talk to the company, page-20

"Mihal, can you elaborate on how the auditors were satified regarding the going concern assumption?"

Sorry, this statement is from the company, not me. I assume that by this, the auditors' debt/equity conditions are satisfied (that the company can remain a going concern), especially after CCC has cleared a further $4.75m in debt since Dec 31 2010 [mainly the balance of LinQ $20m facility], and also that the structure of the EDF loan is clarified, that payments against the EDF loan have already been made, that significant levels of income have been credited to the company since Dec 31 2010 (2 months of export production at levels above 38Ktpm), and that debt funding for future developments is available.

When the section 11 (transfer of mining rights) is finally granted to clear the VanMag sale, and free up the $10m owing, then that will also make a difference to the auditor's appraisals. Let's hope the SA mining bureaucrats & desk-jockies can extract their digits with this one.

Until we see exactly how Penumbra is to be funded, what the loan terms will be (eg. any possible hedging requirements) and also what the company's cash flows will be for the March 2011 quarter, it's difficult to assess if the auditor's concerns are still warranted. From the outside looking in, all appears to be okay - I guess the auditors are just covering their asses, with a conservative approach, should things go awry.