Ann: Quarterly Activities/Appendix 5B Cash Flow Report, page-2

Slow and steady TB development with minor delays-cost associated with heavy rain event. Was always going to cop one cyclone, hopefully into the dry season now and de-risked from the wet. All very boring on TB front. More interested in this comment regards "non-dredge mining" at the Atlantic project.


I looked into the SA project a bit more but never got around to posting back when. Initially I thought dredge, but then I thought selective dry mining (albeit a bit wet in this situation) is lower capex and much more flexible to reach and sustain an economic grade through varying mine grade cut-offs. Similar to STA's Coburn deposit, except thinner orebody in low-energy sheet like barrier sands rather than Cobun's more dunal style sands. Both still very low slimes that suit simple high tonnage wet plant spiral concentration.

By way of comparison, below at the same scale is the Coburn MRE 2019, Coburns high-grade core MRE 2010, Bujuru and Retiro (spun north) and the entire 4 projects make up SA far RHS. Maybe not as deep as Coburn, but similar low-grade barrier sands width, wider HG core to the mineralised barrier sands, just Bujuru and Retiro together are twice as long... and of course higher grade than Coburn.


Zooming in closer, there are obviously substantial contiguous areas of >4% avg THM at SA, which may convert to say 4.5% THM avg for a very large, long life, partially-selective mine path similar but with a greater footprint to Coburn. How selective depends on project size and cut-off grade, but it's relatively cheap and usually more economic to take out some lower grades in large contiguous pits than move around too much. Over many years, simply expand the wetplant to keep up required HMC tonnage to the dry plant as the mine moves from the best to lower grade pits. Typical multi-phase expansion development path, starting with small plant-capex in best HG pit then add size as required from operational cashflow. Much cheaper than large dredge plants paid for by a developer at the get-go...


The economics looks attractive based on location to port, infrastructure, low-cost mining jurisdiction, supply chain control for Brazilian and Nth American pigment and tile industry etc (so long as permitting woks out). Here are some tables of in situ ore value between Sth Atlantic, Coburn and Kenmar's Moma by way of peer comparison. Note, Coburn has higher product pricing to reflect higher quality product. Lower historic prices in tables are used for comparison purposes only, not to reflect current or future pricing). Basically Sth Atlantic at assumed 4.5% THM mining resource has >75% more in ground ore value than Coburn and approx 20% more than Moma...


Of course, SFX don;t own SA and have to pay to play down the track if everything works out, but it looks the right kind of scale, grade and VHM to be in the conversation as Chalmers would say.

GLTAH