Ann: Karara Operations Update , page-68

I said I wasn't going to adjust this cash flow estimate but couldn't help myself after confirming the following changes to the China Development Bank payment requirement - KML payment not Sept, but Nov'13 at $US63,000 (about $A70K).

The new cash flow estimate shows that KML will run out of cash in July (-$45K), but would be able to pay the China Dev't Bank payment Nov'13. The -45K short fall could be paid from GBG and Ansteel cash reserves but not likely with GBG's announcement that they are going to pursue more pre-payments from Ansteel? If GBG goes into full production at 68%Fe early in Jul'13, the cash flow issue is reduced.

More detail - If Gindalban is right that GBG will burn about $A50M a month in the commissioning and ramp-up phase and it is completed end Jul'13 then KML would have $A115M ($105K-50K-50K-50K+40K+40K+40K+40K = $115K) in the bank at the end of Nov'13 and so would be able to pay China Dev't Bank interest of about $A70M without further funding from GBG and Ansteel. The problem is Jul'13 where cash flow drops to $-45K. Funding could come from Ansteel and GBG cash reserves? GBG had $35M as of end Apr'13. Having said that, I don't know if Gindalban's estimate is correct and in the absence of accurate information from KML, we can only wait and trust KML's judgement here - to pursue more pre-payments from Ansteel and a new payment schedule from China Bank to derisk their financial position. sdo