Analysis - from 10c mark

This is meant for potential new holders thinking of entry into BLK. Where the SP may head to after the reset (from the 10c mark).

Current affairs.
1. MACA will likely support BLK operational wise and come up with some kind of profit/cost sharing arrangement. The loss of contract for MACA would be a relatively bigger loss from demob/redundancy costs. I doubt MACA will participate financially in the recapitalisation, it is not likely for a contractor to be involved like that.

2. Lack of wording on December quarter revenue/cash flow is not a good sign, I would put the quarter as breakeven at best.

3. Orion holds all the cards, to VA or not is their discretion. Milan Jerkovic going from non-exec chairman to exec chairman this is likely a sign for BD to resign/leave.

4. Recap plan ~$36mil suggests 1 for 1 entitlement at 10c. The recap plan wording reads Orion wants to reduce risk and be partly/fully paid out of the $36mil.

My predictions
BD to resign or anns intention to leave as part of the recap plan.

If the entitlement offer is taken up and the company lives for another day. The SP falls to 8-9cents on lack of information on December quarter, and stays there unless the Dec quarter announcements shows sizable profit.

MACA's support is likely to have strings attached and reduce upside (from 10c) for holders. If significant portion of the recap plan is going towards paying off Orion, then the participants are at a great risk. Risk trade off from debtor to share holder dilution.

Summary
There are too much at risk here even on 100% successful completion of the recap plan. Orion wants to be paid so any participating shareholders is effectively paying Orion to let BLK live another day. Because operationally it will largely remain the same and the main driver for profitability is for the gold price to move up significantly. It then becomes more so a bet on the gold price, so it could be argued to buy gold directly without the extra strings attached compared with company stock. There is a good chance for the company to come back to the market again in 2018 for cash top ups because the recap money was mainly spent on paying Orion.