Nice post @jdpc3518 days into January - They may have a...

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xxLiONxx

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18/01/24

16:13

Post #: 71947634
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Originally posted by jdpc35: ↑

Unfortunately not much joy in this update.

Production @ 12,599 for December is still only about a quarter of supposed nameplate HMC at full production - so hence the very high C1 costs of A$835/t (also exacerbated by the ongoing commissioning and other "temporary" expenses). It is not clear as to how much of the C1 cost figure relates to steady state vs commissioning.
Sale price achieved was terrible. Some time ago, we were speculating that they could achieve A$1,000/t. Even though we have depressed global HMC prices at the moment, the achieved US$433/t (so about A$655/t) suggests STA is being hit with significant quality discounts.
At the moment, STA is losing about $180/t of HMC produced (A$655/t revenue & $A$835/t costs.
Production costs will obviously drop significantly if they can get anywhere near to nameplate - but this is still a very long way away judging from this update.
The lenders will be looking at this December result and wondering if they have a credible pathway to achieving profitable operations. Their capacity to survive this depends on a credible, milestone focused, pathway from here which both delivers cost savings (no more commissioning & temporary costs) and month to month uplift in HMC volumes.
If they can achieve, say, a +10% per month, every month, uplift in HMC production, this looks like 13.8kt for Jan; 15.2kt for Feb - through to 22.2kt by June which is still less than 50% of nameplate. Even at 10% per month improvement, they would not hit nameplate volumes until April 2025.
The above comment is just showing for illustrative purposes the sort of cumulative performance targets they need to be setting and achieving. Bottom line - they achieved a 19% improvement in December over November. I think they really need to be delivering mid-teen % production volume uplifts every month from here on in to have a shot at refinancing this by end Q1-2024.

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Nice post @jdpc35

18 days into January - They may have a reasonable estimate of where they are going to land for January. You are a 100% right w.r.t the volumes. There also need to lock in a better realised price and make further cost cuts.

Have until mid-March to close the gap between Revenue and Costs
STA Price at posting: 9.5¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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