As others may have noticed, E25 dug a couple of pits that were...

As others may have noticed, E25 dug a couple of pits that were empty on 24 March but by 8 April. Initially one was greenish and the other was muddy (upper left in the pictures below). The amount of water in these pits has stayed fairly constant over the next 3 months despite high temperatures and the typically low level of monthly rainfall across April to June (at least based on Newman historical information). It would appear E25 has intentionally created some pits in the mining area and put some water into them. This does not appear to be a situation like Core lithium's water in the pit issue during the NT wet season that was slow to be drained because it was combined with explosives

I suspect this is a further change that E25 has implemented in the recently completed quarter to improve operational performance. Until E25 confirms what they have done, it will remain a guessing game. My guess is that they are experimenting with using these ponds to pre-soak Manganese ore that is also high clay or dry clay. The reason for two ponds may be to enable either a short/long wash option or for some cleaning process between the areas. The presumable reason for a pre-soak would be to soften up the clay so that the log washer more easily liberates all the clay from the Manganese. The more effective the washing process, the better the optical ore screener will work. Cloud cover makes it impossible to know from Sentinel when during late Mar/Early Apr that this change occurred, but its possible that it was in late March and contributed to the new daily record of 1,859t.





I am wondering whether we are in for a favourable surprise in the current quarterly in terms of both volume and possibly revenue (will we get grade info?). While E25 has only shown limited benefits from it, mined ore is in an up trend with Q1 2023 at a record and up 13% on the previous quarter. The annual increase on Q1 2022 was +39%. If E25 is to mine 1.3Mt of ore per year, it needs to mine 325kt per quarter. This is the metric that is closest to being at nameplate and could possibly have already been there if the rest of the flowsheet was in a position to handle higher volumes. This also means that the cost of mining and crushing ore at nameplate volumes is basically already in the March quarter.


The huge wildcard is of course production volumes in Q4 2023 (and grades on which E25 have been very quiet)

• Do they repeat circa 62kt from the last quarter?
• Have the March changes E25 noted, including possibly the pre-log washer step speculated above mean E25 is nearer 90kt this quarter. Shipping is consistent with something quite a bit higher than 62kt

Another unknown wildcard is whether E25 pre-sold June's production. Due to Accrual/Inventory accounting this won't make much difference to the full year financial statements but will impact the quarterly cash and closing cash balance. It would have been a 50/50 call, pull cash flow into 2022/23 to make that result better but reduce the year on year improvement for 2023/24? Do you accept 2022/23 missed expectations and just line up for a much better 2023/24? I'm not sure which way E25 will have gone, but if the general consensus is for slightly to significantly negative cash flow, there could be an upside surprise.

Unfortunately, given how quickly E25 got their quarterly out last quarter, if its good - expect the result early. If its bad, expect it at the end of the month. This potentially means the share price will decline each day from around the 12-15th that the quarterly isn't released but this isn't investing advice. Perhaps it will be dropped on the same day as the CR.