npv, page-6

Hi Neptune,

What is your assumption for the processing method to recover the Vanadium?

I am not that familiar with Vanadium at all, however in the mineral sands industry magnetism is used to recover some of the minerals when the mineral assemblage allows it. As far as I am ware, this requires the feed to be completely dried before magnetic separation occurs.

As the vanadium will be in the tailings stream from the gravity circuit, this would mean that the entire tailings stream would need to be dried to recover the vanadium. This would require initial filtration, complete drying, then passing thru a very large scale magnetic separator. The tailings stream will be a large amount of material and will need a very large amount of energy.

I admit I am only feeling my way on this.

If I am right, the capex will not be cheap and the opex will not be cheap either.. however it will still add a lot of value.

The announcement today was excellent, but I think Syrah have a long way to go on this yet, which I believe was the context of the announcement.

So what is your processing assumption to add only $15M in capex based on? And what is your opex assumption?

The upshot of todays announcement is that unlocking the metallurgy of the vanadium is a major strategic event for the project.

- It will likely mean that the production of graphite will eventually be as a byproduct, and vanadium will be the main commodity. Maybe not at initial production, but not too long after.

- It will mean that Syrah will not be beholden to the constrained capacity of the graphite market, as the vanadium will cover 100% of the operating costs of the mine, and still make money.

- It will mean that Syrah can undercut every other graphite producer on the world market (even though this was already SYRs position in the market. It will just be reinforced more so).

- It will mean SYR will become a serious takeover target for the large vanadium producers, who will want to get a foothold on a likely future major producer.

I think serious resource companies in this niche of the market will now be taking a very urgent look at SYR.

And it explains why all other graphite producers are trading at miserable market capitalisations, yet are not worthy of putting spec money into.

We still have the graphite scoping study results to come, and I expect SYR will run hard into that announcement, and onwards, as more insto's want a stake.

cheers
gosouth