good news at frances creek, page-16

tfe man, the reason TTY has been sold down (though, it has rallied well in March/April) is because it has some thunderously damaging foreign exchange hedges.

Look at the quarterly. $23M income. Cost of production $23M. And then the negatives start piling up;
$2.8M for tea and bikkies and people's BMW's (admin)
$335K for the announcement on the 27th (exploration)
$5.4M on investing activities
$11M loan to offset the munted currency hedges
$6.9M in advanced payments...giving them the ability to dig up $6.9M of ore and get it to the coast.
$1.194 M cash in the bank.

That gives them...oh, 1/8th of a Quarter from 30th March to secure more borrowings in order to keep in business. Which basically, was 14th April.

Face the facts, mikemennel and others, TTY is a dead duck until the company can get rid of its currency hedges. If it could have got some money back from the stuff Michael kiernan filched out to MON, then it would be able to meet these hedges with something except more debt.

In fact, you may as well work out how much the company is going to end up owing in debt based simply and purely on the mark to market munting of the hedges, and then calculate the interest, and fantasise about the Fe price not dropping at all, and hope to hell they can nurse this leaking galleon of a sinking ship through to the end of the hedges. If they can do this, all they'll have is an abysmal load of debt and an interest bill they can barely meet from their operating cash costs.

I mean, realistically, 63% Fe @ US$0.70 exchange rate should be worth around A$90/t ish. However, they are realising $51/t for it right now on spot, and its costing them $51/t. When the new benchmark comes in at the current spot price level, nothing will change for TTY.

The only way forward for TTY is to get rid of that hedge. Ha. Good luck.

Avoid this. In fact, since its run up, if you are worried about the mounting debts ($18M a quarter from here on in now the cash has run out) then get out NOW NOW NOW. Remember, last quarter saw them trash their cash reserves and take on more debt. This quarter, with no cash, they'll just go to the banks with their cap in hand, and have to load operating costs, exploration and admin atop their hedge problems.