Good News & Bad News, page-4481

Hey BG,

I think the demand that is already present will far outweigh any dent in the spot price that the re-starting of Wodinga may cause. In reality, Wodinga is still 12 months+ away from getting back up to their nameplate and producing any meaningful tonnage on to the market. The spot price is already going bonkers, and will have to wait a minimum of say 12 months before Wondinga and potentially CXO are producing material on to the market. As we all know, ramping up production is never a straight forward process as we have all seen from PLS, who are arguably now a world leader in recoveries and consistent production.

Furthermore, if we just take a very high level look at our recent BMX auctions, we can see the demand is already there. Auction 1 - 17 buyers bid (i.e. 170kt of unaccounted demand), and Auction 2 - 13 buyers bid (another 100kt+ of unaccounted demand). This supply/demand imbalance is going anywhere quick, even if Wodinga was producing at 250ktpa NOW, they would not be able to satisfy even this demand that is already present.

Converters need our spod, and at the moment it appears PLS will be printing cash from the Altura mine sales over the next 12-24 months as a minimum. My gut feel is that even with the additional demand forecast to come online over the next 12-24 months, the supply/demand imbalance will remain an issue for converters for the next 3-5 years as a minimum. Separately, we don't even know if Wodinga will sell on the spot market, my understanding was always that the guys wanted their product to be destined for their own downstream ventures, so even then the spot market may be unimpacted for the foreseeable future!

GLTAH,

Pap.