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You would want to be aware of the life of mine as a new...

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Petemate

233 Posts.

172

19/08/19

16:45

Post #: 40043176
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Originally posted by Chezd ↑

Things certainly have become more critical now with the disclosure of a notice of default.

The details of the default mention the following;

"The asserted events of default relate to: • non-acceptance by the Lenders of updated life of mine plan; • alleged failure to comply with the physical parameters of the preciously approved life of mine plan; and • the Company suffering a material adverse effect to its business and financial performance as a result of the deterioration of the lithium spot price and weakened market demand for spodumene concentrate."

We all know about the deterioration of the lithium market but the first bit about the non-acceptance of the updated life of mine plan is a bit of a surprise because, at first glance, there appears to be no material change between the application lodged in November 18 and the application lodged last week judging by the notes that accompanied each application as detailed below from UYScuti's previous posts.

“The Central pit will be expanded to allow for thecontinuation of mining operations and extraction of additional economic ore.The pit will be extended approximately 100m to the west and 300m to the southeast, the footprint will increase by 10.38ha. Mine life until Q1 2022. (MiningProposal ID: 76849). "

"Proposal to expand the Bald Hill Central Pit, by 100mto the west, and 300m to the southeast. Life of mine will be until Q1 2022(Mining Proposal ID: 81774). "

One thing I noticed with the new proposal lodged is that 2additional licences have been added. The original proposal only dealt with themain mining lease (M15/400). The new proposal includes G15/28 and L15/348 aswell as the main mining lease M15/400.

G15/28 is a General-Purpose Lease that was granted in May2017 and expires in May 2038. It contains an area of 1.43 Ha and is the site ofthe current camp which occupies about 0.5 ha of the area. L15/348 isMiscellaneous Licence granted in September 2014 and expires in September 2035.It contains an area of 3.16Ha and is the access road from the mine site toBinneringie Rd .

The following map shows the locations.

Ihave a recollection that there was deferred capital expenditure in relation tothe upgrade of the access road and Binneringie Rd as well as the camp that was part of previous mine approvals but I cannot locate that at the moment to be 100% certain. Perhaps someone has a better memory than me.

What I have been able to find from previous submissions are the following extracts in relation to the granting of the 2014 licence for road haulage and the road upgrades that were required.

“2.3.8 2014 – Utilise existing access road for haulage
In 2014 a Mining Proposal was submitted in support of an application for Miscellaneous Licence L15/348 over the existing site access road. This was to enable the road to be used for haulage of final product away from the mine site.

The main commitments relating to environmental management were:
• Maintain surface water flows
• Undertake dust management as necessary
• Management of mine traffic to minimise the potential for accidents.

2.8.9 Ore transport
As per the previous version of the Mining Proposal, lithium ore concentrate will be transported to the Esperance Port for stockpiling and periodic shipping to customers. Road trains will complete two return trips each per day (six return trips in total).

The transport route will be via Binneringie Road (unsealed) and the Coolgardie-Esperance Highway. The Coolgardie Shire and Main Roads WA (MRWA) have been consulted regarding the use of road trains on the public roads and approvals are pending.
Planned upgrades to Binneringie Road have been discussed and agreed with the Shire of Coolgardie. This work will be undertaken by contractors to AMA/Tawana.

An upgrade of the intersection of Binneringie Road and the intersection of Binneringie Road with Coolgardie- Esperance Highway will be undertaken in accordance with design specifications provided by MRWA. This work will be undertaken by MRWA approved contractors.”

What is apparent is that there were significant upgrade requirements for roads between the 2014 approval and the last mining proposal Version 3.3 for the TSF and Turkeys Nest dam, details of which I have included below.

I do not recall any of the road works listed under 2.8.9 having been undertaken as part of the tailings dam and turkeys nest dam upgrades. The mining proposal 76849 was placed on hold by the assessors for many months pending further information from the company.

As there appears to be no significant change to the mining footprint between the 2 proposals (76849 and 81774), judging by the notes that accompanied each proposal, I am assuming that the assessing authorities required the exact details of the road upgrades to be included in the mining proposal hence the requirement for resubmission. I would also think that the inclusion of the fines circuit required more additions to the mining camp during the construction stage and these details were also required to be included hence the addition of the extra 2 licenses to the amended proposal.

Neither of these requirements would constitute material changes to the updated life of mine plan that would warrant rejection of the plan by the lenders. The upgrades previously approved for the TSF and Turkey’s nest dam were also sufficient for the current 5 year Life of Mine. What has changed that has led to this rejection? Something doesn’t add up here, but then again, nothing that we have been told so far has turned out to be correct.

As I see it, Tribeca have had enough and want their money so nothing short of a full loan repayment by 5pm tomorrow will stop them from moving forward with this default. Let’s hope that MC can pull a rabbit out of the hat. Let’s hope also that this rabbit doesn’t have myxomatosis this time.

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You would want to be aware of the life of mine as a new offtaker.
Given our short mine life any new offtaker would prefer to see an upgraded life of mine to negotiate how much spodumene they would want per annum. Perhaps the delays form potential offtaker has been Lom yet now that our reasorce update is currently due now the negotiations can now be finalized.
Our new offtaker could sign up with a prepayment to help with cash flow or consolidate our debt.

Cheers gltah

A40 Price at posting: 8.2¢ Sentiment: Buy Disclosure: Held
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