Happy new year!All this talk about spreadsheets and yet I've not...

Happy new year!

All this talk about spreadsheets and yet I've not seen anyone post one. So I've thrown together a very crude scenario for a debt servicing schedule just to see how comfortable our debt burden will be. All values are $A.

Firstly, I've calculated a margin using the current spot price, the current US$/AU$ exchange rate of 0.68 and a production rate of 25kt/pa. I've taken the C2 cost figure from the restart study ($US2.56/lb). C2 cost does not include finance costs. Instead of using the C3 cost figure used in the restart study I am going to use my own financing cost figures as outlined below and apply them against the C2 cost margin.

With regard to the debt. I assume that we draw down all $250M of the secured and subordinated debt during 2023. I've assumed an average interest rate of 8% across the entire debt schedule. That's about a 3.6% premium to the current one month USD LIBOR rate. Is that a good ball park figure to pull out of the air to use for some conservative calculations?

Regarding the Metals X credit notes. If the CYM share price is above $0.355 when they convert in two years time (March 2025) Metals X has the discretion to decide to convert the notes to shares. Let's assume that they elect to receive cash instead. The credit notes attract 4% interest which is calculated and applied up front annually and capitalised. So, come March this year, by my calculations, the credit notes will worth approximately $40M to Metals X and by the time we would need to pay them out (March 2025) they will be worth $42M. In my schedule I pay them out at the end of CY24 but in practice you would expect Cyprium to pay down a bit more of the higher interest debt and not pay out the credit notes until March 2025.

I've budgeted an annual debt repayment schedule (cnote payment, interest and principle payment) of $80M. Using the revenue figures from above, this would leave $20M from cash-flow for tax, expenditure associated with our other tenements and other expenses. Is this a reasonable amount? Should the buffer be more? Using all the assumptions made above, that would give us a six year debt and cnote repayment schedule from the assumed start of copper production at the beginning of 2024.

Conclusions

1. At current market prices, the proposed debt burden, using an assumed interest rate of 8%, is easily accommodated using the C2 cost assumption from the restart study.

2. As has been stated above by others over recent days, the upside potential of this project is highly leveraged to the copper price. If recent industry commentary that the incentive price for copper is more up around US$6-7/lb and we see those prices for copper in the next couple of years, Nifty is going to be able to pay back the debt in no time and it's onward and upwards into self funding Maroochydore and Murchison, or, more likely; we get taken over. For example, at US$6/lb (and using a more realistic exchange rate of 0.8 for such a scenario) our C2 margin becomes A$8,218/t which is $205M pa @ 25kt production. Debt repaid in no time. >$1B market cap. Onwards and upwards. Happy days. But let's not get too carried away as we could end up being taken over for less.

I'm not convinced that the bottom is in for the copper price. We could retest the July '22 lows this year. I am expecting the share price will get a big break up on news of a FID and finance. In the current market, what percentage of the published after tax NPV of $277M would the market give to CYM shares? 50%? That would be about 19c a share. Keep in mind that with the current US/AU exchange rage the current copper price converted to $A is about the same as the figures used in the restart study. I would then expect that the share price might drift lower or become a bit volatile over the course of this year and it will still be subject to the vagaries of the copper price.

	$US/$AU		0.68
1			$A/t
2	C2 costs (restart study)		8,282
3	Cu Price		12,294
4	C2 margin		4,012	@ 25kt/pa	100,294,118
5
6	interest rate	8%
7		loans			c notes	total debt service
8		outstanding debt	principle repay't	interest	capitalised value
9	CY	A$m	A$m	A$m	A$m	A$m
10	21				37
11	22				39
12	23	270	0	21.6	40
13	24	292	15	23	42	80
14	25	315	55	25		80
15	26	260	59	21		80
16	27	201	64	16		80
17	28	137	69	11		80
18	29	68	68	5		73
19	30	0	0	0		0
20