BLM email Response, page-2

I think we all need to relax. All 32 lithium stocks on my watch list are down today between 2 and 20%.

The story is the same over the last month - the majority of lithium stocks from large to small caps are all down significantly.

The sector has run hot all year. The market has been looking for an excuse to pull back. The pull back has been largely driven by macro factors that have nothing to do with the Big Sandy project.

Negative sentiment around BLM approval should be offset by positive sentiment around the metallurgical results and a growing awareness that from a valuation perspective the most important thing is that we produce a scoping study (then PFS, DFS). BLM drilling approval coming through this year or early next year won't make a difference to when these studies can be produced. The bulk sample is the main thing that AZL would need to feed in to the scoping study (not the extra 145 holes).

AZL could produce a scoping study based on the current resource and it would likely have a NPV around the billion dollar mark. Resource upgrades would then be incorporated in to an updated PFS or DFS down the track.

Personally, the key milestones I'm looking for over the next 6-12 months are:
- Appointment of a group to perform the initial scoping study
- Finalisation of preliminary flow sheet
- Commencement of scoping study
- Construction of pilot plant
- BLM drilling approval
- Bulk sample taken from Big Sandy
- Commissioning of pilot plant
- Release of scoping study

If AZL can get to that point I think fair value would be around $400m MC. $600m MC on PFS and $800m-1b MC on DFS (assuming some binding off takes have been signed).

Of course BLM drilling approval is important and will impact sentiment, but there are more important milestones in the short term.

Obviously to realise any value from Big Sandy, AZL will need some sort of mining permit. Some of the challenges raised and addressed in the drilling permitting process will likely be similar to those in the mining permitting process, so from that perspective having a positive result in the drilling permit process is key. But whether that approval comes this year or early next year doesn't really matter IMO.

Sit back, relax, stop refreshing your CommSec account 10 times per hour, and enjoy the ride over the next 12 to 36 months.