A lot of any DD may have been on a list of issues that are...

A lot of any DD may have been on a list of issues that are somewhat different to those causing current concern to shareholders.

In the last quarterly E25 produced 62,277t and sold 62,418t. The HPMSM scoping study required 72kt per year so in a quarter E25 produced almost enough ore for a full year's production. With modest further improvement one quarter's production is a year's supply for the proposed 1st train of the HPMSM plant. For arguments sake lets assume E25 remains at the efficiency shown in the last quarter where Evaluation & exploration, Development and production, staff costs and Admin/corporate were A$10.8m. Scaling this up by 1.16 (72/62) so it becomes 72kt of production Butherbird costs for a year's HPMSM production is A$12.5m or US$8.8m at a 0.70 exchange rate. The cost of shipping from WA to USA would need to be added to this cost as would a sensible profit margin so as to get to "normal commercial rates". Given past cash flow profitability I'm not sure how much beyond cost E25 would have added in creating its input cost estimate for HPMSM.

The Scoping study had the annual cost of Material & Reagents for a single train of HPMSM costing US$34.4m but I can't recall seeing a split into ore cost and reagents. E25 cost to port was only about 26% of the Materials and Reagents cost. It was between 10% and 11% of the anticipated total operating cost. This means that ironically Butcherbird producing ore efficiently isn't a critical cost driver for the proposed HPMSM plant. If you look at E25's ore business operating costs as per Q1 this year, it would appear ore costs may only be the 5th most expensive input into the HPMSM cost base with #1 being Reagents, #2 General & Admin, #3 plant labour in the US, #4 Plant Operations. If Manganese Ore cost is only the 5th largest cost item, the efficiency of Butcherbird wouldn't have been particularly high on the priority list for DD evaluation.

A second cross-check on this apparently odd conclusion is the HPMSM plant needs 72kt of ore for 65kt of output so while there is a significant chemical purity conversion, from a weight perspective input and output volumes are close. In the last quarterly E25 noted a cost per ton FOB of A$180/t (US$126/t @ 0.70). This is massively below the US$530/t cost for Materials & Reagents.

Fromm the HPMSM Feasibility study