82% of options converted by holders, page-48

colquhoun

I too feel sorry about the predicament KMC shareholders are in. But my main concern is in relation to PXG, and consider that putting money into a losing company is value destroying.

KMC has no way back, even if it does manage to get a cash balance of $2m after it has been "stablised".

I disagree with you what said that "If PXG were to take a 19.9% stake in the company it would cost us about $1.4 million which would include $400,000 cash (19.9% of $2 million), so effectively paying only $1 million for the stake." You simply cannot count any cash balance held by KMC under the restructuring as somehow still belonging to PXG on a pro-rata basis. Assuming you are right about the $2m cash it may have (highly doubtful), then all of this belongs belongs solely to KMC which will eat it up over time. PXG will only be able to count the market value of its KMC shares, assuming they have any real value. It would be difficult to exit a 20% stake without thrashing the shareprice down to some absurd level.

As regards PXG's own funding position, I think they will now have used up all of the money it had at 31 December and be now eating into its $7m raised via options conversion. Deducting $1.4m from that only leaves $5.6m, which is really only enough for about two quarters - say at best to end November 2012.

Then what?

Who will care about PXG if it throws our money away on broken down companies? I would never put another cent into it, and I suspect many others will feel the same.

PXG's only hope is to drill up more gold and to actually earn some real revenue via toll treatment.

I am sure the remaining options will not converted if they fail to follow the agreed script.

PXG has a once only chance to perform - after which it will just become a candidate for a very cheap takeover (at best).

That rusted ball mill that KMC has. Yadda, Yadda, Yadda. It will continue to belong solely to KMC until KMC folds or sells the machinery. Rehabilitating the machinery costs $millions - just check how much the larger mill is costing SLR for its Murchison operations.

KMC is a nightmare company. Check them aout very closely. Who knows what real value the machinery has (could be a total wipeout there), and Bullant will probably always be uneconomic because it is a narrow vein mine with low grade (unless AUD POG is 2500 in ten years, when costs are also higher).

Pie in the shy is so some much better than thinking it out. So I just says to youse all - Yadda, Yadda, Yadda.

Sorry, guys and gals - I am feeling a bit frustrated. PXG is contemplating taking a massive misstep and given that it is a spec it may not recover from this.

Over and out. Please, no more fairy tales for this old guy.

loki