I refer to your letter dated 1 November 2002 requiring the Company to respond to eight queries raised in that letter.
The response to each of the queries raised by the ASX in that letter are provided below. IMT notes that the ASX letter as well as this response will be released to the market.
1. RESPONSE TO ASX QUESTION 1
The Company's ability to fund its activities in the next two quarters and beyond cannot be evaluated by reference to the Appendix 4C numbers alone.
Expenditure in the quarter included a significant quantum of non-recurring and prior period costs most of which were as detailed in the Company's Prospectus.
* Research and Development expenditure of $205,000 was incurred in the quarter. Forward Quarterly commitments for Research and Development are expected to be less than $20,000.
* Payments for prior period Creditors of $243,000 were made in the quarter.
The quarter's operating expenditures therefore included $428,000 of non recurring costs.
Debtors outstanding at the end of the quarter included an amount of $158,000 with an ageing of greater than 60 days. Focus on listing activities during this period together with processinq delays from one major customer resulted in reduced collections during the quarter. Improved collection procedures have bean established which the Company believes will significantly reduce the level of aged debt.
The combined impact of additional expenditures and reduced collections generated abnormal operating cash flows for the quarter of $586,000. IMT believes that implementation of current businessobjectives will result in a positive operating cash outcome during the first quarter of 2003.
Investing expenditures of $84,000 were incurred in the quarter to fund new capital expenditure on plant and equipment and mine development costs. The Company intends to fund future capital expenditure from recently established external finance lines.
2. RESPONSE TO ASX QUESTION 2
The Company does not expect similar negative cash flows to be incurred in the future. Non-recurring cash outflows of $428,000, increased debtor collections and actions to increase revenue are expected to return the Company to positive cash flow in future quarters.
3. RESPONSE TO ASX QUESTION 3
Sales revenues were below expectations in the quarter with a slower than anticipated offtake of new generic Coles / Bi Lo cat litter product and delays in production or new industrial grade bentonite products. This shortfall should be partially recovered in the next quarter with the commencement of industrial grade bentonite sales.
Expenses were in line with expectations.
4. RESPONSE TO ASX QUESTION 4
Revenue was recognised to be below expectations in July with steps taken immediately to redress the situation. This resulted in an increase in average sales levels in July and August. The circumstances for the reduction in revenue included:
(a) CAT LITTER
Runout of existing Coles / Bi Lo Generic stocks occurred at a slower than anticipated rate thus reducing the offtake of new Company product.
(b) NEW PRODUCTS Industrial product sales are subject to successful completion of product trials. The Company anticipated trial completion and initial orders before the end of the quarter. Delays in the procurement of equipment and the testing of product have delayed sales to the current quarter.
5. RESPONSE TO ASX QUESTION 5
During the quarter, new plant including a mill and ancillary equipment were installed to produce products for the foundry and drilling markets. This has already had an effect on sales as orders have been received from new customers for these products. A major sales push has been made for new customers in the cat litter and engineering markets, which has generated new orders. There has been no change to the Company's business objectives or strategies.
6. RESPONSE TO ASX QUESTION 6
The Board of the Company confirms that the Company is in compliance with the Listing Rules.
7. RESPONSE TO ASX QUESTION 7
There is no change in IMT's strategy as set out in its recent prospectus and as advised in its subsequent disclosures to the ASX.
IMT has substantial sales revenue from the operation of its mining resource. At current operating levels, that division of the Company is cash positive. With additional orders and new customers being obtained over this last month, the mine is expected to provide a very satisfactory return. IMT have informed the ASX of the development of its Phoslock commercialisation activities. All of those activities continue to be "on track". IMT remains confident that the tests at Lake Dianchi will be successful and that commercial application will commence in the near future, thus resulting in revenues being derived at that time. Given that IMT will receive royalties with relatively little expense to be incurred, the overall operating results of IMT should show a substantial profit.
Achievement of these results will see the Company with a very strong balance sheet. IMT will be in a position where it could pay dividends to shareholders in the current or subsequent years, should the directors so choose.
Apart from lease liabilities in respect of plant utilised at the mine site, the Company will have no interest bearing debt.
Potential investors have met with IMT and have expressed their willingness to subscribe for new shares in IMT at not less than the price in the recent prospectus should the Company decide it requires further capital. Accordingly, IMT believes it has access to further funds if there was a need.
8. RESPONSE TO ASX QUESTION 8
Breakdown of Working Capital Payments follows:
CATEGORY OF PAYMENT $(000's)
Creditors - General 266 Creditors - Transport 271 Creditors Packaging 92 Creditors - Contract processing 100 Creditors - Equipment Hire 40 Rent 57 Other 26
TOTAL 852
N Traill COMPANY SECRETARY
regards gaga
IMH Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
