Pushed out of the way to become the NED Chair? Funny, but doubtful.
Seriously though, stripping $3m pa of costs out of the business is prudent at this juncture. PH's move from CEO to NE Chair will save >$550k pa in base salary (incl. super) alone. CJ's uplift to CEO represents only a minor uplift in his existing total remuneration costs, so that's encouraging to see.
I'm glad to see some cost reduction initiatives that don't hollow-out the BS restart capability. I'm also pleased to see an experienced mining operator in the form of PH move to the Chair. It retains the corporate memory in the business. I also think it's better than having a corporate lawyer as Chair -- especially for a Ni junior that cannot afford to be top-heavy at Board level (i.e. every seat holder needs to bring relevant experience that can add something to the company). That's not to say DLF added nothing, but I think when you've got a (revised) Board of three members it's better they all have direct industry experience.
Now for the bit that may paint a target on my back (for which I simply don't care. My investment funds deployed. My views): There's been so much bitching, hand wringing, and gnashing of teeth around management's and the BoD's competence here on HC which has, imo, been so utterly misplaced -- presumably based on good old fashioned ignorance. That's not to say that some of it has been without merit (e.g. the apparent disconnect between the management of the restart expectations v. reality). However, most of it is just plain wrong, imo.
To provide a brief example into what I'm alluding to, let's examine the question of the BS restart. I'd encourage serious punters to pull up the 2022 BS BFS and run some very simple rudimentary numbers around how the current spot Ni price of AU$13.40/lb (i.e. US$8.60/lb / 0.64 Fx) affects the BS project's Base Case revenue that was modelled using an average of AU$16.80/lb (i.e. US$11.60 / 0.69 Fx). Now, as a quick-and-dirty, simply apply that 20% reduction to the modelled gross revenue to see what that does to the projected Net Cash Flow which is one of the pillars will underpin the FID (using debt and equity) over the relatively short 4-yr project LOM*. Here's a hint: It's not AU$227m over the BFS any more. Not even close. Is the number still positive? Yes. Just. But not if the spot Ni price goes below US$8/lb (assuming unchanged 0.64 Fx). Let that sink in for a minute. If anyone is having trouble with that, they should head on over to the PAN threads to see just how much cash you can burn through when you are operating and the Ni price gods move materially against you. In simple terms: Lose a little (by remaining on C&M) or lose a lot (per PAN)? That's the unpalatable choice.
Am I happy with the current state of the Ni price? No. Was I aware of the issue prior to recently loading up? Yes, of course. Then why load-up? Because the name of the game is to buy low. Counter-cyclical.
Z
(*To pre-empt the obvious, but flawed, counterpoint: Yes, the LOM can get extended in due course during the project, thus improving the economics somewhat (assuming grades, recoveries, etc, etc, remain unchanged). So do you just assume that will happen when it comes to the process around making a FID and 'Nike It' (i.e. "Just do it")? Goodness No! You base FID on a decision-making framework of best practice, not wishful thinking! That's why you do a BFS in the first place!)
(20min delay)