Ann: Southern Cooper Basin Operations Update, page-30

Without the actual specifics of the T&C of the offtake agreement being disclosed, we can only speculate but I would be very surprised if it is just based on the establishment of a sustained gas flow.

The Orica money aside, from a commercial perspective, I have explored various NPV scenarios using the following assumptions:

Cost per well = 3.5mn
Long term gas price = 5 per mCF
EUR = 4BCF
Linear production factored, averaged production rate spread across well life.

Base: Prod rate 250mCFpd for 44 years. NPV 4.4mn
Mean: Prod rate 500mCFpd for 21 years. NPV 7.9mn
Best: Prod rate 1mmCFpd for 10 years. NPV 11.2mn

The base case with average daily prod rate of 250mCFpd over the life of well still has the NPV ahead of expected well cost, but barely. So realistically, we'd want to see something more along the lines of 500mCFpd ultimately.

It is still early days yet since it has only been 45 days since LC-1 was brought online. If the gas saturation is really at 90% and perm at around even 1mD, we should see a significant ramp up in flow rate over the next few months as PSI had stated. What I am really interested in is the performance of the Klebb cluster wells given the new gas saturation. Technically, we should be able to get those wells to dewater fairly quickly in tandem without any frac and still be able to establish a fairly decent gas flow rate.

With all that said, the project is derisking very nicely. So I am surprised at the market's lack of response to the latest news.

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