I take 'comforting' STA information wherever I can get it, even...

I take 'comforting' STA information wherever I can get it, even if it needs a pinch of salt. Lot of information added to Shaw's effort, lot of assumptions, some curiously conservative (WCP nameplate capacity curiously lower than STA 'aim' by end CY23), others decidedly optimistic (operating costs). Not going to detail what everyone has read, suffice to say Morgan's and Shaws have detailed a litany of equipment, mine planning, tailings management, staffing shortage, capex/rectification costs, and ramp-up slippage far beyond what was guided or thought possible during the June Qtr... in my jaded opinion, but that's all history.

Still, as CR brokers do, Morgan's tries to rally the CR troops all underwater since the first day trading (which says more about broker/market opinion of the situation than warm sentiment in my pocket). Below sums up the situation best... brokers all saying 'selling is overdone' yet nobody is buying the risk STA doesn't deliver this far out from the home straight and into an uncertain stock/commodity market to boot.
We thought Jun-Q performance and the need to top-up wasn’t nearly as dramatic as recent share price weakness implied. STA’s equity still offers substantial capital upside (nearly 3x to our target) but it must deliver on rectification works and the revised ramp-up.

What's now clear is how early into the June Qtr that CR would have been apparent to the highly paid and experienced CFO if not the mouth peace. Rectification ramp-up works already added substantially to opex June Qtr, Morgans has it adding ~$30M extra opex in FY24, before an extra +$10M capex for Coburn just in tailings and airstrip alone. $32M CR get's soaked up early FY24, before $6.5M/qtr debt repayments start second half FY24. Given the need to reduce monthly HMC shipments first half FY24 to provide feed for the MSP (which needs to be run continuously at nameplate volume to really fine-tune and prove performance), cash-on-hand was probably never going to be enough buffer against further slippage what with debt covenants and revenue-expense mismatch next two quarters (had you understood those troubles)

If that wasn;t bad enough, what the hell was Luke doing rushing headlong into $15M to re-settle "a significant proportion" of people living inside the Fungoni project this far out from FID or even a plan to get there? Seems he had no choice, that path of action was locked into "the Framework Agreement outlines the key joint venture ownership and operating terms for the development of the Fungoni mineral sands project", and the Framework Agreement was concluded with some fanfare in the March Qtr (ipso facto... STA knew this $15M hit was coming in the SAep Qtr).

Prospecting licenses covering or adjoining Strandline’s full suite of projects (seventeen licenses in total), including Fungoni, Tajiri, Bagamoyo and Sudi mineral sands projects,were transferred to Nyati in the March quarter 2023. As part of this process, the tenure term and conditions of the tenements were refreshed allowing the Company to progress its next phase of project planning and commercialisation initiatives. This includes, commencing the implementation of theFungoni project Resettlement Action Plan with Project Affected People (PAP) to secure land access for potential future development of the project. Standard compensation and resettlement agreements were finalised and signed by a significant portion of PAPduring the quarter, with substantive payments commencing in July 2023. The total estimated amount ofcompensation for Fungoni is US$8.5m, which is based on a conventional compensation package in accordance with Tanzanian law and approved by the Chief Government Valuer.

There's your CR smoking gun fired beginning of the june Qtr, not the end. I missed this in the June Qtrly like most others, hidden amongst the production woes and tantrums of the CR contemporaneous CR releases. This was a crazy deal to sign up to originally imo, who knows how long between signing the Framework Agreement and actually having the right market and timing conditions to move to Fungoni FID (and get the recalcitrant PAPs to also sign on and move)? Fungoni is a pissant little project hardly worth the time/investment/risk, yet here it is wagging the CR dog during ramp-up troubles and years before the Coburn-expansion first cab off the rank. Then we have:
Importantly, the government of Tanzania advanced the review and approval process for the Tajiri project Special Mining License (SML). Strandline understands that the SML has reached the final review stage by the Tanzania Government’s Cabinet Secretariat.
Does that mean more PAP's at the much larger Tajari Project will have their hand out for new housing and relocation compensation later in the year once Tajari follows in Fungoni's footsteps according to the "Framework Agreement" or is that timing in STA's control (and if PAP's resettlement timing is in STA's control, why rush headlong into Fungoni's mid ramp-up Coburn??? )

No wonder STA are talking up Tanzania M&A, because it will be years before STA have paid down debt and the obvious Coburn-expansion... when it seems the natives are restless for action (show me the money, use it or lose it?). I've written on BSE about the synergies of Kwale plant/team (LOM ends 15 months) moving a few km's south over the border into Tajari which looks a very similar high slimes deposit to what BSE are now experts at. Maybe the Chinese are kicking tyres, either way for STA, I hope there is competitive tension and they can extract value while focussing on Coburn and their balance sheet next 3-4 years.
During the quarter, the Company also progressed discussions with potential strategic investment partners (including options for joint venture and offtake partners) relating to Nyati’s portfolio of Tanzanian projects. These discussions are expected to continue as the Company continues to refine its commercialisation plans.

Very glad to see Morgans was also blindsided by this $15M out of nowhere Fungoni payment, not always just us retail mushrooms after all
After some consideration of this welcomed report commentary, there are too many optimistic assumptions and ongoing risks to margins in the plan for my liking to average down, especially this far out. Hopefully Morgans and Shaws can translate their value buy proposition into on-market buying that can rise above the CR price. Until then, I'm watching the share price for evidence the BS is becoming reality, while waiting until 30th Oct for the next quarterly reveal...

GLTAH