We’re going to need at least $5m cash balance at the end of Q4 2023 to provide a commitment to Exalo for warm stacking the rig otherwise we risk losing it. I’m pretty sure the $4.4m letter of credit outlined in the Q1 2023 quarterly report was for this purpose to keep the rig on site after MK-1.
So that brings our $22.9m cash at end Q2 2023 down to $17.9m available.
Take out $0.9m per quarter for operating costs / overheads in Q3 and Q4 and that comes down to $16.1m.
Planned drilling costs for a 60 day drill at MK-2 at $180k/day (which is realistic based on MK-1 costs incurred in Q4 2022) is $10.8m which leaves $5.3m cash remaining out of our $22.9m available. This is all we have to cover our Q3 costs.
And there’s no way our Q3 2023 costs are going to be only $5.3m. This has been one of the busiest periods of activity since drilling MK-1. We’ve completed seismic activities on the ground, then started seismic processing, completed maintenance on the rig, built the well pad, relocated the rig, completed pre-mob checks on all service equipment, will have mobilised all services personnel and equipment, paid all upfront services costs (given that we only just selected them at the end of June so wouldn’t have incurred any costs until Q3), spudded MK-2 and completed maybe a week of drilling.
I’ll be very surprised if Q3 2023 comes in at less than $10m-$12m.
And on the Q2 2023 costs - this would have been transitioning back to full personnel on site at the rig, earthworks and clearing for seismic, starting the seismic on the ground, starting earthworks for the drill rig pad and getting all our remaining long lead items for MK-2. I think it was too early to see any services company costs back then and they’re more likely to show in Q3.
It’s not the end of the world but the numbers don’t lie.
IVZ Price at posting:
16.5¢ Sentiment: None Disclosure: Held
