Ann: Option Agreement for Location of Vanadium Processing Plant, page-41

I thought you were really switched on and on top of everything, but then you come out with this waffling misdirected ramble with little basis in reality.

Firstly, you claim TMT is going to have to pay significantly higher gas prices under a BOO / take-or-pay model than AVL. I think this is predicated on an idea that EITHER party building and paying for a spur line to **anintha by themselves is capex, and they get to just walk up and bolt it on to AGIG's network and pay for gas at the same rate as everyone else. That is not what AGIG's business is. It is fanciful to think that a third party (TMT or AVL) can build their own pipe, force their way on to the AGIG network, and buy gas like going to the shop for a litre of milk.

Your claims about the Economic Regulation Authority display a complete lack of understanding of the role of the ERA. The ERA does not regulate gas prices in this situation. It regulates wholsesale gas prices to retailers of the gas, not the end users. AVL or TMT or indeed WGX and the Meeka SHire, would be end users. THe SHire would fall under the ERA remit as it would be producing electricity to resell to domestic consumers on the grid. THe other companies connected to the network would pay for their gas under offtake agreements - a fact that seems to elude you.

THe offtakes would be negotiated so that AGIG would recoup the costs of installing the spur line via charging more for the gas. But this is ultimately a negotiation between two companies; one which has a choice to pay for its spur line and rely upon the government to ensure it has free access under the act managing the AGIG network or to pay for the gas at a higher rate and effectively pay AGIG to build the spur line themselves.

The former choice lays the capex at the customer's feet and keeps Opex low. The latter choice reduces capex for the customer but they pay with more Opex.

Given that the supposed benefits of moving a plant to Geraldton is that it will reduce the capex needed, this is spurious logic all round. If the idea is AGIG pay for the spur line capex and hits you with the gas charges, it is a strategy to defer capex and increase Opex. This tradeoff is literally reduced to farming out the margin to AGIG, because either proponent (TMT, AVL, or even WGX) would pay for it one way or the other, via capex (which, is capitalised and amortised, causing a deferred operational expense over the length of time taken to depreciate it).

Finally, to reiterate, why would the ERA not approve it? What does the ERA, which is an organ of government, gain by not approving supply of gas for a commercial price to a mine site? It's literally like you are saying the Western Australian government is picking winners and not promoting the mining of anyone's vanadium, by dint of it being located near Meekatharra, because "the customer might pay for the deferred capex via higher usage charges". That's daft. Very, very daft.

Your other points (numbered) are meaningless.
1. The change to APV was made well before this change of venue for the processing plant.
2. So you're saying that AVL couldn't locate the plant on site because they couldn't get enough gas? THe change of venue has zero impact on energy, and the energy costs (being 15% of Opex) are not going to change substantially by moving the plant closer to Geraldton. For example, the BTU/tonne of ore of gas is the same, AMV or APV. Move it to Geraldton, it's the same energy cost. You pay less deferred capital on a pipe you didn't get AGIG to build, but if the extra cost of AGIG charging you that capital as a fee (spread over ten years, mind) is even 30% over you paying the capital yourself, then that is at most a 5% OPEX impost. Trucking the ore 390km to Geraldton is $32/t, or 10%++ Opex impost. Plus you still need a spur line and so on, and you are still going to pay capex or AGIG is going to pay the capital and charge you for it. This is illogical.
3. Yeah, water is an issue. Every company working in the Murchison - WGX, Musgrave, Ramelius, Atlantic - has water constraints. Of course AVL should have known about it at the PFS stage. They clearly did. Did you not read the announcement where they were intending to pipe it from WGXs open pits, 50km to site? That was somehow a positive capex spend, to secure sufficient water, and a gas pipeline is somehow not? This is illogical.
4. Reagent costs are 20-24% of the Opex of the only comparable DFS in the public domain, which is TMT's. We have to compare this strategy using TMT's because we lack any other vanadium development DFS's in the public domain in WA which involve trucking reagents to **anintha. I mean, if that's not a valid comparison, then nothing is. The cost for trucking $350/t soda ash to **anintha is the same as trucking concentrate to Geraldton.
5. If it costs you $32/t to truck something one way, it costs the same the other. However, bear with me, you are going from trucking 50kg a tonne of soda ash @ $32/t to **anintha, to trucking 50kg 50km @ $4/t. IF you treat 1Mtpa of concentrate, this means you save $28/t on the 50kg a tonne. But then, and this is where the whole "saving on reagents" falls apart, you go from trucking 1Mtpa of concentrate 0km, to trucking it 340km, at $32/t. Savings: $1.6M. Costs: $32M. Total savings -$30.4M per annum. My previous post, now moderated, explained this. I'm amazed you need it explained again, it's just self-evident.
6. Absolutely this delays everything. For a start, they have to do the maths. Then they need to buy the land, and get it re-zoned for industrial use. This will mean a full ground-up EIS. Groundwater studies. Tails dams, moved from **anintha, to 50km out of Geraldton. New soil and water sampling. New baseline environmental studies. New plant geotechnical and soil compaction testing. Permitting. Council meetings. Telling people living nearby with their fruit orchards about the scrubbers on the AMV plant, the kiln. Et cetera et cetera et cetera. 2 years? Who knows.
7. Agree. Except, clearly, moving the plant site at this stage means the DFS won't be ready till the whole social licensing is done. Remember, a few sound bites and hand shandies on 7 News and 9 News is going to run into NIMBYism and community worries about dust, fugitive emissions, etc, in a more highly populated region with high value agriculture just nextdoor.