Ann: Contractor Dispute with TMM Group (Operations) Pty Ltd, page-23

my sense is that the markets reaction is more about what this might mean more broadly to the project as opposed to the actual case. After all $15m on a A$260m project is at best, sad but not an abyss. And given STA's poor track record (IMO) in terms of communication quality, the reaction will always be overacted...

a few things:
1. I don't think the markets dour response is over yet ... i suspect [painfully] more downside. I wouldn't dismiss this case as somebody having a bad hair day
2. I wonder to what extent this 'debate' resulted in 6.5kt and not 10kt as the first shipment. If not because of MAH's performance, what was it? And importantly, will this problem (whatever it is) persist?
3. I wonder if there is any substance to the 4 month delay indicated in the newspaper article. If real, what impacts for whole of project timetable? Does LG's on time on budget still hold true? Is this a reasonable conclusion?
4. A $15m claim against a $23m contract is interesting. Some brilliant maths in there I'm sure but I wonder is this just the first of more to come? Certainly won't sit well with the old 'on-budget' representation.
5. I wonder, if in hindsight, STA might have disclosed to the market the draw of liquidated dames ex the surety bond. Whilst $2m in the scheme of things is right up there with average biscuit intake at general meetings, maybe it should have been announced.
6. Someone seemingly has included in affidavit commentary about "over fears Coburn would be subject to audits that might impact the budget and trigger concern from the project’s financiers". That's very dangerous talk especially as now public ... I'm not sure how STA could diffuse the inferences ... tough gig.

for my money, unless the 6.5kt delivery is not symbolic of the balance of project (ie all business case assumptions should be discounted by 35%) and capex blow-out is not gob-smacking (my sense it will be at least A$50m [gross] over), STA will need to grind through these issues but is likely to come out the other side a long-life stable mineral sands producer.

In the meantime, ouch...

have a great day