CXO Site Visit July 2018

Hello everyone. Made it back in one piece from the wild north.

I will get straight into it. Lots to get through. I will likely have forgotten bits. So I will post later on as I remember or answer questions. It was not conducive to be taking notes so I had to use the noggin.

Berry Springs Base

Our first port of call was the Base camp. Here they log,store and process all samples taken. It has a house,labs and a shed. All the geos and general staff where here and they set up a very large table with core samples of Grants and BP33 (BP = Bynoe Pegmatite - very imaginative!).

It was setup so we could see the material from Burrell formation barren rock as well as various intercepts and how the two pegs differ (not much at all).

I did ask how they determined which ground to peg and why they got East and West. These tenements contained the most prospective pegs. Even though the got here first it was not by much and LTR beat them to the other ground they wanted. They have it now.

We then had a geology lesson. Main take outs. Bold (new info that I did not know)

1.Very simple mineralogy.
2. Very low in contaminants.
3. Very high grade.
4. Observation/theory from geos. All the pegs tested in this northern area are mineralised if >5m in width. There are two main types. The Grants steeply dipping type and the Lees stacked type. The pegs from Sandras area to the south (River Annie Group) seem different in structure again.
5. Odds are there will not be a "major find" in this area. This area will likely comprise of quite a number of smaller,high grade deposits in the 1-2mt range. My observation and agreed to by geos. Does not mean there is no deposit out there but odd's are against it, in this area anyway.




Got to take home some BP33 samples. Grade >2% at the top. 1.5% at the bottom. Spod is green/grey. Lighter in the top samples. Very large crystals typically the size of a car tyre.


Grants

We got to Grants and I was shocked that there really is nothing to see! Small pit with a very small exposed weathered part of the peg surfacing. It is amazing that geos can find anything as it all looks the same to me. They look for clay dirt with quartz throught it as an indicator. Luckily this whole area has pits from previous mining at just about every major pegmatite.


Grants peg at surface. That's it!

Access

Excellent. About 1km off the main sealed road. Can pretty much drill this year round.

Further Drilling and Resource

No rigs here at the moment. The rig from BP33 alternates between the two. They are not going to chase it down more than about 250m-300m as it is not worth it. The extensions are likely to add about 30% extra to the resource. As some explained the extension may have a slightly positive effect on the strip ratio currently 13:1 in PFS. Will not make it worse. I don't know mining but everyone seems to be on the same page with this one.

They are drilling to a spacing of 50m and doing some twinning for resource calcs. They are not going to take it to bankable reserve status. This is due to the ore body behaving very well and...well they do not need the bank so they can save the money. Also our customers are happy with the confidence level and the determined amount of product that can be delivered.

Miscellaneous

Grants West. Forget it. Barren and very small.  Carlton was 700m away to the East. We did not go there but this looks very prospective. Again not the mother lode but will add to the resource hopefully.

BP33

Next stop was BP33.

This is about 5km up the road towards Darwin and about 5km on a dirt track off road.

Processing Site

I did not know this area existed and is very handy indeed. This tenement contains the old Greenbush's processing and tailings area about 2km from the road. You go past this to get to BP33. This is where the processing will be done for CXO as well. I believe a similar setup will occur as to what happened in the 80's. Central processing from a whole bunch of very close by pegmatites. There is a 0.5g litre dam, pipes (need new ones), tailing dump site here. There will need to be a new ring road built for trucks bringing ore in. The focus is on processing but they are keeping DSO options open.

The ML approved peg containing Hang Gong will need an updated mining plan, enviro's etc. So not much of a short cut really having this in place unfortunately.


Rig in place currently drilling "THE HOLE" that will answer alot about how far south this goes. It is on the Eastern side of the peg and is going deep. Look at the angle. They will be testing BP32 and BP32W. Not sure if they have done so already, as I accidentally almost fell in a slurry pit just after I asked the question and did not hear the answer.


BP33 pit. I was wondering why no one came with me to take a photo. " Just be careful of the crocs" Pffft. City folk!

BOOTHS

So about half way back on the same road is Booths which is similar to Lees in that there are 3 stacked pegs about 10m wide and at 45 degree angles. This is very interesting because if these prove sufficiently mineralised and wide as in flat not depth (they are estimating about 300m now) then they hold great potential as they are much more easily mined. Alot of work to do on these and it is planned for this season.



Other stuff and answers to Questions

1. Zola and Ringwood. The King is dead. Long live the King. ie the area has a heap of prospects and high lithium anomalies but not at these two sites. No plans to go back to these but they are testing other pegs in this area. THe structure seems different to the north.
2. Sandras and Sandras south. Interesting possibility and they do have plans to get to Sandras this year but are focused up north at present. They only want 3 rigs. It get too hard to manage with any more.
3. Barrow Creek. No plans at present but looks very interesting. Want to build the resource up north around the DMS plant. Obvious strategy here.


Finance, T20 and other important stuff

1. Further uptake and T20 tightening. Well that got answered on Monday. 2nd largest producer in China on board. They will quickly move to a binding agreement soon. A little competitive tension between shareholders will hopefully get these 2 to take a decent stake in the company in the future whilst potentially limiting a total takeover as there are now two large shareholder/customers.
2. Lithium Plus and Bin Guo. He is from Lithium North (or something in the states) who CATL have just taken a big stake in or bought. This a theory and no one is 100% sure. We were interested in KSN land but could not come to an agreement.
3. Plan for the money. Dividends definitely in scope. Exploration obviously and also the potential for acquisitions.
4. Other Assets. Potential spin off/sale and or development of non lithium assets. There is interest in Zinc assets. Watch this space! Working on something to give shareholders value.

METS - 5% or 6%.

Well. Neither actually. The mets and recoveries are looking really good to provide AT LEAST 5.5% and probably higher to our customers who are happy with that.
There is a trade off with going to 6% as to who gets most of the added value for the extra cost. ( I assume the customer benefits more than us). 5.5% seems to be the sweet spot which we should be able to achieve consistently. Premium paid for over. Discount for under. Does not look like we need the extra cost of flotation to achieve this. I am guessing due to to high grade and low contaminants. Not really up to speed on this. That's just what they said.

PORT VISIT

Well we all made it finally the next morning after going hard at it at Monsoon the previous night.
Basic run down.
They are begging for work. Running at 30% capacity. They have all the infrastructure for both uncovered and covered stockpiling and loading ready to go. In negs now with CXO for firm pricing.
7-8 days to China. At least a 8 day time and subsequent cost advantage to other ports. Highway from Grants to port. Only a hour max for a 90t road train to go between the two.
There is a reason they keep going on with the logistics. There are big savings here and offset some extra costs in having multiple smaller deposits albeit in the same area. Everything is so close!