Ann: Quarterly Activities/Appendix 5B Cash Flow Report, page-15

Cguv,
No big surprises, a bit of a yawn but good to know stage 1 is progressing and the plant is being built.

There are couple of matters for concern that need to be monitored.

1. MgO Production date
Looking at the November report released in early December:
As such MgO is targeted to be in production in March and the follow up with magnesium metal expected soon afterwards.

In December report released 19th January there was nothing said about scheduling so I assumed what was said in the previous report was still valid.
In the quarterly released 30th Jan, as you point out, it says:
Our target for the first MgO production after March 2024 remains unchanged.
Clearly they foresee some delays and using skilful wording to buy some more time. What does after March 2024 mean??? - is it April, May or June?? I am assuming that commissioning would be completed by end of March though the dates seem a bit rubbery.

2. Financial cash flow
They have not received the $12.6M Research and Development rebate from the ATO. My reading is there appears to be a problem with the submitted tax return - I say that because LMG reports:
The ATO continues to review our rebate claim and we await a decision to release the amount.
so there seems to be continuing review I assume based on further supplied info. The delay of this rebate precipitated the capital raise otherwise the RnD funding was at risk:
the agreement with RnD Funding is that they provide the last $3M of funding when the project is fully funded through to October 2024.
The project would not be fully funded to Oct 2024 without the R&D rebate. if that rebate does not turn up in the next couple of months we may have a problem.

3. Updating on Stage 2, 10,000+tpa Australian Commercial Plant

Mine planning work(being done by GHD) for stage 2 has been delayed/modified to
The work scope for the mine planning stage is being revised to incorporate only the work needed to commence the project faster by focusing on what is needed to get to a final investment decision sooner namely mine scheduling, geotechnical assessment, mining lease determination and rehabilitation
planning. LMG will complete the resource determination work post commencement of the Stage 2 project. LMG believes this strategy will bring forward financial returns to offset the delays from the Stage 1 project. A more detailed work program will be developed and released in the next quarterly update.
I would have thought that the resource determination is critical to an FID. Whoever is going to finance it would want to know how much resource is available which then indicates the life cycle of the investment? Perhaps there is an assumption that there is ample supply(buffered) by a huge reserve and also the Hazelwood deposit.

We didn't get any update on the approvals process for stage 2 from Vic Government.

4. Stage 3, 100,000tpa Plant Project

• Update, on 3rd party investors(signing of non-binding MoU) was expected to be signed by the end of December 2023, if not before. The PFS-B study is projected to commence during the first quarter of 2024, following the execution of the MoU’s. Does this mean that the PFS=B study is delayed?

LMG reports that critical people were not available,
Delays were unexpectedly experienced due to the non-availability of key partner personnel
though they claim it has progressed to the writing stage(presumably drafting the MoU). Given that it's a non-binding MoU it should only need a stock standard MoU across potential investors. I think it's an understandable delay, this stuff happens in business especially if investors are dealing with some crises. Now expected to be signed by 31st March. If it doesn't happen by then, I will start to worry because if they can't get a non-binding MoU to appeal to investors , then they are seeing risk problems with the project.

No update on

• submission of a land application for the operating plant and the workforce accommodation site

• application process for a manufacturing licence with the Ministry for International Trade Industry and Investment (MIDA)

As I said, no big cause for alarm and don't see anything catastrophic on the horizon. Some of these concerning issues need to be monitored otherwise they can get out of hand and become a growing problem. Don't forget that we still have the post commissioning risks to manage - does the hydromet process work at commercial scale?....the efficiency/recovery will be a big underlying determinant of success, especially for Ni slag.

Just my reading of it.