Sembehun Project Feasibility and Market Dynamics
Appendix H: Risks
Sierra Rutile Limited
Sembehun PFS key risks
This presentation and Section 3.12 of the Demerger Booklet summarises the outcomes of the recently completed Sembehun PFS and the material assumptions underpinning the
PFS. The PFS was completed with the assistance of specialist consultant, Hatch. As discussed further in Section 3.12 of the Demerger Booklet, Sierra Rutile plans to undertake further
work before commencing a DFS and to complete a DFS before a decision to develop Sembehun is made. As a result of the additional work that will be undertaken in order to
increase the level of certainty and target accuracy associated with the PFS to a DFS level, it may be necessary to revise the assumptions underpinning the PFS. In addition, Sierra
Rutile will also need to obtain funding in order to develop Sembehun. Accordingly, there can be no guarantee that the development of Sembehun will proceed as contemplated in
the PFS or at all. The key risks associated with the development of Sembehun are set out in Sections 3.27 and 3.12.21 of the Demerger Booklet.
Sierra Rutile will be subject to risks which may adversely affect its future operating or financial performance, or the investment return or value of Sierra Rutile Shares. Many of these
risks are existing business risks, to which Iluka Shareholders are already exposed, while others arise out of, or increase as a result of, the Demerger.
The key potential risks of an investment in Sierra Rutile include:
the risk that the development of Sembehun may not proceed or may be adversely impacted. Whilst the Sembehun Preliminary Feasibility Study results are positive, Sierra Rutile
plans to undertake a Definitive Feasibility Study (DFS) to support a final investment decision in relation to Sembehun and there can be no guarantee that the results of the DFS
will be positive or that Sierra Rutile will be able to obtain finance for the development of Sembehun on acceptable terms;
the risk that operational and technical difficulties may be encountered in development and operations;
risks associated with operating in Sierra Leone, including, but not limited to, economic, social, labour or political instability and future material adverse changes in laws or their
interpretation. If such risks eventuated, their adverse impact on Sierra Rutile would be increased as a result of Sierra Rutile not being geographically diversified;
risks that Sierra Rutile's rehabilitation and mine closure costs will be greater than the estimated provision as at 31 December 2021;
the need for ongoing government approvals, licences and permits as well as new approvals, licences and permits to pursue the development of Sembehun; and
the potential for adverse movements in the prices of commodities produced or costs of production achieved by Sierra Rutile.
Further details of the risks associated with an investment in Sierra Rutile Shares are set out in Sections 3.12.21 and 3.27 of the Demerger Booklet.
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