There you go Henry, I actually agree with you for once
The costs heralded as falling to 553USD after a ton is not actually comparable at all to 824/ton because suddenly everything is stripped out of the calculation used this QTR.
They have simply listed production costs and divided by the amount produced then used 72 cents to get to 553. The definition of cash costs in the report footnotes has changed significantly and to get to 553 it looks like the have apportions $0 for corporate and staff.
Tricky attempt to compare/ hype imo
If they did the same calculation based on last QTr figures 608USD, but they didn't, they included everything normally associated as costs and came in at 824.
Have been trying to reconcile the reports and CEO's last statements all morning
Last Qtr. everything including costs of new credit to operate was included I think to get to the cash costs after TA excluding royalties of 824USD
Compare apples to apples not some Apple to some new fruit.
Notwithstanding there is an easy way to smooth it out and get a true picture than the underlined they want you to simply rush in on.
CEO said just recently , A40 producing "close to USD 600/ton" (assumed after TA credit and before royalties. This was said just 10 days out from end of the QTR
How did he get there (close to 600USD)
Simple
Production Costs (29.551M AUD), plus Staff Costs(1.381M AUD), plus admin Costs (1.744M AUD) Divided by the production for the QTr (38291) gets 823AUD after TA excluding royalties
Using the 72cent exchange rate inferred in their current report, 823 AUD = 614USD which confirms CEO statement that a40 is producing close to 600USD imo
As stated above, the 553 uses a different calculation for reporting and excludes even the most basic of inclusions like Staff and admin costs, hence why it is lower than stated by CEO just before QTr endWhat's interesting is when you do the same calculation QTR
Production Costs (13.825MAUD), plus Staff Costs(1.095M AUD), plus admin Costs (666KAUD) Divided by the production for the QTr (22724) gets 685AUD after TA excluding royalties
Using the 72cent exchange rate inferred in their current report, 685AUD = 493USD
If they just used that in their last report the share would have cranked but using the same today would see a big increase and it wouldn't be good.
If you put in the same costs used last QTR, its way above the headline claimed of 553USD
SELLING PRICESAS you know Cannarcord had projected 765 as the average selling price which represented a new selling price of 680usd post the backlog shipment.
Todays figures reconcile to a new real average selling price for the QTr post backlog shipment of $711usdThe average selling price claimed of 780USd for the QTr is reconciled by
View attachment 1535317RAW MARGINS Vs peersIf we use the Production costs plus staff costs plus admin costs divided by productions for the QTr to work out a raw margin of what was actually achieved in the QTR then you can see A40 made a positive raw margin.
Whilst a positive margin, they are not 100% as originally planned in the PFS and are still very low considering the finance spend, need for development etc.
Ill post later the JV ideas but clearly a40 need to come up with a new way of making money given its current balance sheet imo
View attachment 1535341The following model is based on actual costs reported and tries to get to FOB prices
CIF prices have been reduced by $50 estimate for shipping so PLS gets 625/ton
Galaxy has estimate of only $650/ton as the prices spot were 600-750 for 6%/5% min and they dropped at end of Qtr. to 600-700 USD for 6% and 5% min and they sent 5.6%
Galaxy didn't give a breakup of their costs other than a headline 453USD so assuming it contains, production, staff and admin costs only
rate being used is 72 cents USD AUDInformation taken from QTR reportsBANKBank Balance is 15.6M AUD end of QTR, which I point out is way below the many heralded thumbed up predictions following the Dec Qtrly and JAn Update vs mine.
Some were even projecting 70M in sales but I digress
If you take out the extra proceeds from the debt draw down of 7M (which again was claimed as not needed, I don't think so) The underlying bank balance fell to 8.6M from its starting point of 13M despite the record qtr.Considering 5M has to be kept in cash to avoid defaulting on loan covenant that would have only left 3.6M, hence the reason they had to borrow the extra 7M, absolutely nothing to do with reducing average real interest rates
FORECAST OUTFLOWS and capital positionBe careful imo
51M was forecasted to be spent this QTR, considerably less was spend because they did not have the capacity given the 5M covenant . Would have been too tight
Forecast spend rises this month presumably to make up to this
forecast now 56.25M AUDCapital Position
Assuming debtors received as calculated in report
Assuming 25K sold at 711 FOB which is at top guidance of current offtake
Assuming all sold is received
Assuming cash outflows as per Qtrly report
In the absence of any additional sale to someone else this Qtr. and the only off taker taking say 25K t, ( at top end of their commitment80-100K tPA)
the potential bank balance shows big deficiency at end of this QTR and if you have to bring that back to 5M minimum has to be kept on hand plus some working capital it appears to be needing money from somewhere
View attachment 1535491
