They spent $47m in Q1 and $48m in Q2. Those are the incurred costs. They claimed an extra $20m in the Q2 report for commissioning costs, short term capex etc. and then budgeted another $20m in the CR presentation. I don't think it is safe to assume opex is $25m and total costs are $35m a quarter at all as real costs have been higher. In my opinion they are presenting costs in a way to make opex look lower than it is and one off costs higher than they are. Either way the costs are the costs and no one will see the Q3 costs until October.
What you suggested above is a perfectly practical ramp-up/transition approach, I just don't think they have enough runway to do it. In my opinion they are doing the right thing selling HMC until they can ramp up to somewhere close to nameplate. Not sure how that is unreasonable downramping. If they can ramp up to ~90% they should be able to make more revenue than the DFS final products case without even running the MSP. Given they already basically produce 3 x 10000t shipments a quarter then targeting 4 in Q3 and 5 in Q4, or 9 overall (average 4.5 per quarter) is not unreasonable. 30000t a quarter is 55% nameplate, 40000 is 72%, 45000 is 82%, 50000 is 91%. Etc. The alternative if you want premium pricing is to push everything into the MSP while there is $70m in the bank and ride out the revenue hit early then bank on higher margins on final product sales.
STA Price at posting:
18.0¢ Sentiment: Hold Disclosure: Not Held
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