No joy, but there is hope despite severe and ongoing production problems. Look at this old Shaws forecast for an idea of how badly things are going... 9 months on and HMC is much lower than march qtr. Even worse, it's still lower than Jun Qtr after which most of the problems were rectified or well underway to being fixed and $35M raised. 57,000t HMC per Qtr is LOM average.
Revenue is probably less than $1000/t HMC imo on account of market weakness and quality issues that may or may not be materially improved? Commentary about searching for HMC buyers doesn;t sound like great quality or demand for the product, which probably means price discounts. Use $1000/t x HMC for easy qtrly revenue maths.
Costs I am only guessing at. On one hand, they have set up the DMU's in the thick, low overburden east strand to minimise costs, though that trick can only last so long right. On the other, cost inflation in WA and a troubled mine means higher costs. Building bung walls to prevent water mounding escape outside the pits adds costs. If they can get costs down to $27.5M/qtr then they stand a good chance of getting positive cashflow even at 75% planned production... I don;t like the chances of getting costs down that low. Sooner or later they have to start into the high strip ore and inflation is not coming down in WA.
There is hope, because equipment should work with normal downtime, recoveries are OK, and they say mineral quality should improve with the extra attritioning, extra tailings storage should buy time for water mounding to resolve in filled pits, the MSP should work eventually etc. That is the proposition.
However, each quarter that one issue or another keeps production low is an ugly trend that scares away brokers from the required CR needed to prevent creditors taking over the show. Creditors don't mind taking over the show if they think Coburn will come good because they can sell it back to market or another company once it starts wiping it's own face, maybe even for a profit above their debt owed.
Every month they fail to demonstrate material improvement makes me more nervous. Now wait for the Jan update and hope that it all falls into place and brokers decide there is a good risk:reward on offer and money to be made in a CR. Maybe even not terribly diluting. It can turn around quickly, all is not lost yet. Fingers crossed...
GLTAH
STA Price at posting:
9.5¢ Sentiment: None Disclosure: Held
(20min delay)