Ann: Quarterly Activities Report, page-21

My expectation is that when E25 produce the Annual report to 30 June 2022 a differential will emerge between the cash revenue and reported revenue. The "$5,89,610" that was invoiced but not paid will be part of the revenue figure. Assuming this figure was $5.890m, Sales revenue from ore will be $32.824m. This is the half year of $11.080m + $4.008m + $11.845m + $5.890m. The balance sheet will be altered through accruals and inventory will be reduced while accounts receivable will increase by this $5.890m figure.

If we go back to the half year report, $11.080m of revenue was reported. This was the sum the Sep and Dec quarters (5,443+5,637).

This means that the $11,845 of cash receipts is generated from the 35,002 shipped. I've previously posted that I think there is contract value and a wash-up structure existing around the cash receipts. The $11.845m figure may therefore include a positive wash-up figure from previous periods, just as I have speculated that the March quarter contained negative wash-up's in relation to the volume shipped shortfall from December.

Possible Shipping contract wash-up
Depending on the underlying contract there could be any number of wash-up adjustments re rates, grades and volumes and also shipping. One piece of the March to June swing could be that OMH and E25 have agreed that shipping costs will be invoiced at the previous shipments actual cost with a wash-up to the actual cost in the next payment. We were advised that the shipping cost/ton for the December quarter was in the low $30's (when the Baltic Dry was around 3000's). During Jan/early Feb the Baltic dry fell to circa 1,300 and spent a couple of weeks below 1,500/t. Its possible that E25 contracted the March shipment at these sort of rates which could have been around $15/t. If however the practice was to invoice at the previous quarters actual with a wash-up in the next quarter, the March quarter invoice receipt could have included shipping at possibly around $32/t (and a volume wash-up. Grade wash-up's may also exist). If March was invoiced at $32/t this would have assisted to keep the revenue down to $4m.

This quarter would then have both a favourable wash-up, possibly around $17/t being an actual rate of $15/t from March not the invoiced $32/t. On 34kt this would be an additional $578k of revenue. The Baltic dry continued to generally climb between the end of January and 10 May. The substantial change in the Baltic Dry contract means I've got no clear idea what Aquamarine was contracted at but its actual cost could be nearer $30/t. If however the June quarter was invoiced at the actual rate in the last shipment, the invoiced rate could be as low as $15/t reflecting the actual rate in the March quarter. There would be a negative wash-up in September.

The $11.845m is therefore potentially:
A shipping credit from the last quarter of $578k
Only contains a shipping cost of $525k (35kt @ $15/t) rather than higher rates reflecting the Baltic dry during the June quarter
This would mean E25 was paid about A$11,760 for 35,000t or A$336/t. At USD/AUD of $0.70 this would be US$235/t.
If the "high silica" shipment was invoiced at say 32% then this is US$7.35/dmtu. The starting 44% Mn rate could have been around $8/dmtu and rather than a grade adjustment of $1.20 or $1.30 (or perhaps even higher), this shipment was invoiced inclusive of some or all of the smelter credit (as its high silica) if invoiced at 32%, the net grade discount may be nearer 60c.

That's a huge number of assumptions but:
11,841 = (35*32*(8-0.85))/0.7 + 578 - 35*15 [33% invoiced grade] or
11,845 = (35*32*(8-0.63))/0.7 + 578 - 35*15 [32% invoiced grade] or
11,849 = (35*31*(8-0.39))/0.7 + 578 - 35*15 [31% invoiced grade]

Changing the size of the wash-up, shipping cost, exchange rate and grade mean there's a wide range of possible grade adjustment figures that could balance this equation.

If this shipping wash-up thinking is correct, it won't be till the December quarter that the benefits of the Baltic falling below 2,000 again are gained as cash flow because there may well be a negative wash-up in the September quarter.