Ann: Shareholder Update - Capital Management, page-62

This announcement was clearing trying accommodate the shareholders that had concerns over the 22 December 2016 announcement regarding the EFH Financing Program.

> Including retail investors
> No margin calls
> Locked custodian

These were all front line concerns that were raised when the first option conversion program was announced.

So why do they need an option conversion program and why was this announced shortly after receiving a Certificate for Finding from AusIndustry?

Assuming that ESI receives a favorable ruling, the tax incentive would never have covered the full $10m commitment that ESI will be making as a part of the 1/3 funding arrangement. For ESI this means that there needed to be financing options in place to cover the shortfall and that's what I think we are starting to see now.

This is pure speculation, however, my theory is that we received a positive ruling which translates into the provision of capital in the near term via the Brevet facility. This near term financing solution will satisfy our short term commitments as a part of the MPA which will carry through to the second half of the year at which point capital from the conversion of options will be utilised.

I suspect that offering an options funding facility will serve the purpose of providing certainty around the amount of capital raised from the conversion of options prior to their expiration date. Locking in X amount of dollars from future conversion may enough of a guarantee to our partners that we have the means to satisfy our 1/3 commitment.

Regarding the timing, management now know what our financing needs are and the timing surrounding those needs. The announced Options funding facility fits with these needs.

The main point to take away from this is that management now know how our financial commitments, as a part of the MPA, will be met up to the end of July. This takes the biggest uncertainty out of the MPA and again with pure speculation, this will all start to pick up speed.

All IMO.