General Discussion Topics, page-146840

I think if everything were to remain the exact same as it did this quarter, then I think your $950 to $1000 is spot on to cover everything. But it seems almost every quarter brings a bit of difference in how we approach production and that directly effects costs. Without getting too far into the weeds if we look back at Q1 we would see that we mined far less than we had in previous Quarter (240,000 tones in Q1 vs. 318,000 in Q424) and instead we drew down the ROM and in-pit inventory. Roughly i'd guess we used 30 to 40 days of ROM during Q1, this helped us to reduce costs but caused us to have to rebuild the ROM in Q2. We did increase mining in Q2 by 54% (370,500 tones), however our unit cost came down a bit... the difference being the tones shipped was much higher and therefore our costs were spread over far more units. Here is an illustration of what the cost would have been if we shipped exactly what we shipped in Q1.

66000 * 1256 = 82,896,000 Now divide that by our prior quarter shipments and you will see our costs would have been 1691/t instead of 1256.

So what about this quarter, well first off the ROM pile is completely rebuild so we should not incur a substantial cost there, however I don't think there is any way of repeating 66,000 tones shipped in this quarter. I am going to guess we end up shipping between 55,000 and 60,000 this quarter. If my assumption is correct that the ROM is rebuilt and we don't have to dig 130 days worth of ore out of the ground in 90 days, then we should be looking at an even lower cost this quarter than last. I would guess that they may slide down to around $1180/t (maybe even a bit lower).

We are about 1/3 of the way through the quarter and prices this quarter started out about $80 higher than they did at the start of last quarter, if they just maintain that number we could be very, very, very close to break even. If they continue to tick up another $15 or $20 before the end of March ( or really when we ship next) then we will most likely be break even or even a slight profit.

What we don't know is how much of the merge cost we will eat this quarter, that could pull some of the good out of the quarter. We also know that CAPEX will be next to $0 and exploration will just be the remaining unpaid invoices as drilling has fully been completed and LD said no more exploration spend for at least 18 months.

No one can say with any certainty that we will not revisit some of the lithium lows of last October, but things appear to be trending up, so maybe a quarter or 2 of breakeven, then we start putting some money back in the bank instead of constantly making withdrawals.

These are just my thoughts.

GLTAH