Ann: Brisbane Mining Club Presentation, page-2

Interesting presentation - probably missed by the market that they reported that they are still cash flow negative in Q1’19:

After a 50% increase in metal production, 5-10% increase in recovery to average 50%, 20%+ increase in the zinc price between the start and and end of Q1’19 and a very supportive AUD/USD fx rate they are still cash flow negative (refer page 4 of the presentation & associated footnotes).

Cash at end of previous qtr - A$22.2M - working cap facility A$20M = A$2.2M.

Cash at end of Mar’19 - A$56.9M
Working cap facilities - A$100M (of which $60M is drawn down).
Net Cash at end Mar’19 - minus A$3.1M

Effectively a $5.3M reduction in cash Qtr on Qtr.

They need to meet certain conditions to be able to draw down the remaining $40M. The first 2 conditions of minimum recoveries & volume mined shouldn’t be a problem - however the EBITDA of A$8M for the previous month condition will be problematic at the moment. Will have to see the quarterly for more detail about this.

The need to bring costs down / increase recoveries and this next quarter is critical - part of these costs & risks are outside of their control like the increasing zinc TC. Probably why they are brining in Nick Cernotta.