Ann: Karara Operations Update , page-53

Just got the following information from GBG.
1. The cost to repair the filter is not material (or significant).
2. Cost base is about $60M per month

Based on 7 ships per month with 4 being magnetite, I estimate sales to be about $40M or negative $20M cash flow.

The $60M paid to KML end Apr'13 should then be enough to cover negative cash flow of $40M for May and June leaving $20M.

The $44M pre-payment from Ansteel with give KML about $60M in the bank for cash reserves which hopefully will be enough to manage their operations and further delays or poor shipping conditions as they ramp to 13 ships/ month. GBG will also have about $30M which could be used to help KML if required.

So if the plant is completed end June/ early July, KML will say worst case burn another $20M during that month leaving $40M but start generating positive cash flow from August - say $30M before interest. Question then is whether KML having enough cash to pay China Bank interest in September (start/end?) of what I thought was $50M - KML could have cash of $70M to pay the interest? If KML can delay this payment a few months, issue goes away otherwise it will be tight with some risk if unfavourable port conditions occur. I think GBG has a solid plan now to get to nameplate production with sufficient funding to get there. sdo