Ann: Noosa Investor Presentation - Update, page-39

Klipklop

You make some interesting comments.

There's some information that might assist with understanding what they are trying to do.
A. Confusing messages - 1. They have been trying to bring Mt Carbine back to life. The strategy was to do it in stages which required lower levels of capital until they were confident of the medium to long term picture. They are now at that point with the QIC, Cronimet & Oaktree deals. They could have originally gone to the market and raised $50m to $80m. Would that have worked? don't know. We have seen others that have failed at that strategy - Tungsten UK (twice), potentially G6).
2. Saloro was an opportunity presented to them. Kevin has said it was 12 months to early, but too good an opportunity to miss. Saloro has the deposit and the equipment. All that is missing is improved recoveries (was below 40%), Kevin has already lifted it above 50% and is back in Spain to lift it above 60%. Saloro has the capacity to produce more than Carbine in the short term.
B. None really have skin in the game. I beg to differ. They have substantial shareholdings. Steve Layton has 55m shares , ZP has 73m shares, Oliver represents Cronimet who has converted $10m at 9c. Oliver has 6m shares and his close associates in Singapore have more than 500m shares. Kevin has 5m shares and they were able to do a deal with Oaktree to put the Spanish operation in at a discount to value and buy more shares at 9c. So the parties who are running the show have plenty of incentive to make it work. Even previous management are still holders - Leon P has 26m. Jim Morgan, Andy White family and Sheffield Parker still have their holdings.
C. Cronimet has the only win win. Not sure about this one. The project wouldn't be in place without Cronimet. In the early years they backed it and kept it afloat. Now they have converted their equity in at double the share price. They have brought a global presence which includes Masan and Oaktree and Kevin certainly wouldn't be here if it wasn't for Cronimet and Oliver.
D. Compelling story. They are doubling the capacity of Carbine which will lower costs and provide healthy positive cashflow. They are still on that journey and not there yet, but not far away. There is material in the pit that needs to be removed before hitting higher grade zones lower down and then there is the underground which represents 85% of the deposit. Even at current rates (which is stop start due to adding more capacity) they are getting close to positive. Saloro is a recovery story and the addition of the ore sorters means they can reduce costs and increase production. Kevin has indicated he has found improvements. We should see this in the coming months.
E. Acquisitions - The management team isn't stupid; they know they need to be able to walk and chew gum at the same time. There are improvements already underway with Carbine and Saloro that will make them financial. The acquisitions will come after this. They have been able to get Oaktree and QIC on board due to their plan. I think it doesn't just include other mines but downstream processing which makes healthy profits. Wolfram Camp was awarded after a tender process (15 tendered). They have 5 years to determine what to do with it. Carbine will be pumping by then. Not sure about Watershed, maybe other targets.
F. Ore Sorters are the key to making a low grade deposit workable. Yes, they create a bottleneck, until you add more capacity. That's what they are currently doing by adding more crushing and more ore sorters. Carbine would be marginal without it. It allows them to convert the ore into higher grade than King Island. And I disagree with your statement about EQR not being the gold standard regarding ore sorting for tungsten. Others have struggled to get recoveries above 40% (previous management teams at Carbine, Tungsten West 3 times, G6 currently, previous Saloro, La Parilla, Almonty at Wolfram Camp and probably others). So at this point they are the gold standard for the tungsten industry.
G. Far more to it - I totally agree and this is probably the part that most investors don't understand. Mining a material that has a grade of less than 0.5% means you can't afford to get too many of the steps in the process wrong (recoveries). There are lots of moving parts in generating the final mined product. It's not as simple as switching on a machine. Everything needs to be calibrated to work with other parts of the process. It can be very challenging given the material (tungsten) is tough to work with. Kevin and his team have been fine tuning the process over the last few years and they are currently pretty happy with how the production process is running (I visited earlier this week).

This has been a long journey, but they are progressing to being one of the major tungsten players.