Ann: Battery Conference Presentation - March 2019, page-166

Actually that’s not correct those assumptions are wrong, WFE is a producer not a miner so it’s value is in making profits largely based on cost/quality of ore purchased, all-in operating costs, and hydroxide sale price. That error of assessing WFE as a miner is why most assessments on HC can be ignored.

Think of the company as a battery maker, they buy materials and sell batteries, no ownership of raw material mines. Similarly WFE buys cobalt/ copper ore and sells cobalt hydroxide. Supply is secure no different to a battery maker securing lithium, nickel or cobalt supplies. So once the offtake and supply contract prices are known, operating costs estimated, the profitability can be fairly well established allowing for a range of efficiency.

We should also note the $10M is to start the project, not just the plant, that cost is inclusive of “working capital” for ongoing operations for a certain period until revenue commences.

There is a false mindset that WFE needs its own mine to function in the long term or a measured JORC resource, that’s a flawed thought process, they don’t. Cobalt manufacturers in China rely on cobalt hydroxide supply, no problems operating there. Personal supply at WFE should prove to be cheaper than buying it boosting margins even more, that’s about it. Currently 530,000T/mth supply contracts from 7 groups far exceeds plant capacity, it’s fair to say supply is a small risk. There’s more where these guys come from and there are also parties producing cobalt hydroxide from external supply.

So I come back to the prospectus, that will lay down a factual basis for profit. At the moment it’s dart throwing numbers at will. They hit anywhere depending on your sentiment for the stock. It has been expressed to me that profitability is very comfortable at an LME cobalt price of $30k with conservative numbers and room to move should a lower cobalt price emerge.