2022 production progress, page-9

Hi @gutterman, overall I think the management team have done a great job in de-risking this turnaround play, they've locked the full years worth of production in contracts and also hedged their shipping costs for the next few years. For me, those are the two biggest risks that have been mitigated. The other risks that I see that could derail this are:

- bad weather in the production season (April - December). Weipa has a pretty consistent environment, but long term forecasts show that this year is likely to have higher than average rainfall in 2022. Main issue is then loading and getting the barges out to the crane pontoon and demurrage
- equipment breakdown. Its a very basic mining operation with a known and reliable resource so I'm not concerned about the mining equipment side. More the barge loading equipment, but mainly the crane pontoon. MMI have committed to using Capesize ships and that means we need to have the ability to load them, and for that they only have the one crane. If it were to have an issue to would be a massive problem to repair it and get it back into operation. The only other alternative would be to go back to Ultra sized self loaders which is likely to be a lot more expensive. The crane just got refitted in Cairns in Feb/March so should be in good shape so fingers crossed its not a problem!

Other than the above, there's no major exposures that could hurt the company significantly. Fuel / labour costs will go up but they aren't material, and aluminum prices will fluctuate but bauxite has been very steady over the last few years.

In terms of a good turnaround play where you have an ability to watch it happen, MMI is a great opportunity. If we look forward a few years, the management team that have assembled here (all ex RIO), clearly aren't here for a one asset small cap mining operation. Once MMI are running at 6m tonnes per annum (2024) and spitting out $90+ mil of EBITDA (don't forget its a minimum 16 year mine life), they'll look to diversify the business and add other commodities. This is a massive call and speculation only, but all big companies start small, and I think MMI will turn into a South 32 type business (smaller obviously) but mutli-commodity small/mid tier miner.