March Quarterly

We will shortly receive PEK's March Quarterly Report. Hopefully this won't just be a reiteration of the already announced drill results from the Northern and Breccia Zones - though these were certainly marvellous.

What I hope the Quarterly will give is some clarity on their dealings with Shenghe. The end date for the current "non - binding MoU" with Shenghe is the 31st May, at which point the expectation now is that they will sign up to a fully (or mostly) funded Turn-Key mine and plant. PEK would then follow with it's FID- Final Investment Decision. Following which the share price would rise to a dazzling height. But clearly Shenghe will not sign up till they have secured a significant ownership of the new Company Ngualla UK Group. So Mr. Bardin, can you tell us if agreement on this question has been reached?

However, this non-binding MoU allows for it's end date to be extended by mutual agreement. So, for instance, it is possible for Shenghe to say they are unwilling to outlay capital till the price of NdPr has increased. This would be a pragmatic decision, not just a delay to annoy us minor share holders. On the question of the NdPr price I don't think any one knows if the present low price is temporary, or represents a permanent world over-supply.

Now here is the big worry. The present "stand-still" agreement which limits Shenghe to 19.8% of PEK's shares will also expire on the 31st May. So, Mr Bardin, will a new "stand-still agreement be carried over into an extended time? If not, then PEK could be subject to a low take-over bid due to the present dreadfully low share price. Please give us some advice on this Mr. Bardin.

Even if the the present low NdPr price is permanent I would not be despondent. This Ngualla deposit is huge with a long life, and has extrodinary low radio activity. The capital cost at 279M seems to me to be very very low. It's in a stable country with low labour costs. All of this means we will be a very low cost producer. It will be mined!

I am also hoping the coming Quarterly will tell us something of the Board's thinking concerning mining all the good stuff in the Northern and Breccia Zones. It seems they have several ways ahead - all of them good - so it's a matter of picking the best way. For instance, they could :-
(a Very quickly start mining the Phosphate. Mr Bardin has described the mining of this as being "capital-lite".
(b) Start mining the higher value Flurospar. Which would require more expensive separating plant.
(c) Or do both, using money derived from the sale of the Teeside property. By the way, who ever secured that Teeside property for us deserves a medal. Both (a) and (b) could give cash flows pending the finalising of the issues with Shenghe.
In all cases there could be a need to stockpile the spoil for future processing to extract the NdPr, Niobium, etc.

Finally, I can't understand why PEK's share price is so low, given all the good stuff we have in the ground, it's advantages as outlined above, pus the firm "take-off" agreement and having all permits in place. Some people think there is illegal manipulation of the share price. Does the Board have any information on this? Please enlighten us.

So there you are Mr Bardin, some ideas for you to make the next Quarterly a meaningfull one.

Wichetty.