Ann: Proposed Debt Refinancing, page-87

Hi to  everyone.
...That Fitch report says it expects capex of around AU$6M for  next two years to FY22.
“We expect funds from operations (FFO) fixed-charge coverage to remain below 1x in FY20 and FY21, and then improve as we expect the spodumene price to recover from the current trough and AJM to increase sales volume.


And it said it also expects AJM's funds-from-operations adjusted leverage to be circa 9x next year and in FY2021  “due to its leveraged balance sheet and weak spodumene price and sales volume.”

I don’t understand the numbers and so can’t comment on that bit.

But regards its key assumptions;
- that ‘realised spodumene price’ for the next two years will fall and then increase “modestly”.
- and that AJM is likely to cut back on production next year in line with customer demands so will be achieving production volume that is  15% lower than  nameplate capacity next year.

That view on reduced volume  is based on precedents set by ‘many others’.

And yet it says
“We understand that AJM is in conversation with a number of parties in regards to potential off take variations and additions which may typically attach to an equity position in the company. “

Offtake variations doesn’t have to include increasing volume but offtake additions surely does?

So on one hand it thinks Altura will cut production next year and on the other it says Altura has told Fitch it its in contact with customers who want more ?