over budget?under budget?on budget?, page-2

Bill, I initially thought of yesterday’s announcements along the lines of Option 2 that you outlined.

I took it that 38% of the way (or just prior to that) into the project they realised they needed a contingency of $4.5m on the original $38-40m plan.

So in their eyes $4.5m on a $38-40m base is just over 10-12% and that way they can claim the project is ‘substantially on budget’. (For now leave aside the semantics and/or merits of substantially, material and immaterial and all the delays that preceded the original development).

As for why can’t they just drawdown on the $35m Penumbra Development Funding maybe it comes back to whether any of our loans are in any way tied to our market cap? Just like a bank would lend for a property on a Loan to Value Ratio (LVR).

Previously someone posted that the finance was based on the perceived cash flow of the mine life. Whilst that is possible, I think back then RBCT was approx. $120 pt. Now RBCT is around $90 pt.

So maybe the $35m funding facility has shrunk in conjunction with a perceived reduction in either RBCT prices and/or current MC, meaning that Conti has to fund more of the development before commencing the ABSA drawdown?

It also raises the question as to how does SIOC-cdt contribute if at all to development costs or are they free carried to some future point in time.

The other issue that never goes away is cash burn.

Let’s hope your option 1 is incorrect.