The specific of the questions that you asked Tremonti17 are confidential agreement signed between the smelter and the mines.I do not think we'll get that level of details released in the market besides the TC/RC charges.
Moreover , I do not think that's an issue here. MLX needs to increase production and to do that it needs stope dirt.To access stope dirt it needs to develope the ore drives and since MLX are developing outside the checkerboard zone , it also needs all the infrastructure necessary to support the development and consequently stoping in the future.
One cut of development is 250t of dirt (
typical drive is 5*5m) .Not all the cuts are in ore some are waste cuts .And typicaly ,only one cut is taken in a 24 hrs window in any particular drive due to the need for it to be bolt,meshed,shortcreted(optional , depending in geotech), charge and fire , bogged and trucked.Also , include the nipper to set the heading and the bogger to wash it down after firing.
So as you can see ,in June 586m (record till date )of development was completed.One cut is typically 4m rounds depending in the jumbo steel and butts left behind,but thats another topic on its own. So 4m round gives you 146.5 cuts in June .Notice the decimal because not all cuts are 4 m , some are jumbo strips example jumbo box cuddies or a drag for an intersection.
Now put that into perspective,they are pushing for 5 cuts in a 24hrs window for all their active heading.There is almost no stope dirt coming from the central zone (old mining areas) which is good as the dilution there was killing the overall recovery due to the surrounding stopes falling in the active stope which wasnt properly filled by the previous owner.
They have addressed this and from memory allocated $6mil for paste distribution for the new mining areas.Like the development rate above,this is slow but absolutely critical specially considering the subsidence issues Nifty historically had( or any bulk caving mine in the world ).
Also there is ventilation, no air= no dirt .A typical rise 4m (raise for Queenslander haha) is not just costly but very slow process. You need to get a raisebore machine which are almost solely thru contractors and depends on the availability of the rig.Depending on the ground conditions it can only do a meter or two of vertical development per 24 hrs.This is again a two step process-first a pilot hole is drilled and then backreaming begins as its nearly impossible to drill a 4m vertical hole UG straight up.They do have one in civil but this is UG and call up Raising Australia ,Byrncut or Macca's or any other UG boring contractors if you need more info.
Unlike previous mgnt who promised 40,000 Cu tons without a road map, I am happy that the new management realise its a slow and ample work still needs to be conpletewhich is reflected in tgeir canny release in which they have given themself ample time for 28k Cu target. Remember its not tgis Quarter or the next ....its 2020.
So what are the risks.....?
The biggest risk besides production which as outlined above is expected to remain flat untill the project works are completed is liquidity.
They had $52mil working capital ( End June ) and since Nifty is a fixed cost operation i.e it cost the same amount to produce 10kCu or 28k Cu ,we can assume another $20mil cash drain by Nifty in this Quarter. ( previous Q $17mil) .Even if they dont fully draw the credit line from city for $32mil they can still survive 2 more Quarters i.e 6 months.Although this exposes the company hence its better to have that credit facility secured sooner rather than later.In those 6 months, the project works mentioned above should be ticking simultaneously getting us closer to the new are and virging stope dirt with no dilution from surrounding stopes.Also I believe there is an option for working capital credit facility from Macca's their UG contractor.Maccas recently did this to BLK in which Milan Jerkovic is MD who also is a non ex BOD in MLX and bought $240k of MLX at 44c last yr with his own money after the capital raise at 67c last Aug for $50mil.
In conclusion ,there are plenty of options and just watch the space for project works and development rate in the company release to better judge the fundamentals rather than the headline production number for now.The dirt will follow.
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