RE: Atm31 Aug 2024 09:35
£10 million in the bank end august vs £14.5 cash and cash equivalents end february. While unclear what might be included in 'cash equivalents' in feb figure but not august figure, it seems pretty clear they are still substantially cash negative even with the higher production and higher tin prices.
In any case, losses of £8.9m are a lot to turn around in a year (using to non-comprehensive losses figure for simplicity). Even if $5k per tonne of tin went straight to the bottom line, that would be an increase of profit per year of approx £3.4M for 900 tonnes (current run rate). But AISC for q1 was higher than the average for FY2024, at $28.77k, which eats into that $5k/ton, reducing it to more like $2.5k/ton. I hope to see the start of a reduction in AISC for q2 next month, but I don't expect a huge drop given they've maintained guidance of $25k-$30k. It also looks like expenses are continuing to go up; from the CFO's statement "Furthermore, the multiple workstreams and special skills needed to achieve the potential lithium production, continue to necessitate an increase in recruitment.". Tantulum production is pretty small. Lithium sales remain the unknown.
So the key factors for the coming year are:
- increase in production (900 -> 1600 tonnes a year)
- reduction in AISC as production goes up and processes get optimised.
- price of tin (hopefully stays steady/goes up)
- lithium sales/offtake / funds associated with strategic partnership
Balanced against
- continued rise in administrative and headcount costs
- higher debt servicing costs
A win for me at this point would be seeing overall losses narrowing to under £4.5M this coming year, and into positive the following year.
But if you think we're making good profits now and that I don't know how to read a balance sheet/AISC/tin price, then I'd be keen to see your work. I think I've got this roughly right, and I'm heavily invested here so it does matter to me!
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