Please correct me if I am wrong but on 17th May, AGO said in April they achieved an average sales price of A$59 with full cash costs of A$62 on volume of 0.7mt.
This would give an estimated net cash outflow of about $2M for the month.
This is consistent with the calculation used for the March 2018 quarter +/- any working capital movements (Ie debtor, creditor delayed or brought forward)
Chris said they are burning cash at $7M per month in a quote to the AFR. Firstly the March qtr proved otherwise. Therefore the word "Every" was not appropriate.
Please see extracts below from the two sources I am referring to.
Secondly, if there was say a $7M cash outflow for April 18, it may be due to either working capital movements or the $3M prepayment to PLS for the DSO contract, which would be amortised over the life of the contract. A prepayment is not an expense, but rather an asset and therefore does not constitute a "burning" of cash.
Either the information provided by AGO was not correct or the figure quoted by Chris was off. I hope there is some type of explanation for this as the information provided in the article could be coercive in nature....
It should be noted that DSO income will commence this month and royalties from AJM in the near future. (As mentioned previously, royalty income could be $180M over life of me. Pls see my prior calc on this in a recent post)
http://www.copyright link/business/...-grumbling-atlas-shareholders-20180526-h10l7d
"The majority (of shareholders) seem to be happy that we are going to do something because obviously if we don't do something, they are sitting there burning cash at the moment at a rate of about $7 million a month so at a point in time they will become insolvent."
AGO Financial Update 17/05/18:
Impairment
The Company last reviewed impairment at 31 December 2017. In its Half Year Financial Statements, the Company provided calculations showing that the carrying value of its assets is particularly sensitive to assumptions around production costs and realised iron ore price.1 Consistent with these calculations, adverse movements in ongoing discounts applied to the Company’s lower-grade iron ore coupled with elevated sea freight and fuel prices are increasing the likelihood of an impairment at 30 June 2018. The Company recorded an operating loss during the March 2018 Quarter. Atlas recorded an average sale price of A$59/wmt and full cash costs of A$62/wmt for the month of April 2018 on volume of 0.7m wmt.
