achieved nameplate capacity

Mr Williams ambiguous words to describe MP1 gave opportunity to spruikers to claim MP1 has achieved nameplate capacity but is not running. These ignoramus are blinded by Teflon words without realising the accounts tell a story too.

What Mr Williams announced to the market:

On 5th of July, the immediate actions section in the strategic review announcement included: Complete programmed developments of existing Rockingham Manufacturing Plant.

On 8 August, in the shareholders newsletter Mr Williams stated: “Manufacturing of API at our plant was suspended recently to implement a number of design changes aimed at improving the safety, efficiency and maintainability of the plant. At the same time we commissioned a review of those changes and the early part of the process by an independent international expert. The focus was around the hazardous first part of the process.
As I write, we are well advanced in the process of bringing the plant back up to full operation and it is performing well”.

On 5 September, when announcing the slash & burnt of half the workforce, Mr Williams said ” WE HAVE NOW SATISFIED OURSELVES THAT THE FACILITY CAN OPERATE AT DESIGN NAMEPLATE”.

The accounts is a wealth of information and like a picture it showed a landscape of facts.

CMQ consistently burnt “other working capital” between $1.1M to $1.8M every month for December to April. ($1.2M; $1.2M; $1.0M; $1.8M; $1.1M).
This dropped drastically to $0.7 in May & $0.3 in June.
It then picked up again to $1.6M in July & a record high of $2.1M in August.

You may recall in May 2005 Mr Melrose announced a small fire at the API building requiring minor repair work that lasted from 12 to 20 May. Melrose also announced the intention to fix supplementary filtration equipment expected in June 05. CMQ monthly accounts for 2005 showed a similar pattern of reduction in ‘other working capital’ for May and Jun coinciding with the plant problems.

“ Improving safety, efficiency and maintainability in particular the hazardous part of the process” to me meant MP1 had to be shut down because it was downright dangerous. The timeline in the accounts indicates the plant was shut down in May and June. Took 2 months to announce the significant shut-down in gooble-gook language?? Is this an improvement to continuous disclosure? Even worst than Melrose' poor governance standard?

The accounts show very clearly MP1 was not idlying. CMQ had burning record costs in July and August trying to get MP1 up and running. Mr Williams avoided the words “has achieved nameplate capacity”. All sensible readers should have no doubt MP1 has NOT achieved nameplate capacity. In fact the bigger question remains whether the design changes to make it operate safely works. Is this Mr Williams “proven commercial production” to present to potential partners?.

Mr Williams burnt a record $3.7M 'other working capital' in July & August and did not announce MP1 is safe or has achieved nameplate. How much more will he burnt before MP1 is safe and reach capacity? $2.1M per month 'other working capital' is far bigger than the 50 slashed jobs (In comparison total payment to staff is $706K for August, so at best 50 jobs = $350K in a cashburnt of $3.07M). At this rate, the $23M is going to last less than 6 months.

Cheers.