second payment now due

The second intsallment payment being $24 million (of $260 million total - $6 million already paid) for the purchase of Wiyot SA is due Monday, 18 April 2011.

Before agreeing to make that second payment, Fortis has said that it requires the technical analysis and opinion of German company Erocsplan. "This opinion is required by the board ahead of a non refundable progress payment due 18th April 2001." (2011 - their mistake)

So it could be assumed that the opinion from Erocsplan has been received and the payment will or wont be made on Monday. It could also be assumed that Fortis should be in a position to make a price sensitive announcement on Monday or Tuesday at the latest to confirm this.

However, Fortis also stated in their announcement of 24 March that they would be calling a general meeting by end of March. "Company to call general meeting of shareholders by end of March 2011." and "It is the Company?s intention to call a general meeting of shareholders by 30 March 2011". They also stated in their Indicative Timetable that the dispatch of notice of meeting would take place on 29 March and a prospectus would be lodged on 18th April.

No such meeting appears to have been called to date.

This meeting is vital to gain shareholder approval for the extension of the Gem Equity facility, the 100 million capital raising shares, change of scope and size of company as well as the final tranche of the Grande Concorde shares. Not stated is whether they need approval to provide Ji'an Resources with 40 million shares for the 75% acquisition.

As a result of no meeting announced or forthcoming, and $6 million having already been spent on the first payment, where is the money coming from for the $24 million second payment?

According to the quarterly cash flow report, Fortis had $3.568 million in cash. Subsequently they placed 5.9million shares at 40cents, to raise 2.36 million. Total cash should have been $5.928 million. So the question would be, where did they get the $6 million to pay for the first tranche payment to Ji'an for Wiyot? Have they already dipped into the Gem facility?

Given that they have not secured shareholder approval for the extension of the Gem facility, they will not have enough cash to make the second instalment by the 18th of April. That is unless they secure a further debt facility as stated in their clarification announcement of 29 March "the Company has received and is in the process of reviewing a number of attractive debt/equity funding proposals from international funds and organisations to help complete this transaction."

If they do secure external funding other than Gem, will these transactions also require shareholder approval? If so, again where do they find the money to pay the $24 million due on Monday? I suspect there may be a delay.

If we assume that they request 100m share issue for capital raising to pay the entire $260m for Wiyot, at current SP (assuming a moderate discount) they will fall short even including a $60m debt facility with Gem. Which means they will need to get further funding to secure the purchase then have enough money for working capital, ongoing exploration and feasibility studies. This means more dilution.

Lots of questions, not a lot of answers.

Good luck all.