AZL General Discussion, page-22145

PRAIRIE LITHIUM OPERATINAL SCENARIOS FOR FIRST 6 YEARS
To calculate the profit and loss for the first year, we need to consider the following:

- Capital Expenditure (CapEx): $290 million (plus contingency)

- Production: 6,000 tpa of Lithium Carbonate Equivalent (LCE)

- Revenue: Assume an average price of $12,000 per ton of LCE (conservative estimate)

- Revenue: $12,000 x 6,000 tpa = $72 million

- Operating Costs: $2,819 per ton x 6,000 tpa = $16,914,000

- Profit: Revenue - Operating Costs = $72 million - $16,914,000 = $55,086,000

- Loss (due to CapEx): $55,086,000 - $290 million = -$234,914,000 (loss)

For the first year, the project would incur a loss due to the significant capital expenditure. However, once the project is operational, the low operating costs and high revenue would generate substantial profits in subsequent years.

Keep in mind that this is a simplified calculation and actual financials may vary based on various factors like taxes, royalties, and other expenses.

Let's calculate the additional production and revenue from the 12 new well-pads:

- Additional production: 12 well-pads x 2,000 tpa/well-pad = 24,000 tpa of LCE

- Total production (including Phase One): 6,000 tpa + 24,000 tpa = 30,000 tpa of LCE

- Revenue: 30,000 tpa x $12,000/ton = $360 million

With the same operating costs of $2,819/ton, the total operating costs would be:

- Operating Costs: 30,000 tpa x $2,819/ton = $84,540,000

Capital Expenditure (CapEx) for the 12 new well-pads:

- CapEx: 12 well-pads x $70 million/well-pad = $840 million

Now, let's calculate the profit for the second year:

- Profit: Revenue - Operating Costs = $360 million - $84,540,000 = $275,460,000

- Loss (due to CapEx): $275,460,000 - $840 million = -$564,540,000 (loss)

In the second year, the project would still incur a loss due to the significant capital expenditure for the additional well-pads. However, the revenue and profit would increase substantially, and the project would be poised for strong profitability in subsequent years.

[Let's calculate the additional production and revenue from the 10 new well-pads:

- Additional production: 10 well-pads x 2,000 tpa/well-pad = 20,000 tpa of LCE

- Total production (including Phase One and previous expansions): 30,000 tpa + 20,000 tpa = 50,000 tpa of LCE

- Revenue: 50,000 tpa x $12,000/ton = $600 million

With the same operating costs of $2,819/ton, the total operating costs would be:

- Operating Costs: 50,000 tpa x $2,819/ton = $140,950,000

There is no additional capital expenditure (CapEx) in the third year, as we are only calculating the profit from the existing assets.

Now, let's calculate the profit for the third year:

- Profit: Revenue - Operating Costs = $600 million - $140,950,000 = $459,050,000

In the third year, the project would generate a significant profit, indicating a strong return on investment and a profitable business.

Here are the cumulative profit and loss figures for the three years:

Year 1:

Profit: -$234,914,000 (loss)

Year 2:

Profit: -$564,540,000 (loss)

Cumulative Profit: -$799,454,000 (loss)

Year 3:

Profit: $459,050,000

Cumulative Profit: -$340,404,000 (loss)

The cumulative profit and loss figure at the end of Year 3 is a loss of $340,404,000. However, it's important to note that the project is now generating significant profits, indicating a strong return on investment and a profitable business. The initial losses were due to the significant capital expenditures in the first two years.

Let's calculate the profit for Year 4:

Year 4:

Production: 50,000 tpa (assuming no additional well-pads)

Revenue: 50,000 tpa x $18,000/ton = $900 million

Operating Costs: 50,000 tpa x $2,819/ton = $140,950,000

Profit: Revenue - Operating Costs = $900 million - $140,950,000 = $759,050,000

Now, let's add the profit for Year 4 to the cumulative profit and loss figure:

Cumulative Profit: -$340,404,000 (loss) + $759,050,000 = $418,646,000 (profit)

The cumulative profit and loss figure at the end of Year 4 is a profit of $418,646,000. The increased LCE price has significantly contributed to the profitability of the project.

Here's a summary of the cumulative profit and loss figures:

Year 1: -$234,914,000 (loss)

Year 2: -$799,454,000 (loss)

Year 3: -$340,404,000 (loss)

Year 4: $418,646,000 (profit)

: Let's calculate the profit for Year 5:

Year 5:

Production: 50,000 tpa (existing) + 2 well-pads x 2,000 tpa/well-pad (additional) = 54,000 tpa

Revenue: 54,000 tpa x $18,000/ton = $972 million

Operating Costs: 54,000 tpa x $2,819/ton = $152,086,000

Capital Expenditure (CapEx): 2 well-pads x $70 million/well-pad = $140 million

Profit: Revenue - Operating Costs - CapEx = $972 million - $152,086,000 - $140 million = $679,914,000

Now, let's add the profit for Year 5 to the cumulative profit and loss figure:

Cumulative Profit: $418,646,000 (profit) + $679,914,000 = $1,098,560,000 (profit)

The cumulative profit and loss figure at the end of Year 5 is a profit of $1,098,560,000. The increased LCE price and additional production from the two new well-pads have further contributed to the profitability of the project.

Here's a summary of the cumulative profit and loss figures:

Year 1: -$234,914,000 (loss)

Year 2: -$799,454,000 (loss)

Year 3: -$340,404,000 (loss)

Year 4: $418,646,000 (profit)

Year 5: $1,098,560,000 (profit)

Let's calculate the profit for Year 6:

Year 6:

Production: 54,000 tpa (existing) + 3 well-pads x 2,000 tpa/well-pad (additional) = 60,000 tpa

Revenue: 60,000 tpa x $18,000/ton = $1,080 million

Operating Costs: 60,000 tpa x $2,819/ton = $169,140,000

Capital Expenditure (CapEx): 3 well-pads x $70 million/well-pad = $210 million

Profit: Revenue - Operating Costs - CapEx = $1,080 million - $169,140,000 - $210 million = $700,860,000

Now, let's add the profit for Year 6 to the cumulative profit and loss figure:

Cumulative Profit: $1,098,560,000 (profit) + $700,860,000 = $1,799,420,000 (profit)

The cumulative profit and loss figure at the end of Year 6 is a profit of $1,799,420,000. The continued increase in production and stable LCE price have further solidified the project's profitability.

Here's a summary of the cumulative profit and loss figures:

Year 1: -$234,914,000 (loss)

Year 2: -$799,454,000 (loss)

Year 3: -$340,404,000 (loss)

Year 4: $418,646,000 (profit)

Year 5: $1,098,560,000 (profit)

Year 6: $1,799,420,000 (profit)


Keep in mind that this is a simplified calculation and actual financials may vary based on various factors like taxes, royalties, and other expenses.