i'm out, page-67

Thanks for pointing that out Systematic. Am disappointed that it was mentioned in such a "by the way" manner in the SPP Despatch announcement by the CEO. At least it was explained in greater detail in the half-yearly the next day.

Had a weekend to ponder over the risks of holding CCU:

Going concerns...

(a) Raising new capital through the SPP.
$8m - $2.6 to pay off CBA immediately. Dependent on the underwriting by Patersons. Called up CCU last week - according to CCU will know results this week. This is crucial for the near term viability of CCU.

(b) Repaying the CBA loans through a further capital raising and / or a refinancing with another financial institution - In the same call to CCU I have been informed they have started the process for the latter. The POS to hold the break-out over the next 2 months will be crucial to convince the new financier - if it reverses and bombs during this period it would be sayonara.

(c) Negotiating an extension or refinancing of the Magna loan - I reckon probability of success for this is high as long as POS doesn't bomb. Magna has the most skin in the company - why would it kill the company off if the potential for success is still there?

(d) Negotiating extended credit terms with major creditors
To repay $12.5m
- I think this is 50/50. Again, this is dependent on POS; doubt the creditors will want to delay receipt of funds further if POS goes on the slide. But if POS remains as is right now or goes higher, chances of an extending credit terms would be higher.

(e) Generating operating surpluses ; achieve planned production levels
- Paul Bibby's report card so far is 50/100. Credit to him to get the ball mill up and running and getting to nameplate in December. But discredit to him for abysmal performances in Jan and Feb. 200 oz again in March? Well let's see.

The overriding factor that determines CCU's survival is definitely the POS. POS - To convince Patersons, to convince the new Financier, to convince existing shareholders for the SPP take-up, to convince the creditors, to make 150~200 oz / month production meaningful.

Also, am keeping an eye out for the Ukraine crisis unfolding in Europe - I have a feeling it will have a big say in near-term POS.

After considering all the above - my action plan for March: Hold - but no adding of new holdings, unless Paterson agrees to underwrite and POS breaks $26 convincingly before closing of SPP offer period. Sell - if Paterson does not underwrite and / or POS goes below $22 (negating the recent break-out).