GXY emergency offer for Alita?, page-106

Just a quick look at A40's Quarterly June Reports:

- Record Quarterly Production of 38,717wmt of lithium concentrate grading 6.2% Li2O, slightly above the March 2019 quarter of 38,291wmt due to increased throughput rates;

- 18,669dmt lithium concentrate shipped during the Quarter to Jiangxi Bao Jiang Lithium Industrial Limited.

- Stockpiles of 32,296wmt lithium concentrate at Quarter end (Stockpiles of 12,373wmt lithium concentrate at March Quarter end) An increase of approx. 20,000 wmt;

- Production Cash Costs1 for the Quarter were approximately A$774 (US$545) per wmt lithium concentrate produced. (Production cash costs per wmt of spodumene concentrate produced is a non-IFRS measure and includes all mining, processing, transport, port and site based general and administration costs, an allocation of corporate administration/overhead costs, but is net of tantalum by-product credits and waste deferral costs and excludes royalty costs);

- Average selling price for the Quarter was A$1,070 (US$749) per dmt lithium concentrate sold;

Consequently based on these figures A40 was still able to produce concentrate profitably but just couldn't sell about half its production during the quarter. The 20,000 wmt increase in stockpiles at cost was worth A$15.5M and valued at June quarter selling price was worth A$21.4M.

A review of their June Quarterly Cash Report shows that they had an net operating cash deficit for the quarter of A$9.5M which included expenditure outlays of A$2.1 for exploration and A$2.3M for Interest. Consequently, if A40 had of sold all of its production during the quarter it would have generated an operating surplus of A$12M for the quarter.

During the quarter it also outlayed A$8.6M on Plant and Equipment. This probably predominatly relates to the Stage 2 Plant Upgrade - Fines Circuit which involves lowering the Dense Media Separation (DMS) bottom size from 1mm to 0.5mm and increasing plant processing throughput capacity from the current 220tph to 300tph. The Company announced on 25 July 2019, the construction of the fines circuit has been temporarily postponed pending an outcome of a strategic review by the Company.

Consequently, it appears that A40 can produce lithium concentrate very profitably but in the current market cannot sell all it currently can produce.

Regards

SP