Reply to ASX Query.
1. The Company is in discussions with magnesium metal users and magnesium buyers, including car makers (Fiat and Daimler), and aluminium/magnesium alloy producers regarding potential supply of magnesium metal from Korab Group’s Winchester magnesium project located near Darwin in the Northern Territory. No commercial terms have been agreed between the parties. These discussions are incomplete. There can be no certainty that any agreement or agreements can be reached or that any transaction will eventuate from these discussions. Accordingly, no investment decision should be made on the basis of this information. The Company is also internally assessing the use of two solar farms adjacent to the Winchester project (Batchelor 1, and Batchelor 2) that have a combined capacity of 22MW as the energy supplier to the project with the view to Winchester becoming a “zero-carbon” magnesium project. No discussions have been commenced with the owners and operators of the two solar farms pending the completion of the internal assessment.
2. The discussions mentioned above are at an early stage and are incomplete. Consequently any announcement of the details of these discussions would be premature and speculative.
3. As a further explanation to the recent trading in its securities, the Company points to:
a. Recent media articles and TV news stories regarding a threat of an imminent halt to global car production due to depletion of stockpiles of magnesium metal used as alloying element in production of aluminium alloys, which are then used extensively in car production. According to these articles, the shortage of magnesium metal is caused by severe cuts to magnesium production by China, which accounts for close to 90% of global magnesium metal production.
b. Magnesium metal price rising from approximately $2,000 per tonne in October 2020 to approximately $3,200 per tonne in September 2021, and $11,000 per tonne in October 2021.