IMO to shut down operations is possibly the only sensible decision they have taken recently. I have been knocking the numbers around and done some research and come to the following conclusions.
1.Today they say that their ongoing costs would be ~$290,000/month 0 they could save a further $53,000/month by the directors forgoing their fees and more by closing down the Adelaide office and staff (particularly senior staff - C Whiteley and J Kopias are together on $529,889 per year - $44,157/month) going on with reduced salaries (to be made up on profitable operations). C Darby was on $333,071 but I hope he has now gone. Should be able to shave $100k.month off the $290k/month costs
2. By my calculations its not worth restarting operations until it can produce ~21T/day. This means that finance for the ball mill ($500k), one vertical mill ($2m) and engineering/screening (~$1m) - $$3.5m - $4m needs to be in place before re-starting.
3. Cash (end Sept) was $235,000 and debt (end Sept) $3.3m. They also claim to have drawn down $4.5m so I make it that they had $1.435m at the beginning of October. They will have about 100T of graphite in stock (worth about A$188,000) I would guess that have about $700k of this left now. However they owe Chimaera ($4.5m) and trade creditors $5.5m. Assuming that Chimaera and trade creditors refrain from putting them into liquidation they can stagger on for about 2/3 months. Chimaera will no doubt have a charge over VXL assets (I don't know where that places SER; I guess VXL would have needed SER's agreement to allowing a charge on their assets which had priority over SER's)
4. I really cannot understand why Chimaera advanced $4.5m to then in early October it should have been obvious to Ian Patterson (as a director) that production (at 2T/day) was not economic. C Darby step down announcement was on 16/10 - this was (I guess) when Chimeara pulled the plug (however the ann on 25/11 shown debt of $5.5m so maybe they lent a further $1m before pulling out). The Chairman's excuse of 25/11 "Despite meeting the debt fund’s technical requirements, their concern regarding the graphite market, notwithstanding their original optimism, has meant this debt facility was not established" does not ring correct to me - IMO it must have been uneconomic production. I also cannot understand why CD did not go immediately and was allowed to not only stay as MD until 1/12 and has not been sacked even then. I just hope CD does not get a termination payment (typically 6 month salary - $166,536) and is not now an expense to the company.
5. It seems that Chimaera were a party in at least two court cases listed on austlii as below:
