No worries at all, Jack. I think I understood you correctly from your original post, but it was good to get the clarification to confirm.
Here's the nub of our respective positions, as I understand it:
You are saying that management should have preemptively committed to the restart works, say, ~12 months ago on the promise that the NP would be were it is today (or was earlier today) and, thus, we would be in a position to start making physical sales very shortly. My problem with that argument is that it would have amounted to an
unmanaged risk punt on the NP because, regardless of all the promises and forecasts by other Ni bulls out there (worth precisely zilch),
at no time in the past 12 months, prior to today, has the NP matched our "go/no go" DFS profitability hurdle.
You might say, "
See, there you go. It was a good call!". I would respond by saying "
It was an unmanaged punt that the NP would come good at precisely the right time. It could have just as easily gone the other way (or flatlined at lower levels) whereby we either break-even or lose money today and, to add insult to injury, sell our limited ore into a weaker-than-expected market, thus heavily eroding (or possibly even destroying) any hoped-for profitability. That's the way it can be with unmanaged punts". I used "
unmanaged" because until the NP reached the minimum required level (per DFS) today, management could not have made
any forward sales at the required DFS price levels, in order to actively manage their revenue risk. They would have been totally exposed during this time. (Well, not strictly "totally exposed"; they could have forward-sold some future production but at lower-than-DFS price levels, thus ensuring underperformance from the get go. Hopefully you get my drift, though). Their Plan A (go hard and go early) would not have been very risk-manageable from a revenue/profitability perspective, so a Plan B is kinda moot, imo. Management would have burned through, say, ~AU$40m in cash (per max. drawdown in the DFS, assuming that's still current), with no meaningful sign that the NP was going to be where it needed to be until, say, early this month when it broke above the June highs.
Shareholders would have had to endure ~8 months of
material uncertainty regarding likely revenues/profitability while watching an accelerated cash burn in the hope (<-- oh dear Lord, that word!) that things would turn around in time. In this context, it's my view that the SP during this time frame (Sept '18 to, say early July '19) would have taken a hammering because punters would have fretted about the cash burn and the very real threat to profitability of the project/company. It would have been a white-knuckle ride - perhaps even punctuated by an opportunistic low-ball T/O bid by you-know-whoz (one or both). And for what? Impatience? No thanks.
Fast-forward to today and we have the NP teasing us by briefly touching our hurdle price. We are yet to spend our cash and, subject to the NP exceeding and maintaining >DFS, management is much closer to being in a position to forward-sell some of our production (if they choose to), in order to actively manage (hedge) the revenue-side risk moving forward. A much more manageable and civilized environment, imo. And dare I even think it: by waiting and not being so impatient for nature to take its course, we may even stand a chance at selling our concentrate at even better prices when we do come to market. But I won't get ahead of myself there.
As a shareholder who has real money invested in this thing, I am
very glad that the Board has taken the less aggressive path on this issue. I don't expect that POS will be the first small Ni player to get back in the game when it starts in earnest. And if we Ni bulls are right it wont be a bad thing at all because it won't be short-term trend.
I'm not attempting to change your view, just expressing mine - perhaps somewhat passionately.
Cheers,
Z
(20min delay)