Ann: Half Year Accounts, page-2

The reasons for the share price weakness are a little clearer. Net profit before tax fell from $19.4 million in the pcp to $4.1 million in the last half year. Net profit after tax was only $2.9 million, or only 0.28 of a cent per share on a share price of 17.5 cps.

Even this was only after fiddles. The residual value of mine equipment was increased from $10 million to $15 million, reducing depreciation by $2.1 million.

Cash flow has been boosted by slashing money owed to us from $12.1 million to $1.2 million. The swing in net receivables is from owing a net $7.4 million to owing a net $13.7 million. So Autosime's calculation that the starting point at 30 June 2021 is cash of $38 million needs to be adjusted for the fact that we have outstanding bills of a net $13.7 million. Cash less net payables is only $24.5 million.

The value of inventory at cost is $27.6 million. This does not allow for the profit margin of course, which with rising prices will be large (thank god). However, note that shipping costs more than doubled to $8.8 million, which will be a deduction from revenue and shipping costs will certainly stay high given the Baltic Dry index is double what it was in March.

So we will benefit from the sale of inventory and we have already paid the mining costs (though not shipping), but on the unchanged production guidance for the year production in the second half will fall from 187k to around 120k, partly due to lower grades.

I gather they will only start accruing franking credits from now on, so there could be a partially franked dividend at year end, but of course cash flow is reduced by tax payments in the meantime.

The second half will certainly be much more profitable, but the stagnant share price is less of a puzzle until the runs are on the board.