Ann: Update on Cornerstone Investment, page-5

I attended the GMC AGM meeting this morning, along with about 20 other shareholders.   Hamish gave a strong confident and informative presentation following the formal proceedings. The following is my understanding of the presentation.

They are targeting Commissioning by the end of H1 2019 and will have commercial stocks available to sell in June.

There is only 1 JORC on manganese mines in Indonesia so the Geology team is reviewing the resources of the local mines and they are liking what they see.  The manganese grade of the local mines is about 52% meaning GMC can make high grade ore cheaply.  Thus 1 tonne of ore will produce about 500kg of metal.  The next closet grade is South Africa with an average grade of 30% for essentially the same cost.  The current price is about $2200 - $2300 per tonne.  GMC’s ore has a low carbon content and so has the advantage of only needing a 1 step process as they don’t need to remove carbon.

More manganese is utilised in Lithium batteries than lithium.  Currently GMC is focused on producing concentrate for use in steel manufacture but is keeping a close eye on the lithium battery market.  Manganese is the 4^th most used metal in the world.

Construction of the plant is 60% complete.  The plant will employ 220 jobs directly and over 2000 indirectly which includes the workers from the supplying mines.  GMC are allowing 5 months to commission the plant to enable the local work force to be trained to operate the plant safely.  The operation is of great importance to the community.

They are ready to purchase a mine but are waiting for the local Government to publish details on their mining position before proceeding.  GMC are expecting clarification from the Government this week and will notify the market once received.

GMC have MOUs with 22 miners, there are 100 registered mining operations in Timor.  To be selected as a supplier of ore mines need to meet the following criteria: be clean, clear and legal, have no access issues, paid their taxes, be licensed and no issues with the local villages.  There is no shortage of ore.  They are also considering other miners in Indonesia and Timor Leste.  Discussions have taken place with international manganese supplies including S32.  They have had interest from a number of steel producers and once in production they expect interest from all steel producers.

GMC have completed all the requirements for the DSO and are now just waiting on the Government to tick all the boxes.  They are expecting the DSO early December, worst case a Xmas gift.  The DSO enables shipping of manganese over 40%, as GMC grade is approximately 52%, they will be able to ship all the ore.  Initially the ore will be shipped in containers due to the smaller quantities, the long-term goal is to build their own port. The DSO will provide a cash flow of $1 million per month.  The first shipment will be made within one month of receiving the DSO.

The quality of the ore is not just about the grade but also about the ration of manganese to ore, typically it is 15%, the GMC average is 50%.  Hamish sees our ore as always being a desirable product as it can be mixed with other low- grade ore to meet the client’s specs.  GMC will be targeting a premium price for their ultra-high- grade ore.

Having attended the AGM, I feel very confident of GMC becoming a successful producer of high grade manganese.  IMO once the DSO has been approved GMC will be a screaming BUY.