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WPG

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1.5¢ wpg resources ltd

POG - $1400 early next cal year?, page-23

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Oden1

80 Posts.

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28/10/17

10:18

Post #: 28275426
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Originally posted by Knowit ↑

OK I can see u r talking about negative working capital rather than debt per se. Roughly $10m of which is the Pybar claim that will either be settled at a much lower amount, even zero if the counter claim has legs or in 2 years if it goes legal. So IMO it is safe to back this out of your definition of debt as it is not currently enforceable if at all.

IMO the booking of the full Pybar claim in the stat accounts is misleading and has negatively distorted the balance sheet. WPG should have booked a management valuation and not the full amount. Pybar's progress claims aren't a liability until validated under the contract dispute process. CFO should have come up with a management valuation in the accounts and not freaked everybody out. Subsequent announcements show that the value of the claim ranges from $0 to something well short of $10m. There could well be a chunky reversal to profit this financial year upon reaching a commercial settlement. Maybe that was the plan all along ie take the full hit because things are bad anyway and then reverse to profit this financial year ? Bit of a conspiracy theory I know but this does happen due to auditors always being happy to book the full amount.

Apart from Pybar, 60 day creditors are the norm for any company and IMO can be paid out of operating cash flow now that Byrnecut has got the AISC down.

I am not disputing that a CR is not needed to support future exploration and development but IMO it is certainly not needed for working capital.

I trust this puts a different light on the company's financial position and I think you are a wise man buying more shares at these fire sale prices. WPG is an emerging gold producer and will be re-rated once the AISC cost comes down under Byrnecut. It is not going bust !

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Negative working capital describes a situation when current liabilities exceed current assets. In other words, there is more short-term debt than there are short-term assets. THIS IS A CLEAR TRIGGER POINT FOR INSOLVANCY WITHOUT QUESTION WITHIN ACCOUNTING STANDARDS.

I dont know how negative working capital could not be seen as debt along with forward gold sales and non cash payment of the rehibiltation fund. If the company had to be sold today these aspects would instantly be classed as debt. Its as good as borrowing money so they most certainly do have debt.

Last edited by Oden1: 28/10/17

WPG Price at posting: 1.8¢ Sentiment: Sell Disclosure: Not Held
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