wheres the half yearly accounts ?, page-97

I agree with those arguing an EGM is not necessary or desirable at this point in time. I also agree that PLV management/directors are highly unlikely to be sitting on their backsides. I have little doubt they are doing all that they can. I would have preferred a simple release stating that a delay to trading has arisen while they work through some further issues. It might have reduced the angst slightly, even though it would have been a nothing release.

There is a key sentence in the March quarterly report..... "USD24 million funding agreement reached, subject to completion of specific conditions precedent. Funding will allow for the transfer of the project to Pluton."

So it appears we have operational control over Cockatoo, but still do not have full ownership given that the project has not been transferred to us. In addition to Cliffs and HWE, Cockatoo Mining Pty (presumably the JV) was the vendor of Cockatoo. I had a look at Mineral Titles to get some detail on PLV's title over Cockatoo. In respect of Irvine (M04/452-I), the results are:

Caveat 405793 Lodged : 15:10 11 September 2012
Caveat Type : Absolute Caveat
Caveator : COCKATOO MINING PTY LTD
Shares Caveated : 100/100 shares PLUTON RESOURCES LTD
RECORDED : 15:10 11 September 2012

Mortgage 405794 Lodged : 15:10 11 September 2012
Mortgaged Shares : 100/100 shares PLUTON RESOURCES LTD
Mortgagee : COCKATOO MINING PTY LTD
REGISTERED : 15:10 11 September 2012

Mortgage - Discharge 424167 Lodged : 14:55 29 May 2013
In respect to : Mortgage 405794
PENDING

Withdrawal of Dealing 424166 Lodged : 14:55 29 May 2013
In respect to : Caveat 405793
PENDING


So, not unexpectedly, when PLV took control of Cockatoo in Sept 2012, the vendors took a Caveat over Irvine (preventing PLV dealing with the asset eg selling it) and provided a mortgage with Irvine as security. The mortgage presumably reflected that PLV had not made the bond payment on Cockatoo. As indicated, the good news is that on Wednesday 29 May the debt or liability secured by the mortgage was fully paid/discharged and an application to remove the Caveat was lodged. Both are pending action by the Department.


In respect of Cockatoo (M04/448-I) there was no mortgage or caveat. The following is of interest though:

Bond Requirement 399805 Requirement Date : 19/06/2012
Amount : $18,680,000.00
RECORDED : 07:19:51 19 June 2012

Application to Amend 407187 Lodged : 15:25 28 September 2012
Amending : Address
From : COCKATOO MINING PTY LTD, C/- CLIFFS ASIA PACIFIC IRON ORE PTY LTD, LEVEL 12, THE QUADRANT, 1 WILLIAM ST, PERTH, WA, 6000
To : COCKATOO MINING PTY LTD, C/- PLUTON RESOURCES LTD, LEVEL 14, 5 ORD ST, WEST PERTH, WA, 6005
RECORDED : 15:25 28 September 2012

Bond 422307 Lodged : 11:00 01 May 2013
Bond Type : Unconditional Performance Bond
Bond Amount : $18,680,000.00
RECORDED : 01 May 2013


So it appears that the US$24m funding completed on 1 May 2013 was used to satisfy the $18.7m Bond on the same day. This is consistent with the sentence in the May 17th release …."The $24m debt funding package provided by GNR has been used to satisfy outstanding State Government commitments to pay Environmental Bonds, with the balance committed for seawall construction." The Surety provider was HSBC Bank (PLV's bankers) and so I dont know that cash was necessarily provided by PLV.

So, out of this information, the issue that may be causing PLV some grief with the Audit opinion is possibly the mortgage secured over Irvine. There is a big gap between 1 May Bond payment and 29 May application for Mortgage Discharge. Maybe some unexpected legal issue/dispute appeared or the audit opinion forced PLV into action re the mortgage?

I would imagine PLV's balance sheet might not have looked that healthy at end Dec 2012 ($12.7m for various letters of credit, $23m received for 1m ton offtake, Hyundai Steel Company $17.2m letter of credit was dated 28 Dec (may have been issued, but not activated by PLV), a mortgage over Irvine. One might think that on the flip side the cash balances might have been healthy, but starting up as an iron ore producer is a cash intensive activity in the early months with only 1 ships income in Dec.

I have had some experience with Auditors and they are a breed of their own. Spend most of their time telling you what they are not doing and thus what they are not responsible for. They cover their backsides by being ultra conservative and I would guess that the audit opinion was heavily qualified. I doubt the delay is with the auditors. Possibly PLV is waiting to discharge the Irvine mortgage in order that the audit opinion might be toned down by the auditors or over-ridden by subsequent developments.

I'm not too worried as PLV had nearly $7m cash at end March qtr. Since then, 4 more ships have departed at Fe prices higher than current. Yes, prices have fallen, but so has the $A and so have costs as we move to three ships and a higher grade ore, meaning a price premium (or volume effect if blended). They are on 8 ships versus forecast 10 and will be on forecast by July. One final thing, re the negative cashflow thread started after the quarterly release – people were correct to raise timing issues (revenues booked previous quarter etc). The thing missed from that discussion was inventories. Costs were increased as inventories were built, yet revenues were not received. With a ship departing every 10 days you would want to have a sizeable inventory just in case of machinery failure. PLV would do well to report their inventory levels in the quarterly.

Hope this info calms some nerves.

Cheers
Bleasby