Ann: Appendix 3B, page-11

Good news flow expected through Q1 and 2 - not 10 bag worthy but will shine a spotlight on the ridiculous proposition that AQD has shaped up to be and show the materials sector that you want to be on the rocket ship before it launches

Facts

- MC -> 10Mn AUD
- Cash on hand -> ~5.5Mn AUD
- 1x project at 2nd stage drilling prep - Billy Blue - due to commence in a couple of months
- 2x projects at early stage drilling - drilling permitting due in a couple of months - Peru
(check the AGM pres.)

Pipeline and cash flow injections:

- 2x opportunities are being prepared for JVA consideration - would mean an additional $500K USD - EM surveys were due for completion last December - AQD has 6 months from opportunity announcement to be 'drill ready'. We are at that date.
- New tenement secured in WA late last year
- New tenements in Peru
- Many unexploited tenements in WA
- 3x more early opportunities in 2018 accepted by s32 would mean an additional $500K USD
- $2.8Mn injection from listed options if they are in the money (more for unlisted options @5c)
- $1Mn USD interest free debt facility available from S32
- Shareholder approval to issue 25% additional shares in AQD's FY for special purpose of pursing a JVA through a short funding cycle

- Translation - money available for pursuing new opportunities for the Strategic Alliance
- Translation - money available to pursue rapid progression of a PFS / DFS / construction with S32 if AQD hits paydirt


Hitting paydirt:

Soon AQD could have five 'company making' drilling targets underway - no hype, no 'Saudi Arabia's of coppers/nickel/zinc/lithium being thrown around , no rubbish marketing - just Graham and his team plugging away.

The base metals targeted have a compelling story and would give s32 significant exposure to the battery storage story (copper and nickel) and zinc - you can do some armchair research to get a feel for the positive consensus story there.

For anyone of these, assume a PFS indicates an NPV of $1Bn USD (in the range of what comparator Billy Blue is targeting but on the small end of the scale) a 20% ownership  could translate to a MC of $250Mn AUD (AUD:USD 0.8) after project has been materially de-risked - enter S32 balance sheet strength and execution capability = de-risk potential on steroids

Translation ->

- MC today of 10Mn;
- one materially derisked project at 20% ownership 250Mn
= 41.5c per share - diluted with listed options
= 39c per share - fully diluted
= 20x bagger for hitting paydirt on one of those

The SA with S32 has two more years to run for new opportunities

S32 could gobble up an AQD with a MC of $250Mn without even flinching - the warchest S32 has been developing for growth is super sized - net cash balance was $1.6Bn USD last qtr.

Some quotes from the AFR last June on S32 to make it more real:

Over the longer term, South32’s portfolio will become more focused on base metals such as nickel and copper, as China transitions to a consumer-driven economy.

Instead of splashing cash on acquisitions, Kerr is pursuing a small-target strategy of investing in junior explorers and promising exploration projects to leave a “legacy” of development projects.

“We don’t have many development options today,” he says, “so what I would like over the next five years is to build a hopper full of development options that then get prioritised and focused on.”

Hats off to you Graham and team - love the business model and the ability to rapidly develop and derisk a project.  Love the no marketing hype around your work.  Wondering how long it will be for the market to uncover your hidden gem.

DYOR