Pilbara sends mining contractors home, page-242

The Company has now been mining for approx 15 months now so I thought it was time to compare what they expected to happen against what has actually so far happened.

The DFS Stage 1 outcomes as per the presentation 25/01/17 was as follows:
Volume 2Mtpa = 314ktpa 6% Spodumene concentrate and 321,000 lbs pa of tantalite
LOM revenue of A$9.2B generating LOM after tax cashflow of A$2.6B
EBITDA over first 5 years of operations average A$136M pa
LOM EBITDA average of A$121M pa
DFS based on assumed LOM average spodumene price of US$537/t
Operating cash costs per tonne of spodumene 6% concentrate first 15 years US$196/dmt
Operating cash costs per tonne of spodumene 6% concentrate LOM US$207/dmt
Project payback 2.7 years
Project NPV A$709M and IRR of 38% (DFS Reserve basis)
Project Capital Estimate of $214M
Initial mine life 36 years

So using the June 2019 Quarterly report and the 30th June 2019 full year accounts this is where they are:
6% Spodumene concentrate June qtr act production 63,782 x 4 = 255,128dmt pa vs planned 314,000dmt pa.
Tantalite June qtr act production 67,075 x 4 = 268,300lbs vs planned 321,000lbs.
Spodumene 6% concentrate price June 2019 US$644/dmt with forecast US$580-640/dmt vs planned US$537/dmt
Operating cash costs US$528/dmt with a forecast of US$320-350/dmt by Q4 2020 vs planned US$196/dmt.
30th June 2019 Full year Actual Gross Profit A$6.2M and Actual loss after tax A$28.9M vs planned average EBITDA of A$136M pa.
Actual Capital Spend A$200-280M (still ongoing) vs planned A$214M

Comparing the current actuals vs previously planned it is very clear that the issue is the cost of production rather than the falling Spodumene price.

The actual US Spodumene price (US$644) is still much higher than the DFS (US$537) plus the AUD has dropped from approx 75cents to 68 cents which also benefits the actual revenue received.

They are still in ramp up mode but the current operating cash costs (US$528/dmt) compared to the expected (US$196/dmt) is not even close to being in the ballpark yet.

So in summary costs need to reduce substantially and clearly they are not going to achieve the 2.7 year project payback as planned.
It remains to be seen if they will eventually achieve a sustainable EBITDA of A$121M pa as planned which was the expected outcome of just stage 1.