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03/04/23

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Post #: 67114252
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Originally posted by Giant1: ↑

3 April 2023 (Foster's Stockbroking)

STA

The analyst owns 265,500 STA shares. Foster Stockbroking and associated entities (excluding Cranport Pty Ltd) own 265,500 STA shares. Cranport Pty Ltd owns 500,000 STA shares

Strandline Resources (STA) - Coburn ramp-up progressing well·
Coburn continues relatively strong ramp-up. We caught up with STA CEO Luke Graham on Friday for an update on the company’s Coburn mineral sands project. Given the many vagaries that can impact – or even derail - a mine project during commissioning,

Coburn’s performance to date has been quite positive.

· No major issues identified. STA highlighted that ore being fed to the WCP was reconciling well with Reserves, obviously welcome as failure to do so has train wrecked many a new resource project. Reconciliation was not only with ore grade, but with slimes and oversize content. HMC Product (+94%) is also meeting product specifications.
· MSP handover a positive sign. Contractor Primero undertook handover of the MSP to STA during March with the plant transitioning to 24/7 operation. We believe the handover signals satisfaction with plant performance to date.
· Shipment increasing reflect ramp-up. STA completed its fourth shipment - 10.1kt in March, equivalent to 121ktpa run-rate. Full ramp-up of both WCP and MSP are expected by August but could be sooner. Meanwhile inventory build-up of other separate products – rutile, ilmenite, and premium zircon – is being made, with their shipments likely in the June quarter. However some zircon in concentrate has already been included in the HMC shipments. The company will provide FY24e production guidance in the coming quarter.
· Cash position strong. Cash at end December was $67M and we expect it to be approximately $45M end March. However STA now has minimal capex ahead and has passed its cash trough, with net free cash flow to increase. It seems likely the company won't need to draw the NAB working capital facility. First repayment of bond is scheduled for March 2023. Pricing of shipments has been above hat factored in DFS and is $36M to date.·

Growth options.
STA’s growth options include expansion of Coburn, which has a sense of urgency given the lack of new global supply. A PFS is expected in 3Q/4QCY23. Meanwhile its Tanzanian assets provide multitude of options. These include but are not limited to a potential spin-out, or development with a strategic alliance partner.

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'looking good and performing well".

STA Price at posting: 36.5¢ Sentiment: Buy Disclosure: Held
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