Ann: Project and Funding Update, page-169

LTR funding has now been put into the uncertain box.
1. The A$760m facility has been pulled and is now subject to a comprehensive credit review
2. LTR has maxed out the FMC facility of A$300m. This was to be repaid from the A$760m, Now no.
3. Ltr say they have cash A$515m In reality Cash A$215m and FMC facility A$300m
4. LTR will now have to prepare a new production plan based on a SC6 = US$800m. This will be required by the banks prior to a new facility grant.
5. IMO a SC6 Price = US$800/dmt CIF will result in negative FCF (AISC will be higher than A$1000/dmt FOB in year1).
6. LTR will publish their Half yearly account in Feb 24. This will show their working capital position and once this is combined with the remaining cash developments costs, we will get a good handle on their cash position when they start production. This is crucial because if SC6 does not recover they can only trade at negative FCF for so long before they will be forced to out the operation into C&M.
7. I am becoming more convinced that LTR will merge with PLS and PLS will manage the production profile to reduce the market oversupply. They have the technical & fiscal resources to do so.
8. Regards the merger price. I initially thought A$1.00 but I was being too generous. I now suspect that PLS smells blood on the streets and will wait until around A$0.50. Why pay more than you have to!