Hi Curiouswon and guys, This is an exceptional performance from...

Hi Curiouswon and guys,

This is an exceptional performance from Ramu IMO and, if sustained will lead to a progressive re-rating by the market over time (once the market becomes aware and believes it is sustainable).

Extrapolating, which is of course dangerous, but if the Quarterly performance can be sustained then the cash generated from operations at Ramu should equate to:

US$89m x 4 Quarters = US$356m p.a.

The issue with Ramu is that it is heavily indebted at c. US$1.343 Billion. HIG's share as of 31/12/18 is US$115m.

This FCF (at an operational level) will FINALLY allow the reduction in this debt.

The interest rate (from memory) on the debt provided by HIG's JV partner's parent company is 5%.

Thus - interest charges are c. US$67m p.a.

The operation is now generating enough FCF to make inroads into this scary debt mountain and I can actually see a light at the end of the tunnel now for HIG.

You can see clearly how important the Co contribution is to Ramu with average realised prices per t of Ni for the Q being US$17,492 (after Co credits) .... in excess of c. $3-4k per t on the average Ni price for the Q.

If Ni and Co prices remain stable then it is not hard to see operational FCF improving further as 2 of the 4 autoclaves were down for 15 days during the Q for maintenance:

4 x autoclaves x 90 days = 360 days per Q at 100%

2 x autoclaves x 90 days + 2 x autoclaves x 75 days = 330 days for this Quarter

Ramu only operated at 91.6% efficiency during the Q.

Trifigura may use this liquidity to sell down more shares (and they do have a lot!) but HIG is on much more solid footing now if this performance at Ramu can be sustained.

The optionality (or not) at Frieda River and Star Mountains and Sewa Bay can then potentially be unlocked over time.

And, now that the debt is being eaten into at Ramu, it is not too Pollyannaish to remember about the uplift from 8.56% to 11.3% ownership of the JV (32% upside) for free once the debt is repaid ... maybe 4-6 years out, metal price and operational performance dependent.

Cheers
John