One thing I observe from the announcement, is that MGX require about AUD$100 million of revenue required to be cash flow positive.
Quick graph based on how much has to ship in kwmt based on the FE price to market this target
First thing to note if all other costs remain the same and average realised 65% Fe falls to AUD$100 (about a 30% drop) then MGX will have to ship 1000 kwmt to achieve the $100 million target. This is currently the top end of what they can ship per quarter based on previous quarters.
Second costs should come down as the stripping ratio should fall but contracting a mobile crusher will increase costs. Not how much one will offset the other.
Lastly the final factor is the number of ships that can be berthed and be loaded.
Given the headwinds I mentioned above (many out of their control), MGX are going to be walking a fine line to make forecast. Nearly everything has to go right. Not impossible - but risk is increasing day by day.
MGX Price at posting:
62.5¢ Sentiment: Hold Disclosure: Held
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