Capital raising?, page-11

It is so easy to talk about things when you do not put any numbers on them. Item 22 on page 59 outlines Debt in US $ Jare $273M Mt Kellett 290M Total $ 563M Divide .77 = AU $730M. I firmly believe if they could raise $200M they could negotiate a good long term deal with these creditors. Besides this there seems to be about an $80M delta between short term borrowing, and money owed vendors, and Receivables This brings. Total to $280M. Last spring we were told they planned to go deeper at Mt Weld to avoid expense of removing overburden to expand. What is clear is that this ore is less profitable than what original plans called for, I have no idea if it is poorer ore or just expense of getting it out. I do not know what it would cost to expand Mt Weld. It might be better to open Duncan. I will put in $20M ?? for this effort. Now $300M. The plant could use some improvements. Maybe separate SEG. Maybe separate Nd from PR, Would $30M ?? cover this? Lastly they need some sort of emergency fund. Lets say $30M Total $360M Now to avoid arguments lets round down to $300M needed. To raise this with stock be it Private placement or SPO would take 6 billion shares if they received $0.05 after discounts and fees. Receive $0.06, 5 billion shares. Receive $0.10, 3 billion shares. Draw your own conclusions.

As far as what requires a shareholders vote. If there is treasury stock then directors can sell it without a SH vote. Last year when they needed stock to pay a vendor to remove a take or pay clause. They needed a SH vote at GM to issue shares and no extra shares were allotted. A quick skim ( nearly 100 pages) of report I can find no treasury stock. If there is not then Stock holders vote is nesasarly for new shares. It would be very unusual for there to be more than 5% of outstanding shares in the treasury, which would not do much at all. Stock holders vote will be needed. Directors cannot issue new shares.

It makes no sense to me to continue with current shares. The number of shares is just crazy. Any new type of shares would need vote of stock holders. New shares just make more sense to me than a 1 to 500 reverse split this would need SH vote as well.

It was clear (at least to me) when the contracts were amended last spring to defer principle and interest payments to December that they would not make it. Now with less than 3 months left even a jump Monday SEPT 3 of 70% to the ABP (average basket price) to $23.00 would only raise $9.00 times 4 KT = $36M if it all went to bottom line. This would be enough to get them past December with a little left to pay any critical vendors. If prices stayed up 70% then they would be fine. They owe Jare 15.5M in interest and 7 M in principle. Mt Kellett 8 M in interest. Total 30.5 M due in Dec. I think at that time I said they needed an immediate jump in ABP of over 20%.

I am sure the directors and Amanda have been working very hard since last deal was announced to come up with a better and longer term plan. The fact that Report was delayed till the last 36 hours, Indicates they were close enough that they thought they could finish before report came out. I do not think it will be long

I still feel that Lynas has made great progress. Unfortunately the Debt that NC accumulated was just too large when combined with low REE prices, Lynas did not have enough time.

Both JARE and Mt Kellett’s primary responsibility is to the investors who put up the money that was loaned. It’s not that they want to hurt current stock holders, they do not. It is just to get the most for their investors the stock holders cannot end up with much. The future pie is just not large enough. Even with a total flush of stock holders the investors will lose $$ but that is investing.
The Stock holders can vote no but that will result in instant bankruptcy. May cause the company to cease to exist. The Stock holders have the lowest priority in a bankruptcy and will receive nothing. So unless they are just hurt and want revenge they have nothing to gain with a no vote. They may be offered a small share of new stock or less than $0.01cash to give them something for their yes vote. Remember there is only AU $ 71 M in equity in the company now, Less than $0.02 a SH. Not much to split up. Even a penny a share will cost $35 M this is money creditors do not have to give.

I still think this company is worth more down the road if they can operate out of the public eye till prices are much higher than today(Double???). To do this the number of owners has to be substantially reduced.