Ascendant Part #2, page-38

You were a lot more blunt than my assessment.

Have a look at the LTR X post that accompanied the release of the corporate video.



I think taken together with the video, it very much reinforces the notion that LTR went UG to appease the Tjiwarl people. No doubt at the time it made sense on a number of fronts. It got the mine approved and pricing was anticipated to be much stronger and able to support the higher costs of UG. Why not have higher Opex and Capex if price forecasts well and truly supported it in order to get operating? Why not avoid protracted negotiations or potential disputes with the Tjiwarl representatives? I'm not going to critique them in hindsight for today's pricing environment because that would be silly and unbecoming.

There is an upshot to going UG in respect to the current situation that has not been explored on these forums as far as I know.

IMO UG is keeping the project out of C&M and I'll try to explain why (also WOF plays a part). LTR's last CR was of a size to support the more expensive path and the same goes for the LGES notes - you don't finance directly or advise without confidence there are enough funds. As a more expensive proposition than the original larger OP model that meant a greater quantum of cash reserves and that has allowed LTR to continue operating; with a cheaper OP operation there may have been an uncomfortably low level of cash months ago, forcing dilution or C&M. For now that is delayed with LTR no doubt heavily praying for an uptick in pricing ASAP.

It certainly wasn't widely anticipated that SC pricing would fall to current levels... not even 12 months ago. Nor was it anticipated to drag out this long. It would seem that analysts and commentators keep shifting away the time for a rebound. What was 2025 is now some time in 2026, 2027 or later for an uptick.

An UG operation is far more costly to shutdown and due to the scheduling, LTR have the cover of the FY26 "transitional year" when dealing with investors; they are primed and will be far more tolerant of the cash burn. There will likely be significant willingness to financially support if / when a CR occurs and that translates to lesser discounts to VWAPs.

LTR have the cover to say, hold on, we told you we're going to have a rough FY26 as we move to full UG reliance, so stand by us.

I think I have consistently maintained that LTR communicate with investors in a way they understand extremely well. Efforts over the past 6 months or so will have provided a sentiment buffer around what I expect to be coming over the next 4 or 5 quarterlies and the big shock of what AISC will really be long term.

UG mining contracts are known to be sticky for good reason. Not only is it complicated to change operators, but difficult to resume once placed in C&M. On the other hand, if there had been more focus on OP, LTR could have taken the opportunity to bring that aspect of mining in house from MACA and secured future savings. It is common for miners to take over their OP mining once comfortably operational. The same cannot be said for UG.

As Ascendant 2 pointed out repeatedly, KV UG is a large scale UG operation. To deliver enough feed for 2.8mtpa, multiple stopes are required to be mined simultaneously. It is no small feat. The impact of C&M on UG operations would be difficult to quantify. Restart delays, inefficiencies and mobilisation costs make it a different proposition to an OP C&M.

Important to keep in mind that KV is the flagship for Byrnecut. It is a source if pride. To go offline would be hugely detrimental to their business and it is uncertain if equipment could be redeployed. It would be a big dent in their pipeline.

As @sabine would know from her NRW experience as a long term holder there, it is not uncommon for contractors to financially support struggling miners. So it may well be that Byrnecut come to the party in one way or another to help LTR. Perhaps they would be willing to pause payments in part for an extended period of time - a loan of sorts - or take payment in the form of equity.

Watching Ascendant 2 it is very hard to fault Byrnecut. They make LTR look great with their progress to date. It's a very symbiotic relationship and in Byrnecut's interest to be supportive.

As we know from LTR announcements, the UG mining is the biggest cost of operating. The first screenshot here is from the operational update. The second, that showed OP costs of $28dmt ore mined / UG @ $45dmt is from the DFS. Will we see another future revision on UG costs now stoping has commenced?





The WOF nature adds further complexity to any consideration of C&M. The operational knowledge isn't easily transferable and losing key personnel would be a huge blow.

Between UG and WOF, Kathleen Valley is a complicated proposition to put into C&M. Both WOF and UG are more difficult than what most peers contend with and working knowledge of the ore body and ground conditions held in employees heads is very valuable. Had KV been open pit only, I believe it would be in C&M already.

What I'm trying to convey is that LTR's decision to take a more costly route in support of the Tjiwarl people may have ironically kept LTR out of C&M and in a position to fully benefit from any future uptick in pricing.

The above is all in my opinion.
GLTAH