SB does have approx 8 million shares, but they are all...

SB does have approx 8 million shares, but they are all performance rights issued over the past years or so that were subject to some lax requirements IMO. The only director that I am aware of that has put their own money on the line is Malcolm McComas, from memory he invested 67k last year - the ironic part is that he is the newest member of the board. I would like to see our board have much more skin in the game and something that needs to change, but I have been banging on about that for as long as I have been invested, and nothing has changed yet!. They each have 5,000,000 in options exercisable at 6c - an allocation I disputed, but they have not taken them up yet. They will I am sure, even at todays SP, they would be able to convert a 300k investment in approx 1.2m instantly!. The last time I raised this with them, they said it is not that easy to sell shares, so whilst they may get the conversion on paper, actually converting it to cash is a little harder for the director of a company (I can understand their point here, but they still win).

I spoke to management this week to ask some questions, and here is what came out of it - disclaimer here: the below is my recollection only.

Timing of the DFS - there has been no material delays that they are aware of, but there has been some issues in getting the required skills in and out of WA because of COVID border restrictions. My view here is that we have not seen the DFS because we haven't got the appropriate resource base, I think CXO is hoping the current MASSIVE drilling campaign will get us to beyond 10yrs and provide a much needed boost to the numbers. Hopefully I am wrong and we see the DFS very soon however. I asked if finance was contingent on the DFS, but the response was that financiers tend to make their own assessments based on their own parameters and the DFS is largely for the market - my read of this is that the published DFS is unlikely to restrain finance or FID.

Potential offtakers - discussions are progressing but the company is being very selective about what they entertain (not unexpected) and they are working on tougher terms given that it is definitely a sellers market at the moment. I asked what geographic location the suitors are from, and the response was that China will continue to dominate the hydroxide and carbonate market for the next five years (they account for 90%). Europe is building up, but the majority of the proposed factories won't be operational in the next few years. My read here is that it is likely that our off takers will be chinese in the short term. It was mentioned that it is not a good idea to have the majority of our product going to one off taker, so perhaps we are not looking at Yahua for additional product. It makes sense to me, and whilst I would have loved to see some product going to Europe, our timing to market may not allow for it in the shorter term - a reality of life perhaps even though I don't like it.

Finance discussions - the last time I spoke to management, they were looking at a mix of debt and equity. This is still the case, but there was some discussion around some of the debt financing terms and how they can be quite restrictive. I used to support debt as a key source and given the very cheap interest rates around at the moment, it could be very attractive, but the world is so uncertain now and miss one payment to a debt provider and you can lose your company. I think in the current environment, I am actually leaning towards equity financing (i.e. CR) being a better option - especially if we have most of our off takers in china in the short term. We have a relatively low SOI, so given our higher SP (compared to last year), we have some option here IMO.

On finance, I asked if the European sustainment funds that have been established are an option, and it seemed like the processes are complicated and it was mentioned that it takes time for them to get to know Australian organsitions and for them to establish their own processes (given the funds are quite new). My read here is that we might be looking at finance from offtakers as a primary (or maybe banks), potentially NAIF as a primary/secondary and European government funds perhaps running in third.

Spot price - not much covered here other than a statement that any amounts will be detailed in the DFS (when we see it!!)

New tenements - I asked if these were acquired to improve our DFS: management believes the potential pegamites are shallower than Grants and BP33 (as detailed in the last announcement), so should anything be found here, they may allow for a rapid increase in resources - here is hoping!!

Delays (other than the DFS) - I asked if there were any issues with delays form assays, but I took from the conversation that the results are being processed in Darwin, so there should not be any significant issues with the processing of exploration results - maybe we will see them soon given that some rigs have been on the ground for over a month.

I asked about cost per tonne: Management is using all the contractors that have been used by the larger players in WA, so they are confident that all the lessons have been learned, and our plant should be able to get to a higher level of productivity sooner because of the companies we are engaging to build our plant.

I don't mention the poor communication from management anymore - I have banged on about this enough and not much has changed, so as I said in my last post, I just accept the status quo now and as long as progress is being made then I will hang around.

I think that CXO has some great potential, and based on the wider sector performance, we are now very undervalued - even though we will be the first to market. As I stated in my last post, I am watching this current (3rd) quarter with interest - the next three months should tell us everything we need to know.

From a charting and short term perspective, I think that our price channel is compressing and given our previous point of support, I am hoping we are set for a move up soon (we definitely have some ground to make up relative to our peers!).

GLTA.