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Andyrooo

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20/02/18

12:50

Post #: 31187065
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Originally posted by Cashmeoutside ↑

View attachment 975592
Couple of questions on cash flows and how susceptible to a CR PLS is if commissioning drags on (not suggesting it will – just a ‘what-if’ scenario).

Cash balance at 31 Dec sat at $200m ($72m + undrawn debt facility)

In the picture above from the most recent presentation there is about $160m left to spend between Jan-July.

There is about $10m in interest payments to be paid between Jan-July

There is about $10m of overheads to be paid between Jan-July

There is about $15m to be spend on Stage 2 DFS and drilling for stage 2

There is 16.1m options to convert on 16 May which should provide $7m cash flow

DSO sales start around late May/early June – at rate of approx. 100kt per month. Assuming a margin of $20/t (and they need to repay Atlas the prepayment facility) – this will bring in around $2m a month from June. (assume it generates $4m by July).

With all that said the cash position looks to be around $16m at July 2018. Given they will need working capital to fund the first month or two opex before sales revenue – there is not much buffer there for either another overrun on capex or a delay in commissioning before the cash is drained.

What options does PLS have to draw on additional capital if there is a hiccup or two? Do you think they can draw Gangfeng etc into a prepayment arrangement? It seems very difficult to get money out of China? Or can they draw on the stage 2 loan early from Great Wall / Gangfeng? - isn’t this to be used to construct stage 2 only? Does the capex figure included a provision for ‘working capital’? I can’t see that it does.

AJM have come out today and commented on all the weather delays in the Pilbara and have now pushed out wet plant commissioning into April/May and there is a comment on the announcement about about coming online in June (amongst other comments). PLS could potentially not have first sales until August/Sept. Not attempting a down-ramp just wanting to get thoughts on capital funding options (without the need for further dilution).

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"With all that said the cash position looks to be around $16m at July 2018. Given they will need working capital to fund the first month or two opex before sales revenue – there is not much buffer there ... "

USD115m in Stage 2 financing becomes available after completion of Stage 2 DFS and FID.

Some of this will undoubtedly be used (if necessary) for operating cashflow until Stage 1 becomes cashflow positive in Q4CY2018.

Then of course, there is the balance of Stage 2 SC6 and SC7 still available for negotiation which KB could cashflow compensate in dealframing.

Many options and a long way off.

PLS Price at posting: 83.3¢ Sentiment: Buy Disclosure: Held
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