Shaking my head...
Coburn Mine is clearly on the razor's edge of being close down under administration and sold as insolvent operation on account of being cashflow negative. Updated my operations table and the hoped for continued increase in HMC production simply isn't happening, stuck at 15kt/month. Not just that, 15kt HMC WAS THE PLAN for April, with zero mention of May production second last day of the month to give the market some hope... one has to assume May is no material improvement with a very real risk May was actually worse.
Mar Qtr went backwards $18M cash on account of shipment timing, $5M on a pro-rata production basis and little reason to think that figure will come down in an inflationary environment even one-off if sustaining costs fall. With SFX announcing that zircon concentrate prices in China are falling there's no reason to believe STA HMC prices are rising. I've tabled $6M less costs for June Qtr, possible, but realistically a $10M negative cashflow is coming this Qtr unless the Mine Plan is about to suddenly lift HMC to a higher level...
Not just is Coburn losing ~$10M per Qtr, that excludes any interest payments let alone principal repayments on close to $300M debt. The new mine plan AND a risked MSP final product with commensurate higher prices is required to simply remain a cashflow positive going concern even if all $300M debt is wiped out.
There is obviously risk new investors will not sink money required to try and improve the MSP, if the MSP performance data and realistic improvements together with whatever the New Mine Plan HMC production is doesn't make sense on a risk-reward basis. IMO, 15kt/month HMC would be lineball cashflow positive for STA including sustaining capital and overheads (but excluding one-off capex costs to fix the plant/mine) even with a well performing MSP. The idea Coburn can wash it's own face and service/repay ~$300M in debt is becoming more far fetched every update...
"The trial will provide the Company with separation performance data and inform the capital program for the modifications required to maximise separation into final products."With the mine plan and MSP problems forecasting a wipe out of STA shareholders if not the entire $300M debt, why would the Board borrow $20M in March and place $43M of Tanzanian assets into the creditor's security?? $43M to buy a couple of months when it looked highly likely that $43M would be chewed up and lost in an eventual mine administration??
Such a risk with STA shareholder's only unencumbered and demonstrably valuable asset ($43m = ~3c/share, or more possibly priced as a future development inside a company with huge, valuable tax losses etc) without a shareholder vote is outrageous. JP was incentivised with $750 bonus to buy time for creditors to see what Conurn might be worth for sale as a future going concern (fact). That time bought provided only a very small chance of saving STA shareholders any value in Coburn from whatever debt restructure and recapitalisation is required for it to stand alone and make bank (fact). Yet JP just rolled the Tanzanian assets into the creditor's hands without any shareholder approval... wtf?
Posters going to reply nobody knows for sure if Coburn survives or STA holders will get wiped out even if it does. The Board will say "so sorry, we tried, who knew" if Coburn goes into administration next couple of months... when demonstrably insolvency was the clear favourite, daylight second and third. Class action for anybody with enough invested to be worth their while?
Finger's crossed the never released new mine plan has much higher than 15kt/month coming down the line and our nag way behind the back of the pack comes flying down the straight for a place if not outright win...
GLTAH
(20min delay)