Same outlook as Ana had in her Rockstock interview this weekend....

Same outlook as Ana had in her Rockstock interview this weekend. Which makes sense I guess - if you’re CEO of a hard rock company which can produce at something like $400/t (FOB) - which both SGML and PLS can - then the strategy for companies like this will be to expand production and increase their market share.

Sigma (as an example) generates free cash flow - even at $900/t SC6.

The outcome of all of this (IMO), will be that ‘less good’ and higher cost producers will either go bankrupt or into C&M for an extended period. CXO was just the first, but I think SYA should also be in C&M with them. It will also be a shock to hear, but there is a scenario where even LTR ends up in potential C&M (SC6 prices go to ~$850/t or lower - and they have ramp up cost issues - and/or they are unable to secure finance or end up with onerous covenants). In the hypothetical where they lose $150/t, they would burn $45m cash in a year (assuming 300Ktpa, but higher if 400ktpa) or $300/t loss = $90m cash burn per year). if this plays out over 12 months - their ability to refinance the bridging loan is potentially non existent.