Entropylord,You may be right that is could be a small NPV issue...

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Fredbear2

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31/03/23

12:38

Post #: 67066153
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Originally posted by entropylord: ↑

The corrected version.

Zebster,

The difference in words may relate to the penalties for off spec product, which may deter MCR from delivering it, even if BHP were to accept it?

The absence of information about the potential severity of the problem is concerning.

Maybe it’s a temporary issue, temporarily requiring stockpiling - Insignificant NPV impact
Maybe it’s a long term issue requiring substantial LT stockpiling - Very minor NPV impact

But if Cassini has major arsenic issues, and if they can’t fully be resolved by blending then perhaps this could result in substantial reduction in reserves and major NPV impact. [Sorry TB but a new mill likely wouldn’t solve the problem].

If it’s a major problem then I doubt it’s in the northern operations, because it doesn’t appear to have been a major problem at Durkin or Long in the past, has it?

Whatever, management owe us, the owners, a much more detailed explanation of the extent of the problem. Major stuff ups have obviously occurred on DS’s watch. Hedging, financing top ups and now mine planning (perhaps poor understanding of an ore body or scant assaying?). Is there anything else they are not telling us about??

EL

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Entropylord,

You may be right that is could be a small NPV issue but if you're correct, it doesn't necessarily solve the cashflow issue. They have hedges they need to deliver into (which are out of the money). Also, at what point will the loss of revenue trigger a default under their debt facility. They are spending on mining but if they can't sell all the ore, how much does this impact on free cash flow. They were also accelerating development into Golden Mile - $20M capital (in hindsight - this pivot looks bad and they knew there were issues).

My maths as at 31 December 2022 is:

Cash: $85.5M
Trade Receivables: $19M
Trade and other payables (A$50M)
Debt ($30M)
Out of Money Hedges - 2,358 at A$21,000-22,000. Based on A$35kt, that is $82.5 - $49.5 = ~($33M).

Net cash = ($8.5M).

They need to be generating cash and I can't believe they are.

MCR Price at posting: $1.41 Sentiment: Hold Disclosure: Not Held
1 Upvote

0 Great analysis

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