there are some frustrated holders and now former holders, so i wont try to be a smart a...i think the forum has gotten toxic enough today.... but, just a few points of thought/replies to some comments and queries from the last few days... which i know are all my own opinion, and by no means can classify them as fact...and i too fit the category of a frustrated holder also...
Re monsoons and rain as an excuse:
you're right, there's a monsoon season every year and NSL will have to deal with it..... but, think about it objectively without all the built up frustrations everyone (including management) has no doubt felt and still feeling....
Monsoon season in AP starts June and supposed to end in September... Rain this year continued well into November.
- Approx July 17 commissioning/construction of the thickening circuit started... so there was well and truly rain effects being felt on the ground by then.
- Mid Sept Thickening circuit construction completed.
- End of October Name Plate on individual processes confirmed.
- Therefore, by the time plant is operational post thickening circuit it has rained from June til start of November, some 50% above average.
Operational companies (those of more than a couple of months operating that is) would no doubt be able to plan for the monsoon seasons ahead. They would and do use a combination of many things, such as:
- shelters/sheds/hangers/tarps to keep stored dry feed for the wet season
- site planning and management: having the mines with the right drainage/falls etc to ensure that they are not flooded as best possible
- engineering prevention: probably such as that just undertaken by NSL etc... things like crushers, which crush rock and clumps of dry dirt to feed in as a blend with wet feed. They've stated something has been engineered to help mitigate this in the quarter. Well this is already in place now for 2018 monsoon season.
- piles managed accordingly, so that the top of feed might be wet, but, the majority of the product underneath is dry.
Now remember the rains started June (approx)... people were claiming there was going to be a CR at that time due to no cash or sales.... First Samuel didn't come on until late Sept... Therefore, it is understandable to think that none of the monsoon minimisation techniques above were done, or able to be paid for at that time before the rains started... By the time we had first samuel money, there was already photos of large quantities of water onsite. It wasn't until the first samuel announcement that we even were reminded that mining had to ramp up to allow production....
They said they had difficulties with the wet feed going in... I well and truly believe this.... And believe any of these techniques will be planned for the future... They will have learnt a lot. It's just easier to do when already mining with cash in the bank account.
Then, once you're through the issues of production, you have site management (and movement) of inventory and dispatching of inventory to contend with.... They will have learnt from year 1, along with (hopefully) having money to invest in mitigating these next year.
Re the next plant order, agreed, if they were continuing on in the same operational position this quarter or next as sept and dec were, then you can't rationally order the next plant.
however, a blown quarter of dec doesn't mean they are blowing money now... if the company feels they are making profits from now on, then who is to say they can't fairly, and justifiably order phase three now...
back of the envelope stuff.... but:
currently 80% nameplate x (conservative) $20/t margin x 200ktpa = profits of $3.2m per annum before overheads etc.
I know these numbers can't be confirmed and purely speculative for us punters... but, if the company believes this is happening, then they could certainly order the plant.
notes on the above:
-80% is based off the advised current production of 80t per hour with the target of 100t to be achieved this quarter.... (yes yes, i would love this to be 100t now too, and why isn't it). even if we don't know how long they've been operating at 80t an hour, it doesn't mean they're not making profits from monday's date going forward (when they stated 80t)
- margins noted in the notes provided to insto's in november were $30/t. This appear to have included delivery, so i have used $20 for illustration purposes. But, this was also before the reports surfaced suggesting that domestic iron ore prices have risen some 20% in december, due to prices increased by NMDC (from memory), the biggest producer in India. These price rises were also before the 10's of millions of production that has been cut recently due to compliance bans. So, hopefully $20 is conservative.
best case may be around 100% at ~ $40 making $8m pa profits...
each person's interpretation of other commentary is based on how they each see it... and i'm sure not going to try and bother defending each announcement....
disappointed we've waited a year longer than expected, but, confident we've learnt a truckload along the way, which we will put into future this year... we couldn't be in a better environment for demand of our product and i'm confident xinhai will be the key to unlocking a lot more success with the plant(s).
it all comes down to producing... you either believe we are, or we aren't... and if you don't believe. well good luck with wherever you put your money.
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