good buy at 2-3c? , page-26

When Directors have to lend money to a company for it to survive as a going concern, the company is in trouble. Why wouldn't they invest equity if the outlook is so rosy? The silence in this forum on that issue is deafening. Answer = they don't have confidence that the share price will stay above 7 cents, or that the company will survive as a going concern.

I am even getting a little concerned about investing at 2-3c per share now given the terms of the shareholder loan facility. Fixed and floating charges over all assets concerns me greatly - just remember that clause in the loan agreement when you are voting to approve the fund raising. One typhoon and the entire company could be in the hands of Santo and Molton. Miss a loan payment = default = Messrs Santo and Molton own the company. Show me the error in this logic if the security is granted (I won't even invest at 2-3c per share if this occurs).

At least the main asset Galoc (which is already secured via project financing) is non-recourse. The loan you are being asked to vote on is FULL RECOURSE. Theoretically, Santo and Molton could pick up the company for US$2 million if the fund raising goes wrong.

I am still confident that 2-3 cents per share is a realistic figure in the near future for a company which is relying on the continued support of two main shareholders and directors to remain a going concern.