Ann: Quarterly Activities/Appendix 5B Cash Flow Report, page-74

Re inventory
The inventory valuation is both ore that is available sale and also ore available for further processing (stockpiles along the production process before the log washer and before the ore sorter). The valuation should be the lower of cost and net realisable value. While a inventory write-down was done in June 2021 it appears with hindsight this adjustment to net realisable value wasn't large enough. This was probably because E25 didn't fully factor shipping costs into net realisable value.

You are correct in noting the $3.85m value for inventory is too high to be just 8,973t of ore available for sale. Given the intention was to stockpile ore for the log washer, a significant proportion of this value will be extraction costs for ore that is yet to be fully processed.



Inventory valuation doesn't however impact cash flows because its just an accounting adjustment transferring costs from the P&L to the balance sheet. Depending on your viewpoint (communication around this has been poor from E25), the extremely low March quarter revenues were due to E25 being completely slammed due to lower grades, grade adjustments and shipping costs. An alternative possibility is that they agree T&C's for each shipment around a month before departure. There is a washup system in place if the delivery doesn't match specification (and also smelter credits for beneficial elements). The under-delivery to contract in the December quarter cascaded to a negative washup in March and this was a factor in why the payment was so small. Additionally it means the price for March may have been set circa a month before delivery so the starting point may been about US$5.46 (not about $6.53 as the last Fastmarkets weekly update price before departure). Who knows, there may even be a washup on price between contract signing and departure.