western World does - would just depend on who the 3rd partner would be (if there is one).

Short to medium term, the importance of SJ is to provide our small shortfall of finance needed so construction can continue uninterrupted. We’re a fertilizer company a big offtake combined with some finance from SJ would be great, to be (realistically) a minor party in P4 production would be huge. This in conjunction with any other offtakes is cream on top, for the small extra capital outlay I can see them going straight to stage 2.