At risk of being slammed for duplication I figure my post on one of the other threads here is worthy of its own thread.. There's been lots of conjecture that NSL management are incapable of delivering and a number of people speculating on why the deliveries are only starting now. I cannot know for sure as I am not an insider but its worth clarifying that the majority/if not all of our Purchase Orders are ex gate (or ex works) simply stated this means the buyer is responsible for all shipping and delivery costs.. Its very probable that the delay (for the product we had produced pre Monsoon) was more to do with them actually physically coming to pick up the product..
Read below for more.
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Thank you Birdman for taking the words out of my mouth... Read the April 19 Announcement...
The Company is pleased to advise that it has now received a commercial Purchase Order (PO) for 20,000t of the premium product produced by the Phase Two wet beneficiation plant to be supplied over the coming months. The PO issued by Infinity Ores (IFO) is for the supply of 20,000 tonnes of 63% Fe filter cake (wet plant product). The negotiated sales price for the initial PO is A$65 (equivalent) ex gate with payment in advance based on 1,000 tonne lots.
Now I accept thats IFO which hasn't worked out as planned - however - Look at the 18 July 2017 Announcment.. where we recieved a new POs on similar terms to existing.. i.e. Minera is ex-gate just like IFO should have been...
The Company is pleased to advise that it has received a 4,000 tonne order from Minera Steel and Power Pvt Ltd (“Minera”). The initial order is for the supply of 4,000 tonnes of 60/61% Fe filter cake (wet plant product), on commercial terms similar to other orders.
With respect to BMM I can't find the words ex gate specifically in any of the early announcements re their POs however if you go back a little further all discussion of costs and sales prices in the previous announcements throughout 2016 refer to
ex gate numbers. Read the highlights section of the 21 March 2016 announcement for an example...
Offtake agreements are already in place with India's JSW Steel and BMM Ispat for Phase Two product.
Cost base A$22/tonne ex gate, with current ex gate sales price of A$52/tonne.
Citing 30 October 2017s announcement with respect to BMM they do however say that:
5,000 tonne purchase order received for premium filter cake grading 59-61% Fe from BMM Ispat Ltd.
Commercial terms similar to the previous BMM 63% Fe PO, and in line with the current market.
Ok so what is 'current market' well after five minutes googling 'India Steel Industry Pricing' I note that all Indian prices are quoted EX Works (commonly referred to ex gate or ex mine or ex farm in agriculture)...
What does EX Works mean you ask? Well...
From
https://www.investopedia.com/terms/e/exw.asp
Ex Works (EXW) is an international trade term by which a seller makes the product available at a designated location, and the buyer incurs transport costs.
This arrangement is extremely favorable to the seller at the buyer's expense. The seller is only responsible for packaging the goods and making them available at a designated location, such as the seller's warehouse. He or she must also help the buyer obtain export licenses or other necessary documentation, but only at the buyer's request and expense.
Ex works costs are calculated by businesses that may be able to cut costs from their purchases by eliminating the seller's value added for shipping.
Now do you think some of Indias biggest players in Steel are going to expect little old NSL to organise the shipping or are they going to do this in-house with their economies of scale?
Why does this all matter? Well it matters because even if we had the product to sell in the Dec quarter (removing the Monsoon factor here for a minute) when we talk about receiving our payment we were still at the mercy of our customers and when they start to plan to pick up their product. This won't be a problem once up and running regularly because cash will be flowing in steady but some of you are very quick to draw the conclusion that its NSL management trying to cover up some big scandal - I believe the money hadn't been paid because they hadn't started to come for their product. And guess what? We received announcements in Jan that deliveries had commenced - for two customers! So that would suggest that the pre-payments included would at very least been received.. Of course that wouldn't be in the Dec Quarterly..
Like I've said and many others have said recently - this is a defining quarter for NSL - yes its later than we would of liked but it is happening - you can get/stay on board or you can sell up and move on - frankly I don't care - but stop bashing up management about continuous disclosure just because you can't or haven't read the announcements in enough depth to know what our terms are...
IMO - GLTA
