General Discussion, page-2186

"Cap raising coming"

In the last quarterly, Row 8.7 estimated 25 quarters of funding available. The ASX gets concerned when this falls below 2.0x and seeks an explanation.

• If EGR is a lifestyle company, there is no need to have CR soon because 25 quarters is a lot. It enables 5+ years before a CR and more if some head office costs are scaled back down.
• If EGR is about to make robust progress on one of the many initiatives it has explored that could cost capital, then a CR may well be required. This would however likely mean EGR is making progress towards development and generating cash flow.

The 28 April 2023 Epanko pre-development program put average annual EBITDA over the initial 10 year period at US$79m/yr. If EGR starts to look like Epanko is progressing at this sort of size/scale, I'd be extremely surprised if the EV of EGR remains around the current circa A$40m.

The last announcement for EGR was the 15th June US patent allowed notice. There was a brief but not sustained share price response to this announcement. The absence of a sustained reaction is probably because its place in the overall EGR strategy isn't clear (hint - hint EGR, if its important, make it clear in this quarterly!!). Is its value is protecting EGR's non-existent US manufacturing capacity in which case, fair enough it doesn't add much if any value. Is its value opening up the potential to licence the process to what will very soon be a booming US battery inputs market? In a good year like pre-Covid, the US market could buy 17m vehicles. Within 10 years that could easily be 50%+ EV's. If each Kwh uses 1kg of graphite (I've seen figures as high as 1.2 in reports), and a US car size battery size averages say 60kWh would mean 500kt of annual US graphite demand from EV's along (ignoring ESS, larger vehicles and the rest of the world). 60kWh may even be conservative if the US consumer decides bigger is better!!

If the US market builds a graphite supply chain that avoids China and avoids high carbon (Synthetic graphite), there could be robust demand for a proven patented method. EGR would supply the know and any progressive process updates. EGR may even supply Epanko ore. Companies experienced in building and running manufacturing plants would build and run manufacturing plants around spherical graphite, paying a fee to EGR. If the price is US$4,000/t and a 5% licence fee were applied, that's a US$100m/yr target market inside 10 years growing to >$200m/yr as ICE engines get phased out and ESS demand increases. EGR would need robust benchmark pricing to set and justify a sensible licence fee. They would also need a research / product qualification facility so that testing could occur on new graphite sources and new areas of existing graphite deposits.

While its another pivot, its potentially a better alignment to the existing skillset of the board and management.