I hope MGT are able to raise funds as cash flow seems a little tighter than I thought.
Cash at bank at 30 June 2024 was $1,212,955, but over $800,000 in creditors and accruals to be paid. In the going concern note below it states the Net Working Capital surplus was only $31,281.
Another sobering statement in the going concern note is that they have done a cashflow forecast to September 2025 and even assuming that they raise more than the underwritten $2m in the current raise, "The cash flow forecast indicates that the current cash balance is insufficient to meet its ongoing planned expenditure for the next twelve months from the date of this report without one of the following funding activities occurring:" Whilst this kind of note is not unusual in small caps that will need to raise capital, given the recent capital raise was not successful and they are attempting to raise again at a significantly reduced price, I certainly hope this one is successful. Otherwise, they could get to a point where they need to consider signing any deal on the table. Hope they are well advanced on signing a JV partner at a fair deal.
Now would be a really good time for the board and exec team to offer a pay cut or at least a deferral of part of their remuneration to show their commitment rather than just ask shareholders for more as their cash cost is over $1.3M per year (Tim Dobson base salary $500k, Simon Smith $322k, one Chair $150k plus $10k committee fee plus super and then three or four non-exec directors at $90k plus $10k committee fee plus super). If they truly believe that a deal is probable, would it hurt them that much if they deferred exec remuneration by 25% and non-exec director by 50%.
From page 59 of the annual report.
Going Concern
The accounts have been prepared on the going concern basis, which contemplates continuity of normal businessactivities and the realisation of assets and settlement of liabilities in the normal course of business.
For the year ended 30 June 2024, the Group recorded a loss of $4,847,855 (2023: loss $5,331,191) and hasoperating and investing cash outflows of $7,440,851 (2023: $13,854,527). At 30 June 2024 the Group has cashassets of $1,212,955 (2023: $5,134,710) and a net working capital surplus of $31,281 (2023: Net working capitalsurplus $1,883,733). The Group has minimum exploration commitments due within one year of $139,213 (2023:$3,464,121).
The Directors, in their consideration of the appropriateness of the going concern basis for the preparation of thefinancial statements, have prepared a cash flow forecast through to September 2025. The cash flow forecastincludes the anticipated cash injection from the recent Rights Offer which closed on 25 September 2024, which isunderwritten for an amount of $2,000,000, and is anticipated to raise more than the underwritten amount. The cashflow forecast indicates the current cash balance is insufficient to meet its ongoing planned expenditure for the nexttwelve months from the date of this report without one or more of the following funding activities occurring:
In the immediate term i) further reduction in corporate overheads beyond recently announced Board changes, ii)responsible phasing of key project expenditure, and/or iii) raising further funds from the issue of equity, subject toprevailing market conditions; and
Within the financial year: i) raising additional equity subject to prevailing market conditions, ii) entering into anagreement with a strategic partner to fund ongoing planned expenditure on the Razorback project, iii) securing debtto fund the Group’s ongoing planned expenditure on the Razorback project, iv) receipting refunds from researchand development incentives, and/or iv) undertaking a Razorback project sell-down.
Notwithstanding the cash shortfall as per the cash flow forecast, and the material uncertainty which may castsignificant doubt on the Group’s ability to continue as a going concern for the next 12 months, the Directors at thedate of signing this report are confident, based on past performance and the market conditions in relation to therecognised global demand for green iron, supported by the state and federal governments policy focus on thisopportunity, that they will be successful in their ability to fund the project and continue as a going concern
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