Upside Scenarios --------------------------- Bauxite squeeze -...

Upside Scenarios

---------------------------

Bauxite squeeze - Planned alumina supply growth in China should drive demand for third party
traded bauxite, which bodes well for price appreciation medium-term. With no mega projects
likely to come online, we note that a ~10% lift in bauxite prices would drive a ~30% lift in NAV.


Forex - A weaker AUD certainly benefits Metro’s cost base with bauxite sold in USD. The PFS used
a ~0.81 AUD/USD f-x rate, which is above the spot rate of ~0.77. Metro noted that following
discussions with a major bank that it could hedge the AUD/USD rate at 0.75 over a 5-year term.


Falling oil Price - Mining, barging and shipping represent ~75% of the overall cost base, which are
all heavily linked to the oil price. This suggests that there is considerable scope for the BFS opex
to come in much lower than the PFS, given the oil price is lower by an appreciable ~35%.


Expansion Options - Bauxite Hills is easily expanded to ~4Mtpa, but management has sensibly
opted for a ~2Mtpa to sidestep the big EIA and to fast track cash flow. Once in production, we
would expect work on the expansion to commence which potentially lifts our NAV by ~45%.

--------------------------------------------------------------------------


Bauxite Hills is proximal to Skardon River, where there is a loading facility that was previously
used by a nearby kaolin mine, which is now owned by Gulf Alumina - a private company that is
estimated to have ~45Mt of DSO. The Skardon River is deep enough to run barges with a payload
capacity of ~2kt to the coast where product is transhipped onto bulk carrier vessels (>70kt) with
well-established routes into China. While there is scope to share the river port loading facility
with Gulf Alumina, Metro has played it safe by assuming it will build and operate its own facility.
The total distance from plant to vessel is ~30km (~10km road and ~20km by barge).