It’s my understanding the company will be needing more cash.
How they will play this is the big question.
Further debt or equity?
They are basically out of cash in the first week of Oct if Q2 guidance is accurate.
Will they get a shipment away before another raise, seems unlikely now that most recent release says early Q4 for first shipment.
Mining commenced at the start of July.
For the first three months it’s mainly pre-stripping activities.
That brings us to start of next month which would put us into the fourth month which the production schedule says is the first shipment.
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I would expect them to be able to arrange a further debt facility of some sort to tie them over especially now that lead/zinc prices seem to be rebounding. The biggest risk going forward for me though, can they produce close enough to guidance quickly. Right now lead is at the low price from studies and zinc price is 10% lower than the low prices from the studies. If costs are higher than guided then things are starting to get squeezed.
LOM EBITDA is $16.4m AUD 60% basis.
Let’s take ~10% from that given current prices.
$14m divided by 4 gives average of $3.75m per quarter.
First 3 months production is fairly low Things will really kick off from next year Especially if zinc/lead prices keep rising.
Last thing they would want is going to the market twice more so Wouldn’t be surprised to see another $3m raise of some sort to counteract this initial stage. I expect a first shipment and some sort of funding to be announced almost simultaneously early next month and it will likely get a positive reaction by the market. GLTAH
