Ann: December Quarterly Activities Report Presentation, page-34

I had the impression on the 11th Oct (after the fire) that we would be at a run rate of 63 ktpq and CF +ve at the end of Dec. Also Q4 net outflow of USD 23.6m. I also note that the CY production range was 250 to 300 kt subject to demand.

Well obviously the run rate is lower if the target is 47.5 kt mid-point, now CF +ve in q2, and Q4 did have a net outflow roughly in range before the VAT refund - which seems to be a surprise, and wasn't mentioned, so $28.7m adjusted outflow. The fire remediation apparently only cost about USD 0.5m. Now we are going for 250 kt, with the current production looking like it is being throttled back - I assume because the market looks terrible.

I suspect the market isn't looking that great, and we are in need of some good fortune to justify raising the production for the final 3 quarters to 70 ktpq. We could be looking at a market that is not easily absorbing Balama's production, and at the same time the production is pushing the prices down to sub economic levels. I suspect that Balama will not reach cashflow positive in Q2.

I think they are planning on selling heaps more quality flake to hit their targets, but I suspect they will kill the flake price in that market, and gain a greater competitive response from incumbents with sunk costs. I suspect the flake deficit of 150 ktpa is looking like a convenient myth. I suspect we will be in for a few years war of attrition in all parts of the market - not just fines - until less economic flake competitors mothball their plants, and some other deposits are economically mined out. And then Balama will be in business.