Ann: Tailings Retreatment Plant Update , page-19

“The $435/MTU and $400/MTU windows have closed and we now have to cope with $350/MTU. Fact again.”

> CNQ have used US$290/MTU in these calculations but
> unfortunately with an underperforming plant etc they only
> achieved US$230/MTU. I am disappointed but realistic,

Todays, the price I have cited was for 1 MTU of APT as it is the standard reference for quarterly off-take price adjustments in the industry. The $230 they have achieved is the price for concentrate which is different from the price of APT. CNQ did not "only achieve $230/MTU" due to underperformance of the plant as you suggest. It is rather their selling price for the concentrate they have delivered. The plant's underperformance made them produce much less product but the selling price for the product per MTU has not been affected.

Maybe an analogy can help. One tonne of gold ore grading 31,1g/t gold and a Krugerrand coin both contain 31,1g of pure gold. However, the price for both is not the same as the Krugerrand obviously is a higher quality, purer form of Gold.

1 MTU of concentrate and 1 MTU of APT both contain 10kg of WO3 but since APT is the higher quality form of WO3, it is priced higher than concentrate. The current price for 1 MTU of APT is $350 while the price for 1 MTU of concentrate is around $230.

Off-take agreements often use the price for APT (instead of concentrate) in order to determine the off-take price going forward. This is done by applying a previously negotiated factor to the average price of APT in the preceding quarter. A simple EXAMPLE: The average price for APT during Q3 was $390. The off-take agreement provides for a factor of let's say 0,7. So the off-take price in Q4 will be 0,7*$390=$273. Should the grade of the concentrate that is being delivered be better/worse than standard, a bonus/penalty will be added/deducted. This way the price for all deliveries during Q4 is set in advance. The off-take price for Q1 will later be determined using the same formula: 0,7x the avg. price for APT during Q4 and so on.

This is why the price for APT is all-important. And it is the reason why all tungsten miners refer to APT despite the fact that none of them sell any APT!

Since the price for APT has been much higher earlier this year (see https://www.metal-pages.com/img/chart/hp/81.png) CNQ would have achieved higher selling prices for their concentrate if they had been able to sell it in quantities during Q2 and Q3. That's why I said the $435 and $400 (APT!) opportunities have been missed. The concentrate that is being produced now (hopefully at close to name plate throughput) will be sold at lower prices (0,7x$350 instead of 0,7x$400 and 0,7x$450 according to the example) than would have been the case in Q2 and Q3.

Hope this helps.