Ann: Increase in Montepuez Graphite Reserve, page-2

Surely the update in mine plan and the CAPEX numbers are key inputs for finalising a finance deal.

Points I noted:

• "And the independent forecaster, BMI, is predicting the graphite price will be more than US$100 a tonne higher than assumed in our earnings forecasts"
  • To me that would indicate an approximate 10% increase in revenue. Basket price of USD $1064 is used. Value engineering study in October 2017 gave a range of USD $847 to USD $950/t.
• 75% ramp-up in first year - assume that means to 75% of nameplate for Stage 1
• Targeting feed grade of 12% in early production to assist cashflow ( average LOM grade 9.3% ). Notes to opex table indicates average feed grade of 12% applies for years 1 to 10.

Basket price $1064 - C1 cash cost $360.90 = margin per tonne $703.10 per tonne.

50,000 tpa x $703.10 per tonne = annual EBITDA USD $35.15M ( although announcement gives EBITDA USD $30M, which might be a LOM average ).