Ann: Quarterly Financial Report and MD&A, page-4

The shot clock is ticking alright. Archie has run it down to a few seconds unsuccessfully trying to get inside Nord's tight zone defence. Looking like he'll have to throw up a long range CR shot before the buzzer goes and trust to luck.


If only that was true. Look at the balance sheet 31 March and it reveals they allowed accounts payable to balloon $1.8M over the quarter, an old trick to make the cash reserves look better than they, quickly run down when invoices are paid early April.





Converting the remaining US$2.5M Sprott redraw (roflmao) at AUD0.65 is A$3.5M for A$9.8M liquidity as of March 31. As per the Sprott covenants, CDV's Current Working Capital Ratio (total current assets divided by total current liabilities) must remain above 1.00. As of March 31st the Current Ratio was 2.03 ($9.36M/$4.62M). CDV spent A$6.8M Dec Qtr and $7.2M Mar Qtr. Simply put, CDV can only spend $4.7M before breaching the Current Ratio covenant.... before the end of this Qtr regardless of the level of Accounts Payable.

How close to breaching covenants can they risk going after being reminded in March that markets can close for CR funding at any time. If it's not a pandemic maybe it's planes flying into buildings.

My call is the following chain if events.

• Release announcing a Finance deal has been signed.
• Shortly after go into a CR trading halt
• Two Tranche placement at 40c

Tranche 1 = enough money to buy +6 months of a drawn out TO time and some early works etc (eg A$40M)
Tranche 2 = CR for mine funding delayed until approved by shareholder vote and void if shareholders approve a TO etc (eg $160M)

New shares issued in Tranche 1 will be a sweetener for easy profits on Nords or someone else completing a TO. Money for jam. The bulk of the placement will only occur if no acceptably priced TO offer is made, and thus shareholders vote for accept Tranche 2. Deadline for TO offers is set.

CDV have now laid out the CR funding alternative to Nords and Shareholders as a fall back option. The CR funding price, dilution and thus final post-CR funding valuations can be calculated depending on individuals specific assumptions and risk discount etc. Funding risk has been removed but not yet fully enacted, giving time for Nord or anyone else to move on CDV before the vote to dilute with another 400M share issue.

If enough shareholders think that with approx 1000M soi CDV is worth say $1.20 theoretically, and the market trades CDV mid-50s post CR, then Nord have their price hurdle to get over. Either offer enough to entice sufficient holders to let go or risk having their 20% diluted to under 10% and not even a seat on the board.

The biggest risk with such a large CR, too many placement holders will arbitrage their Tranche 2 issue risk by selling in the 50's now to raise cash and lock in profits. Issues to loose hands will cap the price to high 40's and lower TO price premium expectations. Still, it would be highly unlikely that 46c would get Nord very far in this situation, and they would want to avoid doubling the shares on issue if they don't convince holders to accept before the Tranche 2 vote.

CDV need to raise more funds this Qtr and also start the auction process. Other corporates may be interested in bidding but are rightly keeping quiet until they need to reveal their cards. Nord's hat is already in the ring, every chance someone else makes a play, price is strongly holding mid-40s over a fortnight. 40c looks cheap to get set in Tranche 1 for the high probability of a quick and easy TO profit, at the risk of having to stump up the remaining $160M if a TO doesn't eventuate.

Certainly it is easier to raise that sort of money at higher prices with a TO prospect at higher prices very much in play, than to try and get the CR away if Nord decide not to go formal and fear creeps in about why not, and if not now, then when if ever?

This CDV ride has been a roller coaster of missed guidance and deadlines, second guessing what is really going on and what will happen. Still keeping us guessing and on the edge of our seats, though enormous pressure to act is building on all parties. imo Archie plays his CR card this month (assuming no JV deal is up his sleeve) and we see how the other cards land.