On that basis the best SP is still less than $0.10. There'd be...

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02/05/23

12:24

Post #: 67562653
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Originally posted by Pseudo19: ↑

There are lots of variables and plenty the public doesn't know.
The latest sales price was US$673/T. Realistically this could fall another 10% within a few months.
The exchange rate is probably as good as they can expect looking at the long term chart.
The last operating cost estimates (in 2021) were for the 120Ktpa operation: $375/T plus royalties. Royalties are 2.5% WA (discounted 50% until 2027 IF sale price is below A$1000/T), NT royalty 0.75% and Smoothy/founders royalty 1.9%. So Another $45/T.
The operating costs for 60Ktpa (assuming they achieve this) will be higher. $450/T?
If the price drops back to A$900/T with costs of $450/T, the margin from 60KTpa is $27M.
We know the credit was good but interest rates have risen significantly since the loans were written. NAIF talks about fixed rates and the Government cost of borrowing. Presumably the rates have risen.
The loan is $195M. At 4% the interest is $7.8M.

Based on all the assumptions above, 1500T per month may be enough to cover the monthly interest. This is absolute survival mode with no capacity to repay accrued interest, deal with any further issues requiring capital and zero ability to fund any expansion.

If the Aussie dollar rises to 69 cents and SOP price drops to US$600/T, both very possible, the margin is $25M.

All of the above is assuming the current plant upgrades actually work.

With 2B shares on issue it's hard to get excited about a possible share price at 60Ktpa or 120Ktpa.

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On that basis the best SP is still less than $0.10. There'd be shareholders who've paid a lot more than that. The only way out is if some big operator wanst to buy it out. BHP have been wanting to get into the SOP business for years.

KLL Price at posting: 3.5¢ Sentiment: Hold Disclosure: Held
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