Fair enough if people want to follow train wrecks even if they're not onboard, it's human nature to keep up with events once you have an interest. The fact Randall and others are always negative is pretty darn obvious after what's gone down i would have thought, and small improvements from catastrophic failure is hardly anything shareholders can celebrate yet... Let's break down the production update.
Updated the production/forecast table and daily average last 3 months was 500, 495, 525, = 507t/day HMC. Taking into account Mar&May have an extra day than Apr, statistically monthly production shows very little variation, strongly distributed around 15200t/mth on a 30 day basis as forecast for June.
The " ~84% of the nominal design rate" is based off LOM avg 229ktpa, or 19kt/mth as shown in the blue line (chart line based on detailed monthly stats). The big shock was admission until recently Coburn was producing ~80% HM in HMC vs 95% in the DFS, now lifted to ~90% HM. Great that things have improved, but I can't remember when they ever updated the market that HMC was of such sheet quality when telling us monthly production figures?
They are now saying "Production during the months of March, April and May 2024 exceed the forecast levels developed as part of the operations strategic review", so I guess we can't expect much better than exceeding forecast, but we hope for more improvement. Anyway, moving forward if they maintain May's 84% of nameplate HMC and 90% HM on HMC Coburn is running at 80% of DFS design (84% of design HMC x ~95% design HM in HMC).
We will not know the HMC price that better quality HMC reflects until Jun Qtrly, which will be a tug of war between higher quality and lower HMC prices based on SFX recent commentary. 80% of DFS HMC production x ??% MSP recoveries and production is the next question. Clearly 80% HMC at anywhere near previous reported sales price simply struggles to breakeven on monthly cashflow excluding debt or interest repayments. So how much lift in revenue moving to MSP final products from HMC?
From the DFS, it's only a disappointing +14.3% lift in revenue based on DFS MSP recoveries and production from the HMC case. One assumes similar final product quality discounts as the HMC, for whatever the final quality they can squeeze out of the plant. A$722 x 1.143 = $825/t HMC equivalent (ie less tonnes than HMC but at higher prices). Below table updated for $825/t HMC Equiv on Jun Qtr actual production (sales = production, no account for starting stockpiles) for an idea of what 14.3% higher revenue looks like... basically breakeven within statistical significance.
On the upside maybe the quality keeps improving and prices received are actually better, On the downside, running the MSP will incur more costs, as will trucking, handling, shipping 4 x smaller volume final product streams. Improvements all point towards the hope, sans major downtime incidents, Coburn can operate without losing money each Qtr depending on rehab, sustaining capex, corp overheads etc... but still doesn;t even start to cover interest and debt repayments on almost $300M debt.
The big question is still, what type of debt restructure and recap will the lenders and new investors go for if they believe Coburn will end up a viable going concern worth keeping alive? STA holders look to be balanced between complete wipeout, to very little equity in an outcome keeping STA listed as the vehicle to move forward with Coburn restructure. I just can't see any outcome where creditors don't take a serious haircut in debt Coburn simply can't carry, whether that is a debt-for-equity conversion for creditors or simply a debt reduction to something realistic?
GLTAH
STA Price at posting:
9.5¢ Sentiment: None Disclosure: Held
(20min delay)