Ann: Update from Receivers and Managers, page-22

Unpacking this announcement:

The first paragraph makes it clear that the receivership was indeed voluntary. This action will have been taken by the board, carrying out their duties to avoid personal liability under the companies act, for trading while insolvent. It is permissible to trade while insolvent provided that there is reasonable prospect of recovery and/or creditors will be better served by continuing to trade. If neither of these were the case then things must have looked pretty hopeless.

So why would that have been? My feeling is that costs kept creeping up, while after completing the Klondyke cutback, the grades just weren't there. This conclusion would appear to be borne out by the next paragraph - transition to care and maintenance. If operations were clearly cash-flow positive they would keep the mine going.

In light of this, the remainder of the announcement is a little confusing, as who in his right mind would sink more money into this venture? Any plan that stacks up would also justify keeping the operation going while the recapitalisation is arranged.

The future of this mine is to be either abandoned, with the mill scrapped or perhaps salvaged for use at another site, or, if the PoG keeps going up, it could become viable in the hands of a new owner who has bought it for peanuts.

And what about the $45M of mine rehabilitation obligation to the state government that came with the Nullagine acquisition? I wonder if they are a secured creditor. And then there is Atlas Iron and their 10 year right to use the Nullagine camp. What a mess.

It seems clear to me that shareholders can kiss goodbye to any prospect of a payout from this investment/fiasco. Unless we get some better news, this will probably be my last post on CAI threads. Best of luck to all.

All IMO.