Ann: Quarterly Activities/Appendix 5B Cash Flow Report, page-3

The quarterly ticks all the boxes in terms of forward momentum. I like the reminder to all that "over $536 million of gross project
expenditure" is now in place. (Thanks RockRose!!)

It also means that HHR need to find the remaining $124m to fund their share of the project. If you put the two comments re finance side by side;

"Hartshead are exploring multiple parallel options to secure project finance, including a conventional debt facility, pre-payment on future production streams, publicly listed and private bonds and possible additional divestment of equity in the Phase 1 development project." (12/7)

"Over the quarter the Company advanced discussions with a number of groups relating to further equity divestment or to provide the debt financing to ensure sufficient funding of its remaining share of development costs" (31/7)

IMO the emphasis has moved from debt funding to further divestment over the last 3 weeks and it makes a lot of sense for HHR. A further divestment could

- give them free carry in Phase 1 with no finance required
- provide some production revenue to HHR
- allow them to retain 40% of Phases 2 and 3
- provide cashflow to allow them to prove up new resources

The extended EPL simply means that HHR's project is more financially attractive to an existing producer than an emerging producer. It would be logical for HHR to exploit that position.