NAG trading, page-830

Hi Growler,

I'm not sure how you come up with Cashflow problems via a Cash Conversion Cycle. Presumably the terms of Payment will be negotiated & as such acceptable to NAGs. If you are talking about Late Payments then aren't we getting a bit ahead of ourselves. But lets have a look anyway

CCCs are a major issue when Opex is high & profit margins are low, as Accrued Costs can escalate before being paid. But for NAGs Opex is going to be incredibly low probably around $10,000 -$20,000/Month, while Revenue is probably around say $100/T.

The Weighbridge (Solar), the Haul Roads etc are Capex and so there are minimal running costs. Afterall, they are looking to sell "Water Space" that already exists. Conveyor Belt to distribute PASS if Leased probably less than $2k/mth, will be the main costs ... $2k/mth. The only other Significant Costs is Labor - maybe $10k/mth.

100,000 Tonnes of PASS in a month is about $10M in Revenue (and say about $20K in Cost.)
A one month delay (total 2 months) would mean $40K is owed but $20M in Revenue Accruals

From the QR
At 30 September 2016, total cash held by the Company was $1,609,000.
So Carry Oustanding Payments for say 3 month would be about $60k.

Is Cashflow going to be a Problem - I would not have though so.
I actually thought Cashflow would be one of the Biggest Pluses for NAGs.