Conclusion. : While Cathay Fortune is now out of the picture the company is still in discussions with a number of parties and is still in discussions with its lenders on some form of recapitalisation of the business. The scale of the impairment charge would suggest that management have significantly downgraded their expectations on the cash flows from this project – this would imply not just a lower copper price but a higher cost to bring targeted production on stream. Outside the main Boseto deposit there should be potential to develop the other resources around the project. The right partner should be able to extract value from this project where a high quality plant has been built in a remote location which is a great challenge. The key for management is to be able to demonstrate that the high grade ore can be accessed to achieve throughput targets through the plant.
DML Price at posting:
13.0¢ Sentiment: Hold Disclosure: Held
