Relevant Excerpts from Lake Update Webinars, page-8

The next topic covers working capital and funding going forward.
Sourced from Update Webinar #1 on 23/8/23
Commentary made by David Dickson -CEO/Managing Director

David Dickson talking about working capital from now to FID:
“We announced at the end of June, at the end of the Australian financial year, we still had something like AUD$90 million, in rough terms is just over US$60M. On average, our monthly burn rate is about US$5M. So based on that, it would tell you we have up to about 12 months of run rate. Now, we have other things that we would like to do in that period of time. Sean is doing some really good work on drilling and additional works. Scott needs to move at some point to increase the level of engineering activity. We'll have to select the FEED engineering contractor and maybe EPCM. So, there are going to be some lumps that are going to come out along the way so, what we are looking at is our budget, our financial plan, our capital strategy and in part of that capital strategy, also taking into consideration, when could we expect to start seeing proceeds from offtake agreements, etc. So very much focused on how much money we're spending, how much money we've got, much money we need to spend and how we are going to manage that from now until next year.”

David Dickson talking about how we are going to fund the project given the increased CAPEX number of $1.1-1.5B for Phase 1 as well as how things look from the ECA's perspective:
“So, first and foremost, what we've demonstrated back in the operational update is the economics in this project, even at those CAPEX levels, are still very attractive. The question will always be what is a long-term Lithium price - again we can talk about that later. I think for the project financing, what is important for people to understand is that today we have two ECA's and two Banks who are currently supportive of the project. We did present this data, these numbers to those support stakeholders as part of the operational update - and we are still in dialogue with all those stakeholders. Why is that? We gave a band in CAPEX between $1.1-1.5B so you can't sit down to negotiate with the banks and until we start to firm up the numbers and, what Scott mentioned earlier is, that's going to be one of the outputs from the DFS. So again, when we get the DFS published, then we'll have the number for the CAPEX that we need to raise and we'll obviously have the split between equity and debt. Then it really will allow us to get to work.

Now, we don't need the funding in place until Q1 of 2025 which is the time that we're targeting to go to a final investment decision. So, today we have time on our side to work through what is the best way to finance this project. Certainly, the ECA's haven't run away, the banks haven't run away based on the new numbers. I also think a little bit of that is reflected in the market - since we have come out with the announcement, there's a number of other companies that have started to announce higher CAPEX numbers. Two weeks ago, there was one company who came out with, in their PFS, a CAPEX of $1.3B for 30,000T of Li2CO3. Not that far away from where we are in the numbers from our operational update. So, I think the banks and ECA's are starting to adjust at these level of CapEx numbers - where previously, the earlier CAPEX numbers were significantly underestimated.

But ultimately, the end of the day, the banks are focused and ECA's are always focussed on what is the venture. They just want to protect their investment. If you look at Lithium market news, not to look at what's been said in the political world of Lithium, you look at long term pricing and we're starting to see is, couple years ago people are looking at PFS's at $14,000/T, now we're seeing PFS's at $30,000/T or a DFS at $30,000/T and so people have started to creep up on the Lithium pricing which always comes back to say that the economics of projects goes back up. Today we don't know exactly what the funding is going to look like but certainly we're still going down the path of what is going to be some sort of ECA like payments.”