Ann: Hawsons Prefeasibility Study Results, page-2

What I like about the PFS:

* An ungeared IRR of 17.8% after tax – i.e., an after tax return of 17.8%

* PFS is for 20 years during which ored mined of 1,423mt will produce 201mt of Hawsons Supergrade. Probably reserves are 2,500mt so therefore long mine life after PFS with low strip ratio in later mining – therefore many highly profitable years not taken into account

* Total landed cost (operating and sustaining costs) in China are US$48/t before any allowance for premium for grade etc. PFS based on 62% price of US$63/t. Potential margin at this price given premium for grade etc is US$55/t. Therefore, highly profitable at most prices and profitable at low prices.

The only downside I see is in the pre-production costs which are US$1,401m. However, expected profitability should mean some finance will be available and the proposed debt:equity ratio of 65% debt to 35% equity would reduce equity start up cost to be US$490m. Not sure if finance would be available to this level, but actual equity needed could be less than US$1,401m.

Further, given the potential demand for product of this type, there could be a real strategic advantage in an industry participant or consortium of participants being able to fund the start up costs.

And management are already thinking about the next step.

“Carpentaria now plans to present the results of the report to, and seek support for the next stage of project development from, its seven blue-chip customers that have signed non-binding letters of intent (LOIs) for purchase of the Hawsons Supergrade product, as well as other steel makers, buyers and financial institutions who have shown ongoing interest in the project. Initial discussions have been encouraging and a data room will soon be open.”