+ Lower stripping ratio for SDJ mine: In 3Q18, the average stripping ratio (SR) for SDJ mine dropped to 2.4 (2Q18: 3.0, 3Q17: 3.5). The full-year forecast SR is 2.8, compared to 3.6 in FY17. Accordingly, it will help to partially offset the increase in overall cash costs due mainly to the operation of the new TBR mine (3Q18 SR: 3.6). The average SR for both mines is projected to be 3.9, and the average cash cost is estimated to be US$32/tonne in FY18.
+ Favorable deals with Macquarie Bank: In Nov-18, Geo secured a life-of-mine offtake agreement for TBR mine with Macquarie Bank. The multi-year prepayment facility is structured into three tranches of US$25mn, US$25mn, and US$10mn. Meanwhile, the bank acquired 5% of ordinary shares at a price of S$0.29 (total capital injection: US15mn). It also subscribed 74mn non-listed, transferable, free warrants with a 2-year expiry at an exercise price of S$0.33.
– Sales dropped and ASP trended down: In 3Q18, the sales volume decreased by 15.8% YoY to 1.6mn tonnes, mainly attributable to the disruption on the loading which was impacted by maintenance work performed by the jetty operators (dredging of the seabed and upgrading of the loading equipment and conveyors) in Aug- and Sep-18. Meanwhile, ICI 4,200 GAR price averaged at US$41.5/tonne (down 7.3% QoQ) in 3Q18. Though 3Q18 ASP remained healthy due mainly to the trading at backward prices (3 to 4 weeks prior to laycan shipment date), the dip in ICI 4,200 GAR price will translate a lower ASP in 4Q18.