Ann: Quarterly Cashflow Report, page-4

So, if we ship right now best guess this is how it would look IMO.






The next bit of scenario analysis I have done for me, so I know from my own perspective what I wish to see eventuate from the ore side of things going forward.

I have shared what I am using to make MY decisions. There is no suggestion you should use it to make yours.
It is not a forecast, or prediction, merely an honest assessment of the set of inputs I deem necessary to achieve the required output I deem necessary.
If you don't want to read any further, to put it quite simply, don't.


I am sure some others will have something similar they are using.
All of the individual numbers will prove to be incorrect but it is my expectation that the final product will be close enough to be useful to me.

I have used actual production volumes for June and Sep quarters, then I have assumed 20,000 per month for Dec, 25,000 for March and then nameplate after that.
I have assumed 1 shipment of 50,000 in Dec, 2 totalling 105,000 in March Q and shipping production volume of 87,500 per q after
So by example end of Sep inventory was 20k, produce 60k, ship 50k, remaining 30k. Next q inventory 30k, produce 75k, ship 105k. Then on ship everything produced, which will work over the long run. Some quarters 1 ship, some 2, maybe bigger ships.

The June and September numbers are already set in stone.

For the December quarter I have built in a 5% efficiency improvement over last quarter as production volume rises. Cash receipts based off current prices as per table 1, so production costs + corporate overheads less sales receipts predicted cash burn $6.3m. Bigger number because produced more than is shipped without too much improvement in either costs or receipts.
Not nice but unless things move quickly from what I can see its more or less locked in now.

March quarter, production up to 75,000, further reduction in production costs to PFS + 10%, so that's down another 8% from Dec.
2 shipments total 105k as per Table 2 below. First shipment has a small increase in commodity prices and a 25% drop in shipping costs. Second shipment has a further drop in shipping to @2.5x PFS and a reduction in commodity price as shipping normalises further.
Mineral credits included. The credits are worth roughly $1.5m per shipment.
Produce 75k but ship 105k so cash surplus of @$4.5m

June q nameplate production, costs at start-up PFS level of A$4.55, static overheads, shipping what is produced, cash surplus $3m per q

Sep Q onwards, 44% Mn USD5.65, shipping PFSx2, production costs long run PFS of A$4.15 +5%. See table 3.
Not much of a production cost increase v PFS, but you have to remember I have built in more than a 100% increase in the FOB/CIF adjustment. Swings and roundabouts.
Ongoing cash surplus of A$4m per q.







As I have said, inevitably all of these numbers will be wrong. Lots of moving parts so its the combination that matters, not the singularity.
For me to become more comfortable I want to see
Shipping prices continuing to trend lower. At these levels it doesn't work! Pure speculation on my behalf, but I suspect the first shipment was around these levels and the 2nd one was 25%-35% uglier. And it got worse after that. Theres no way of knowing what they will pay this Q until after the event.
Baltic dry at 2500 by the end of the quarter. 1750 after that, which is still massively higher than its long run average.Hopefully at this level the adjustment should be sufficient.
At the very least commodity prices holding.
Mineral credits inclusion during 1st quarter.
Gradual ramp-up completed by June q
A continual improvement in production costs as volumes ramp up.

I have built in cost escalation. It is going to take most of next year to recover the losses made this year. The ore business can be highly profitable, but the ducks have to be realigned.
I had a high degree of confidence. Shipping has given that a bit of a knock. I do believe the HPMSM side is highly compelling, but the mining side has to, at the very least, be self-sustaining for that to be realised. You cant burn cash for 2 or 3 years. Well, of course you can, but somebody has to fund it!!

The Delorean had to go into the shop. Of all things its an electrical problem.
So in the meantime I am watching the components, with more interest than usual. They are moving in the right direction.
For me, that needs to continue.