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Thanks Gcar - I missed the the dial in as I was away so...

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16/07/19

13:30

Post #: 39542129
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Originally posted by GCar: ↑

My notes from the call, iirc!:

------------------------------
Mt Cattlin:

- 2 open mining faces; increases flexibility
- Mining output greatly improved
- They expected the high grade zones
- Expecting ~1.15% grade for H2
- Basalt concentration slightly higher than expected
- YOP designed to handle this
- More precise mining methods + in-pit ore sorting
- 1.4% head grade processed
- 4-day maintenance shutdown early june (planned)
- 56,500 DMT Spod Conc produced Q2, 35% increase on Q1
- Highest quality since operations restarted
- 6% average Li conc
- +6% now being achieved with <1.2% iron oxide
- Small trade off of grade with recovery
- Further improvements due in H2: plenty of opportunities for this: Costs, processing efficiency (optical sorting, waste rejection)
- Costs down 25% Q on Q
- Q2 performance NOT a one-off
- 29,439 tonnes shipped Q2
- 3rd shipment delayed into Q3
- Q3 shipping guidance 60-70kt
- Q3 production guidance: 45-55kt
- HIGH quality product
- Mt Cat in SOLID position

SDV:

- Development works continue
- Pond lining to commence in Q3
- 40 people recently trained in pond lining
- Test program underway
- De-risking continues
- Base case work underway
- 2 x Solvent extraction processes being investigated
- 2 x Ion exchange processes being investigated
- Good results so far
- Q4 target for developing an updated project execution strategy and timeline
- Simon to site (SDV) next week
- 3 x recent senior appointments
- Catamarca office opened in Q2

James Bay:

- Feasibility work continued as planned in Q2
- Increasing degree of confidence
- Phase 2 test work underway for downstream operations

Both WILL be developed.
Simon accepted this challenge when he took on this role.

Alan Rule:

- $176.3m closing cash June 30, No debt
- $23.3m AUD ($16.4m USD) A40 + LPD
- $55.2m USD tax paid on Posco transaction
- USD/Peso exchange rate reduced this tax payment by $10m
- Inventory at June 30: 59kt Spod conc.
- Equivalent to about $20m USD in inventory working capital
- to be returned in H2, with $$ received to be higher than this $20m ($20 was @ cost)
- $203.3m cash and liquid assets at June 30

Questions:

Matt/Nick? @ Credit Suisse:
June QTR recovery?:
- Not sure yest about recovery for Q3, will be less than 70%, likely around 60-65%
Sales Q3 confidence?:
- Quite confident, 22kt locked in
- 2 more shipments contracted
- Guidance remains
Inventory grade at site?:
- No risk of degradation
- Grade varies, some <6%, some ~6%
- Can blend as required to meet customer targets
Downstream processing in China?:
- Working with contact in china to understand options etc
- Nothing binding in place
- Continue to explore
- INTEND to diversify downstream
- Key focus remains SDV and JB

Reg Spencer @ Cannacord:
Inventory - 2nd half weighted, how to unwind working capital?:
- Will NOT lower production output in H2
- Sales to exceed production for Q3
- Main strategy focussed on marketing
- Q3: remain confident
- Sales weighted to Q4: early indications remain on track
SDV Capital budget?:
- Previous guidance of ~$20m USD for capital spend for the year
- Will commence(?) test work once ponds are lined and filled etc
- Will remain within $20m for the year
- Asround $3m capex spend in Q2

Peter Arden @ Bell Potter:
Mining in Q2, High-grade zones? Were they expected?:
- Yes, did anticipate the high-grade zones
- The amount of basalt and its infiltration needs to be determined
- About 1.15% grade will be fairly consistent for Q3 and Q4
In-Pit sorting?:
- Blast design work to assist separation of ore and waste
- Has had greater focus and it is still improving

Glyn Lawcock @ UBS:
Spod pricing: trend and trajectory?:
- (A Tse) Spod will have some correlation to chemicals price
- Carbonate: ~flat lately
- Hydroxide: has been trending downwards and converging with carbonate
- Cautious optimism in China
- Policy initiatives in June/July around subsidies
- More stringent emissions standards
- Spod prices vary due to different converter scenarios e.g. stockpiles, refurbishment, etc
- it is a CASE-BY-CASE basis
- Sales for H2 contracted, with prices fixed in June for the H2 sales

No further questions?! (I was waiting for Col or ASB??!!)

- Simon to visit Argentina and Canada in the coming weeks!

--------------------------------

Hope that helps!!
Cheers
GCar

Expand

Thanks Gcar - I missed the the dial in as I was away so appreciative of the succinct update.

Good summary.

Mt Cattlin - operating impressively with best ever grade, low production cost, very profitable and production on target, sales deliveries "being managed" to suit buyers which shows a solid ongoing relationship between the supplier and long term buyers - drilling for and finding more ore reserves - all good.

SDV and James Bay progressing well and methodically - costs on budget.

One point to remember is our cash / liquid assets of circa $200m as at 30th June'19 was in US dollars so that equates to A$285m approx versus our market cap of circa A$525m

Shorters and some commentators still working hard to suit their own egos and agendas.

Looking forward to further solid numbers and updates on all fronts in the next quarterly to underline the quality of the Company.....I wouldn't be at all surprised to see a J/V partner appear out of the woodwork for either SDV or James Bay .... time will tell.

Patience will be well rewarded IMO.

GXY Price at posting: $1.38 Sentiment: Buy Disclosure: Held
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