Reds more fun, but the money goes faster.I think INL need to...

Reds more fun, but the money goes faster.

I think INL need to have a look at the way they did business over the months when then zinc project had good cash flow.

I know the wisdom of hindsight is a wonderful thing, but the major expenditure decisions made by INL management when they had the cashflow, worry me.

With the following conditions existing -
A. Falling metal prices from mid March
B. No significant cash reserve held at bank
C. A debt of $5m in place and fully drawn

They made the following decisions.

1. A $2.8m purchase of the dredge and payout of contract rather than continue to lease.
2. A Que River substation upgrade for $2m without the IMRP construction having started and the old substation still working.
3. A $3.9M investment in BSM to maintain its strategic holding.
4. Started shipping EAF dust before a sod was turned on the IMRP and had to pay $5m in EPA bonds for a process that will now not be located at the Hellyer site.

In my opinion, $13.6m was shot up against the wall in an orgiastic spendup, by a company not used to having so much to spend.

This spending pattern also suggests capital risk management tools are not used in their major expenditure decisions.

As (again with the wisdom of hindsight), there is not one of the major purchases that has -

i. Added to the worth of INL
ii. Added to the profitability and longevity of the Hellyer Zinc Concentrate Project
iii Furthered the implementation of the Intec Metals Recycling Project.

I think there was little or no consideration of the risks that metal prices or grades would fall over during the life of the operation in their purchasing planning. Otherwise, why do we have an asset firesale now.

Till this last weeks actions,(the sale of the Tasmanian assets and the BSM sale) I have been supportive of INL and prepared to take a loss if it came.

I now believe they have less strategic planning capacity than thought, which does not instill confidence. I hope to be proven wrong and have a chance of recovering my investment. I am not holding my breath though.

Maybe INL management should back "black" at the casino in the future with our funds. At least there we have 50:50 chance of a profit.

Datrat