As has been mentioned by the company, they may sell some product on the spot market. This may be what we are seeing with this 5kt.
Wording doesn’t sound very confident of having offtakes fully wrapped up this quarter.
“Offtake negotiations for the remaining 50% of long-term production expected to be substantively completed during the March 2019 Quarter. ”
So for me, best to assume it will go into quarter 2 19.
Many holders and non holders alike howling about the chances of a CR imminent.
I haven’t seen them break down the reasons why but even without getting an new offtake partner/sales/prepayments this Q, I’ll break down why they are way off the Mark.
32kt in stock end Jan
18.2kt shipping now, $880pt
5kt shipping now, price say ~$700pt (conservative)
$22m + $5m = $27m + $13m cash = ~$A40m
Leaves ~10kt still in stockpiles (Boajiang said to take another 10kt this Q) and Feb/Mar prod unaccounted for and $20m debt facility
Also the above calculations include no sales of Ta, likely a few million from that.
Let’s say conservatively $2m here.
The crucial part of the upcoming quarter (from a cashflow POV) is the next 10kt going to Baojiang this quarter, should be worth approx ~$10m and then Ta sales that will be breakeven for the Q without using debt facility.
View attachment 1434079
So even with some non-recurring costs applicable to merger, some non recurring development costs (likely some others next Q though) and unsold stockpiles of between 20-30kt of spod (if no others spod sales struck this Q) we still shouldn’t even have to use much/any of the debt facility, let alone be looking at a capital raise. This also doesn’t take into account of (more) sales on the spot market As an option from that 20-30kt.
The chances of a capital raising this Q are low.
Management have been extremely prudent with cash flow and it’s now showing clearly why they have opted to pause all drilling over the last 12 months, things have been very tight with just enough buffer to get through uncertainties like we have had last Q. They deserve credit for that but as Henry says need to improve onsite performance going forward, some of the metrics were horrendous.
I also notice although drilling tenders have been put out, they look to continue to be taking the prudent approach, not much is allocated to exploration/evaluation but I think with $700k we will see some movement there this Q or early next Q.
One final note, outgoings last Q were almost spot on to the guidance given beforehand which Is good to see.
