The good bitsThe cost of production remains broadly similar with...

The good bits
The cost of production remains broadly similar with previous periods $8.3m, $10.8m, $10.6m, $9.2m although these numbers are easy to manipulate when E25 doesn't disclose transportation to port costs separately and doesn't disclose whether the processed ore is at Butcherbird or at Port Hedland.

There's finally something definitive to work with around how efficient or inefficient the mining operation to mine gate is.

If E25 had shipped the 50kt of ore produced in the period then the cash deficit would have been materially reduced (but not a surplus).

Ore mined again increased slightly from last periods record of 267.0kt to 275.3kt.

HPMSM Development is now a separately identified cash flow item so it doesn't get confused as a Butcherbird BAU operating cost

The AUD FoB cost reduced slightly to A$201/t. If the grade was 32% (it probably isn't yet) and the exchange rate was 0.7 then this would have the cost at Port Hedland of US$4.40/dmtu. Add on shipping and grade discounts from 44% and you need prices around or above US$6/dmtu to potentially be profitable. The current Mn price is about US$5.30/dmtu.

There's some clarity on shipping costs and they are higher than I'd have expected from a previous guess of 1:100th of Baltic dry &/or previous comments of low $30's/t when shipping rates were super high.

There is time-based demand for HPMSM (i.e. 2025). This will keep pressure on the project to progress. A number of other battery metal companies are supporting market cap's many times E25's in their pre-production status so you don't need huge ore profitability in order to maintain the current share price (but the losses ending would be good).

The bad bits
28,610t of product sales and basically revenue. This is confusing.

Stopping reporting whether ore is at Butcherbird or Port Hedland means you can't tell if all the transportation costs to port have been incurred within the inventory volumes

Grades produced are still not mentioned

Effectively no progress on getting to nameplate

Progress on getting a DMS plant looks to be slower than hoped

Its unclear if the ore washing is struggling generally, or whether its struggling to meet the precision requirements of the optical ore sorter.

Evaluation
Good progress on HPMSM. Little progress on the ore operation.

On the ore operation this quarter wasn't the best but its currently around A$122-$133/t. If producing a 32% product, $133/t @ 0.70 exchange rates is US$2.91/dmtu. The bar graphs on page 2 note a forecast at nameplate of A$75/t. Again @ 70c and 32% this would be US$1.64/t. Its not clear if this estimate includes corporate costs or not, but my guess is not. If this A$75/t can be realised by getting production volumes up, E25 is back to figures fairly close to PFS figures for the cost to mine gate. Costs beyond this are still elevated. At nameplate you would appear to have an efficient production of ore, but reasonably substantial costs in getting it to Asia.

A Sep 2020 video by E25 had a slide noting US$2.80/t production costs which included US$1.14/t for logistics. Excluding 20c/dmtu of corporate costs, the mining costs were US$1.46/dmtu. If this is now forecast at US$1.64/t that's not a big gap.

With more clarity on shipping costs (higher), more of the difference between market prices and received prices needs to be attributed to shipping. This will lower the implied grade discount. Some recalc's for the evening.

The Ore mined/production rate is higher than expected. It's possible that E25 is being a little selective around what ore is being put through the production process and a stockpile of ore that will work better with DMS is being built. Hopefully its not crashing recovery rates.

Its possible that the scalping / log washing operation is struggling to produce the precision clean requirements required for the optical ore sorter creating a cascading problem. If the log washer was only attempting to get to a "pretty clean" status for the DMS, it may well be achieving this successfully.