Ann: Talga Management PFS Interviews, page-7

Spid

I do not quite follow your line of analysis that your reading of the Talga PFS shows that you are right. Right about what?

I note that the great majority of your posts about Talga's progress tend to be negative, whilst those about First Graphene (FGR) are invariably very optimistic. You still do not hold TLG but have held FGR for quite a while, this should inform those that read your posts on Talga.

Talga has a different business model to FGR. Talga looks to functionalise the end product from its graphite, whether as graphene or as graphite, so that it is configured to be offered as a final product to a potential client that can then be incorporated into the commercialisation of an improved product in that client's portfolio. FGR seeks to sell graphene and let the client get on with it. The Talga business model captures much more of the upstream value from a finite source of graphite.

I am pleased for you and for the holders of FGR that the company has at last achieved its approval process to sell graphene. The test will now be whether FGR can convert this approval into concrete sales of graphene AND that the client has been able to incorporate that graphene into a product it then seeks to commercialise. The second aspect drives the revenue and is not as simple as you suggest, otherwise there would be plenty of applications already commercialised.

Returning to your critique of Talga, the PFS that was recently released is very strong as it is only based on actual reserves of in situ graphite rather than the much larger volume of resources that are mainly in the stronger indicated category. It incorporates very conservative assumptions and contingencies and still achieves a very significant NPV, with a very high return of 55% and a pay back period well under two years with minimal capital expenditure in the initial stage, which is very likely to be funded with project finance out of Europe once the Definite Feasibility Study is completed early next year. My conclusion flows from the fact that the European Investment Bank (EIB) has committed Euro 350 million to the Northvolt battery gigafactory to be located in Sweden, with strong support from IKEA. You also jump to conclusions on the durability of the Talga Talnode-C battery anode, the fact that no detailed information of the number of cycles has been published at this stage, does not mean it is not capable of outperforming other graphite battery anodes currently on the market as has been amply demonstrated in several Talga announcements to the market.

Talga's decision to progress with its graphite battery product does not preclude it from pursuing the other initiatives in its portfolio, rather it is a demonstration that for the immediate future the priority will be the graphite battery until the other opportunities mature sufficiently to warrant further work. I note that FGR has quietly abandoned its Best Battery project, not to mention its mining activities in Sri Lanka.

The issue of of natural graphite versus synthetic graphite is not a question of quality but rather a question of the cost of production at a sustained volume. Talga's PFS demonstrates a significant cost advantage without any loss of performance, quite to the contrary it suggests it can deliver significant battery outperformance. Moreover most of the world supply of synthetic graphite is out of China, which is flexing its power in the trade war shouting match with the Trump administration in the US, as demonstrated by the threats to the supply of rare earths.Graphite has been identified by several industrial blocks including the European Union as a strategic material.

Finally, Kibaran (KNL) have only just received ministerial approval in Tanzania after two years of hard work and are probably further away from producing any meaningful quantities of graphite as their plant is at least couple of years away from construction if the time to grant of approval is anything to go by. Both Tanzania and Sri Lanka have strong ties to China, see my comment above about potential sovereign risk issues, and the latter has some serious sectarian issues to resolve.