Ann: Quarterly Activities/Appendix 5B Cash Flow Report, page-30

Thanks for the response. You're assuming a Mar Qtr of ~45kt HMC production, which is > 50% improvement on the Dec Qtr (never produced more than 30kt/qtr). I agree that is the minimum improvement required Mar Qtr to justify more financing to buy a longer runway. Even then, 45kt HMC at $800/t sales price (vs $650/t Dec Qtr) = $36M gross, vs $48M cash out Sep Qtr and $45M out Dec Qtr (excluding Tanzania costs). There is always a lag between production and sales shipping, so that early Jan 10kt HMC will balance out stocks at end Mar Qtr for all intent and purpose (operating cashflow is proportional to production).

I did question why no mention of a lift, or even maintaining December's prod'n, in Jan from Dec Qtrly commentary when shareholders are desperate for some hope? (ie Jan was not 13.5kt HMC). If Jan production went back to 10kt once they moved beyond the "higher HM grade ore in the month of December", reaching 45kt in the Mar Qtr becomes all the more difficult.

>55ktp HMC/Qtr is the minimum target to demonstrate positive cashflow sufficient to at least cover interest payments even if principal repayments are restructured. That would buy time to transition to MSP final products and even higher revenue from 55kt/mnth HMC (which requires more working capital injection to cover non-sales period during transition and MSP ramp-up) while also hoping commodity prices rise for more meaningful operating margins.

I'm joining the dots on little info, could be Jan was a big production rise on Dec, but unlike Dec, they didn;t feel like giving holders a Jan monthly production update . We know debt went up $10M in Dec (NAIF, $10 & $5 possible, not $15 & $5 in my error previous post) and cash went backwards $25M, so I don;t think another $5M from NAIF will cover it. Good chance 31 Dec $12M cash has already been run down as suppliers start asking for cash-upfront terms to avoid being caught in administration with unsecured bad debts (ie Acc Payable reduction proportionally reduces cash level as invoice payments are brought forward). A new joint NAIF-Bond super senior finance injection more like $25M was required imo (even if NAIF was ring-fencing their debt top-up from bondholders' security), and likely to be a facilitated by another third-party facility.

In short, STA debt went up $10M NAIF and ~$6.5M unpaid interest in Dec Qtr, and likely another $25M plus ~$6.5M unpaid interest in Mar Qtr, or almost another $50M to previous A$235M debt... is that debt load sustainable even if HMC production gets up to 55kt/Qtr? Given what we now know about water mounding issues, grade, recoveries, DMU productivity and product quality I think not unfortunately...

What could turn Coburn into a robust profitable operation? Best option is to undertake the 'Coburn 50% Expansion" with more DMU's, first running the WCP at 100% capacity then lifting it and MSP further to leverage greater production form the existing infrastructure. That was a good plan originally... in min sands as other bulks, size and economies of scale is everything to reducing unit costs. Problem is that Coburn looks like needing a lot of cash and runway just to break even, before considering ballooning debt, before considering new expansion capex to lift scale and drop unit costs.

An expansion might cost another $100M+ capex, but no way would new equity take that risk while sharing upside with existing STA shareholders, or with existing debt levels... Everything points to wiping out STA shareholders, creditors taking a debt restructure haircut, and fresh equity (new owners) taking a punt that with more investment and time at the right price Coburn can turn into a winner. That's assuming no 'fatal flaws' such as water mounding, product quality or simply high costs vs low grade?

Sorry to be so negative, writing thoughts down in HC posts is my way of working through and clarifying the situation in stocks. Without writing stuff down in posts it just bounces around my mind as generalisations and ideas, I get distracted and move on before locking down firm conclusions. I've already written STA off as 100% loss, if they re-list at any price that's a bonus.

GLTAH