Ann: FY24 Production Guidance - Kwale Operations, page-2

I expect the market to drop as some who didn;t realise the LOM plan dropped in grade substantially into the Nth Dune plan (Longtony) and those disappointed with the unexpected drop in quarterly production. In conjunction with tax loss selling, management have timed this release perfectly to shake out more long-suffering holders... kudos boys. If you can hold off a Toliara deal until after the new performance rights trigger in Oct you should be in for a few great years of freeby upside...

Anyway, I posted a production guidance table of my own multiple times showing the LOM fall in production, so this shouldn't have come as a surprise to those following on HC. Table shown here to compare the LOM maths with todays guidance. At the top we see grade is slightly higher than my assumed straight line type fall over LOM, basically as expected. Tonnes is the negative downgrade todaym, dropping 16% over FY24 from my assumed 16.8Mt to guided 14.1Mt. Some of that is Mar24 move form Sth Dune shutdown, but much will be the slimes and oversize issue they were confident would improve last quarter but of course had no idea if it would or wouldn't.





Translating that to the bottom of my sporeadsheet on 'PRE-downgrade' guidance looks like this. Note Commodity Prices are the key variable beyond the production as per the upper half of the table...

Below is the table with updated lower Quarterly production for FY24, will drop free cash on hand from about US$131M to US$106M all things being equal. Probably they are not, recoveries change?.. can't be bothered looking. Bit dark they coujldnt get on top of slimes and oversize issue but that's the gamble punting shitty deposits end of mine life that probably wouldnt have been mined if Tolaira was the focus years ago.



I should have stayed gone lasy year after I realised Tim was FOS regards his continual guidance of a Toliara deal being imminent despite news and politics out of Madagascar saying it wasn't. but again.. that was the gamble and I lost. Kwale was always going to stop generating big free-cash ealry into FY24 and the value proposition was all about Toliara as those invested here very well know (except longtony).

The value proposition just gets even more attractive the lower the share price falls given BSE already sit on ~US$100M by end of June (~A$150M) and at 16.5c today have a MC of A$200M. $50M EV for the world's best undeveloped min sand deposit looks pretty cheap... so long as Madagascar finally, eventually get the mining license issued and some jobs/royalties/taxes/export currency flowing to their impoverished people.

GLTAH