AZL General Discussion, page-11055

On another note, it will be interesting to see the numbers for the scoping study which is due out this month. I’ve done some preliminary rounded conservative calculations where I think we could potentially land.

My general assumptions are as follows:

capex will be around 500-600 million US so I’ve taken an average of 550 million capex.

Opex will be in the range of 3500-4500 per tonne. Average taken of 4000.

Discount rate of 10%. Most mining companies will use between 8-10.

The big unknown for me is where the price per tonne will land long term for lithium prices. I know spot prices are significantly higher at the moment but I’ve used a conservative 25,000 per tonne, as I think they can average between 20,000 to 30,000 per tonne over the longer term for battery grade lithium carbonate equivalent. I think everybody has a different opinion here including so called experts but would rather understate than overstate to err on the side of conservatism.

Something to be aware of is with scoping studies, the asx in most instances will only allow you to use 70% of your indicated reserves and 30% of your inferred reserve in your forecasted model.

As a result, even though our current LCE is circa 321,000 (total indicated and inferred) for our scoping study we end up only being able to use/input into the model circa 160,000 tonnes of lithium carbonate equivalent. I personally am not going to place too much weighting/emphasis on the release of this scoping study, as it evidently only includes 4% of our drilled resource but wanted to come up with my own calculations pre-release to see how close to the mark I was.

I expect management to use 15,000 tonnes as a production target for the scoping study, which results in a mine of life of 10.67 years. (160,000/15,000) = 10.67

Calculations:

(25000-4000) x 15,000 x 10.67 = 3.36 billion in notional profit.

Discounted back to present day at 10% equals 1.215 billion of profit.

Less capex of 550 million off this figure results in a net present value of 666 million for the scoping study.

Please note the NPV is a reflection of the above inputs and doesn’t consider further highly likely future resource upgrades, the above analysis was merely done based on known inputs and where I think the scoping study could land based off on the above assumptions. Cheers, CP.