Sorry to say, I can't see how shareholders don;t get wiped out here... I think STA are Kangaroo Edward
NAIF bought more time Dec Qtr by releasing $15M of the $20M previously earmarked for potential Amy Nth Expansion, but it looks like that will still leave the cash balance below zero by the end March, final Operation Review, new mine plan and funding review. Grade is about what is expected in this part of deposit and looking at DFS mine blocks infill drilled for the pending 5 Year mine plan, I don't expect much uplift and any small uplift will be balanced out by more overburden removal in the west.
Nothing mentioned about better Jan production or better price for Jan 10.5kt HMC sales shipment, so assume similar production and $650/t HMC price given weak min sand markets and quality risk for off-takers. To update the market 31st Jan but with no commentary on Jan performance is a huge red flag imo... "January" is used 7 times in the Quarterly, 6 times in reference to the 10.5kt HMC shipment and once for the date of report
Jan is behind us, they went backwards $25M in Dec Qtr, so even dropping that to $20M loss Mar Qtr (ie ~$6.7M/month) they will burn through cash on hand plus the extra NAIF $5M without material production improvements (they have been operating campaign mining between tailings capacity stoppages for some months already is my read). Even at $750/t HMC CIF another 30kt HMC production/sales Qtr only will raise ~$20M only half the cash excluding debt interest payments. Where is the cash to build a TSF lift coming from? (and work hasn't started on the ground yet looking at Sentinel satelite images).
If NAIF refuse to tip in another $5M or by end March STA are technically insolvent (with ~$15M unpaid invoices in Acc Payable) then someone has to tip in again. I just can't see brokers taking the risk of losing more given the appalling production performance and mounting pre-strip, rehab etc costs piling up. If creditors are asked to take buy more time beyond Mar Qtr, they will surely want to strip all shareholder equity for themselves for the extra risk. Probably the most realistic chance is Ndovu Capital and other Top 20 back and underwrite a very cheap rights issue in an effort to buy time and avoid an immediate wipe out.
No point me going on. It's a subjective call after stewing a few days over the situation. Very happy to be proven too negative here, but if there was a way I could bet someone today at 1:1 odds that STA goes under I'd take and feel confident of winning my losses back... Not wanting to upset holders, just because I got burned though doesn't mean I shouldn';t call it as usual on HC.
Might actually get around to requesting a Top 20 from the share registry, would love to see what rats left the sinking ship prior to suspension?
GLTAH
STA Price at posting:
9.5¢ Sentiment: None Disclosure: Held
(20min delay)