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Even if the costs you just cobbled together were remotely close to reality (they aren’t), Rambler had a payables backlog of $15.5m at the end of Q2… The “profit” they made this quarter wouldn’t even put a dent in that let alone the debt repayments.
From the rumours I've heard it sounds like they're so short on cash they've completely run out of spare parts on some of their primary pieces of mining equipment. Essentially they have to idle all mine development until they get some sort of financing (bridge loan, equity raise, full restructure/refinance). If they don't get things sorted out in the next month or so they will quickly burn through the 191kt of developed inventory (~6 months of mining) and replacing that material isn't an overnight undertaking.
Also updating their NI43-101 as they claim they want to in short order is going to set them back something like $500k and no firm is going to take that work without full payment up front.
They quite literally say in the notes of their H1 financial statements that they need to dilute...
"Following a review of the latest Group working capital forecasts, the Group needs to raise funds to materially reduce the current creditor position in the short term and for general working capital in the next 12 months through an issue of new equity and restructuring of debt."
8th time will be the charm for sure... Doubt they actually have learned any real lessons since they apparently burn through technical staff like they're candy meaning that no knowledge is retained.
Not bitter... Just not completely blind to the holes in the story some people seem to like ignoring.
I can also state things...
1. Rambler hasn't hit annual production or cost guidance since entering commercial production.
2. They've gone back to the market like clockwork to raise more funds every 12-18 months since inception. Hell, they had to do an enormous rollback to bring their outstanding shares down to a number that wasn't astronomical.
3. No major mining company, proper bank, or PE firm are going to give these guys money. They are constantly going with the lenders/bankers of last resort on terrible terms that are brutal to existing shareholders.
4. Any financing done now will simply dilute existing shareholders while the debt holder and any new equity get in at a rock bottom prices.
5. They likely need at least $10m to bring their day-to-day payables current (<90 days).
6. Shutting down capital development to save money is smoke and mirrors. Trading pain today for pain 6-12 months from now.
Also, looking at a single month C1 cost for a mine of this size is deceiving. Literally 1-2 days difference in billing from a supplier (say diesel) could swing that number by a huge amount.
Cu prices will need to be north of $5/lb to be able to get out of this situation without a massive shareholder dilution.
AISC for H1 2022 was close to $6/lb based on my math (they conveniently leave that number out of the financial results). Even by deferring sustaining capital, which will hurt them in the long run anyways, and reducing cash costs they're likely still at around a $4/lb AISC which is effectively breaking even. Going to need a much fatter margin to service the backlog of payables and debt.
C1 cash costs do not include any sustaining capital spend or “offsite” G&A such as corporate expenses (BoD and officer salaries). It is strictly based on cash operating costs like labour, consumables (diesel, power, explosives, etc.), and selling costs (royalties, smelting, transportation).
Once you load in the sustaining capital line items (capital development, equipment leases, exploration) and corporate overheads you’ll quickly eat away at that $1/lb cash margin.
"Overdue AP was probably no more than $4M"
I suspect its a heck of a lot more than $4m considering they were sitting at $15.5m in payables at the end of Q2. Best case they're just keeping their heads above water and keeping the payables in the same range with a good portion of it being overdue at this point. The cost reduction initiatives likely put a bit of a dent in things but that's a good chunk of payables to burn through on a company maybe doing $4m a month in revenue.
If the change in shift/blasting strategy is all about efficiency then why were they not doing this right from the start? The change is simply a reactionary move to make a claim that they can “mine more efficiently
“ while their costs are effectively unchanged. Also, speaking as someone who knows the mining industry pretty well, blasting once a day is a dumb concept that ends up hurting you in the long run due to flexibility issues… There’s a good reason it isn’t practiced on a wide scale anywhere.
Don’t think it’s possible for copper prices to rise high enough to actually bail RMM out of this situation… Odds are history will repeat itself and they’ll blow out the share count and no heads will roll for it.