production history and possible funding gap

Some recent NMG production history in simple terms:

==MARCH QUARTERLY==

"First gold poured"
"Wet commissioning of entire plant proceeding well..l"
"10m raised through share placement"

==JUNE QUARTERLY==

"8857 oz produced"
"Process plant commissioning well advanced..."
"20m raised through share placement"

==SEPTEMBER QUARTERLY==

"7332 oz produced"
"Bibiani plant ongoing commissioning proceeding but slowed pending confirmation of longer term funding solution..."
"$11m raised in share placement" [actually only $9m because WN never paid his $2m!]

==DECEMBER QUARTERLY==

"8440 oz produced"
"Commissioning process ongoing but slowed pending release of funds from the CR"
"Remaining outstanding works can only be completed on receipt of funds expected on 1 March"
"$15m interim facility from RSG drawn down"


The above shows a pattern: At every step of way last 12 months there has been a major capital injection, each one supposed to be the last! But production has been stalled at around 8k oz per quarter. Critical parts and supplies have not been delivered, production has stalled and cash has kept haemorrhaging out.

So what will forthcoming MARCH and JUNE quarterlies say on production and commissioning progress?

On latest quarterly's figures, breakeven is about 7500 oz per month or 22500 oz per quarter at A$1600 pog, so every missing 1,000 oz puts further $1.6m hole in budget.

According to the prospectus the $85m just covers the existing creditors including Investec, with only $5-$10m left over. The "assumption" and "strategy" is that production will ramp up - by magic? Costs may be reduced.

Another 8-10k oz only produced this quarter because still waiting for parts. Then if June quarter gets to say only 12-15k oz? This production profile would create a further $30m working capital deficit over next 4 and 1/2 months to end of June. Maybe costs will be less. But this $30m gap is before RSG technical people start to say what is really needed to fix plant properly, upgrade equipment, fleet etc and what if any additional stripping etc will be required. May still be a production gap in September quarter to fill too.

This funding gap (can anyone see production rising much more quickly to cover it the gap or costs falling fast enough?) sets up a cash crunch/insolvency and a potential Notes default within the next months maybe shortly after Notes issue closes.

RSG with its Notes deal in place and a vice like grip on any CR terms becomes the python swallowing the Bibiani pig whole in this scenario.

Alternative views anyone?