"The Tailings Re-Treatment Plant has however underperformed its expected production ramp-up targets to-date [in fact by -93%!]. This is predominantly due to poor design and incorrect materials of construction pertaining to the front-end of the plant (rotary and vibrating screens) specifically associated with handling of the abrasive and course fraction materials that form a large component of the existing tailings stockpiles. This has presented a challenge to the plant’s production team to overcome as they have attempted to maintain production ramp-up rates whilst simultaneously being required to repair, modify and maintain the plant, which has led to lower plant throughput and low plant availability rates."
More cash raisings followed and the plant was "upgraded" but continued to severely underperform.
The plan was to produce 120k MTU during a period of two years. Production ran for almost two years but amounted to 11k MTU only. That's a jawdropping 9,2% of planned output. Obviously that was financial suicide. Net operating cash flows during the time of production amounted to a negative $7,8M (despite $400/MTU tungsten and adjusted for R&D grants/advance payments). So the operation had to be aborted. The 10th and last container shipped on 18/12/2013.
Management had clearly demonstrated its inability to achieve and meet its own targets. To make things worse, they failed to obtain necessary environmental approvals to mine fresh rock, a prerequisite for Mitsubishi financing. And as if that wasn't enough they recently fumbled with the mining lease that is now in limbo. These guys got things in a complete mess, indeed.
CNQ Price at posting:
0.8¢ Sentiment: Sell Disclosure: Held
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