November 30, 2016, page-7

I suppose other factor to consider are currency rates, commodity prices and macro factors. The BFS (which was released on the 23/7/2015) and loan terms are in USD and while the exchange rate against the Tanzanian Shilling has remained largely unchanged in the past 12 months (2088/1 on the 23/7/2015), from our point of view they have improved considerably in the past 24 months moving from 1678/1 two years ago to 2183/1 a couple days ago.

Another large cost will be oil prices, thanks to diesel fuel and generators. When the BFS was released (23/7/2015) the oil price was ~$48/barrel but it was ~$95/barrel 24 months ago and is currently trading at ~$45/barrel.

Finally there’s the macro factors. The Tanzanian economy has slowed in recent years but is still expected to grow at ~7% this year. The issue is there’s still 28.2% of the population, mostly in rural areas who live below the poverty line. And this is where KNL can make a difference. The regional location of the mine will ensure at least some of these locals receive jobs, we’ve also seen KNL donate to local schools in an attempt to stop poverty at its source, education.

In a win-win for KNL and locals I believe the BFS terms are only improving thanks to currency fluctuations, the improving oil price and the ongoing development of Tanzania. The continuing development of infrastructure, electricity, roads, bridges etc. are helping all involved.

The graphite delivery price/per/ton today will be very different to what it will be in 12 months, and better still in 24 months from now. Fortunately the BFS was performed on a worse case scenario, so the ROE position will continue to improve hand-in-hand with the country.