Ann: Operational Review to Optimise NAL Cost Structure, page-87

This is the way I see things:

To be competitive now moving forward we need to get our costs down to say US$600/t, so a reduction of around US$200/t from the reported number in the September quarter. Is this possible? As we are/were still in ramp up and with issues at rod mill and construction of crushed ore dome, etc etc then I think possibly yes. At that cost point we can compete even with the big boys in WA, our labour cost and water and power costs should be a fair bit cheaper and we are not a FIFO operation so also overall ASIC costs should be lower.

If we can bring costs down to this ballpark then we can generate a healthy margin even at these depressed lithium prices and be one of the best positioned producers for when prices likely increase again.

We need production up to nameplate, as we move into spring in Canada that is more likely to be achieved, and with the completion of the crushed ore dome and other operational improvements should be able to sustain a higher consistent throughput at the plant.

If we can produce upwards of 200ktpa in CY2024 then with a margin of around US$200/t for all production (including PLL offtake) then we can generate a profit of around $40m USD so $60m AUD profit from a US$160m (A$243m) revenue.

Our biggest issue currently impacting our costs is recovery rate (which they are clearly working on) and our shipping costs CIF China. Our unique geographical location in North America will be an absolute godsend in a few years time once the downstream refineries, CAM, battery plants and gigafactories are all up and running, but until then we are shipping our spod literally to the other side of the world, especially while there are/were issues with the Panama Canal.

This tyranny of distance currently being a negative cost driver against many peers will flip 180 once these numerous facilities are in operation, we will then literally be on the doorstep and if can weather this downturn, be front and centre as the established leader of production in North America.

So, costs down to weather the current storm, shave the fat and get NAL to full operational scale with as greater efficiencies and reduced unit costs as is possible.

Once out the other side, we will be looking very good.

We do have cash on hand to help us through this, we do have an experienced albeit unpopular BOD who have indeed been through this before (and PLS is the shining outcome of that process now), and we certainly have the huge advantage of having no debt risking to tank us at any moment (unlike Altura before us).




So yeah, to summarise: NAL costs down, production up, prove up the economic model for Moblan which is clearly of immense long term economic worth (DFS any day now no?) and work through partnerships for this and NAL going downstream (carbonate), hope for some decent results from Tabba Tabba drilling, and confirm what is happening with Authier.

Weather the storm and with that under our belt the future sky is the limit still at this market cap my goodness. All irrelevant though if costs are not down and not competitive at these prices. We set a goddam offtake for sales of US$500-$900/t so it must surely be possible or otherwise what the fk was that ever about even back then?!

I believe it is possible and we have a very good team and new leader on the ground to make that happen. We may not reach that for another quarter or so but if they can then imo upside from our current SP would be considerable.