Mungy, I expressed my views on the A$42m in my previous post...

Mungy,

I expressed my views on the A$42m in my previous post (it's an unrealistic sum) - it would seem (ann 1/2/16) that they are looking at "The program primary aim was to identify, beyond the recognised grinding constraint, potential low cost process plant improvements, ideally utilising the original plant’s equipment".   I would have though $5m - $7m was about the minimum of additional capital required to get going (possibly less if the Directors/KMP's chip in)to cash flow +ve.  IMO (I am a qualified Engineer) the prudent way of proceeding would be to add the ball mill ($500k), the minimum number of vertical grinders (probably just one - cost ~$1.5m), flotation baths (maybe more than one) and possibly additional prescreening capacity + met testing ($500k) .  They could also re-commission the existing column float cell and high intensity magnetic separator (ann 29/1/16) at minimal cost and thus minimize the capex spent on additional flotation.  Bagging etc can be left at this stage.  I would then (and with a skeleton staff) attempt to get the plant up and working at about 7T/day on a single shift 5 days a week.  Once that is proven then they need to train staff (or re-recruit the previously trained staff) to get the plant up to 21T/day (breakeven) on 3 shift, 5 day operation and then to 24/7 operation possibly then adding another grinder (and flotation).  If there was insufficient bagging or drying capacity then overtime should be worked without buying additional equipment when operating at less than 24/7 operation - only when 24/7 operation is required does this "fringe" capacity issues become important (in the meantime you operate the existing bagging/drying plant on overtime).  I would also keep overheads down by keeping minimum office staff and all NEG's directors all postpone their remuneration until cash flow +ve and also the Executive directors & KMP's take a cut in paid salary and treating the balance of their full salary as either payable on +ve cash flow or in shares or a combination of both).

Currently (from page 14/15 of Annual rpt)annual  outgoings to directors & KMP's is:

	Column 1	Column 2	Column 3	Column 4	Column 5
0		Salary	Super	Total
1	Spurling	$24,375	$35,000	$59,375
2	Lamont	$47,482	$4,613	$52,095
3	Schache	$14,136	$24,059	$38,195
4	Darby	$371,000		$371,000
5	Kopias	$342,917		$342,917
6	Mencel	$300,000	$27,000	$327,000	(ann 16/10/15)
7	Whiteley	$314,286		$314,286	US$220,000
8	Lloyd	$157,525		$157,525
9	Leydin	$3,000		$3,000
10	Total	$1,574,721	$90,672	$1,665,393

It would give me some confidence if there were directors/KMP loans (and postponed remuneration) coming to the company to see it over the hill to +ve cash flow.  Also Chimaera and trade debtors (including CD's $371,000 termination benefit (page 15 annual report) - assuming he is not still employed- IMO he should be fired without termination benefits, (CD had 802,804 shares, worth A$160,561 at IPO value - ann 30/11/15)) would need to take a moratorium on payments and interest until cash flow +ve.  I have seen this with other company's in strife (I have done it myself) - it's important to show "skin in the game".  One saying I heard in such circumstances was "the pig has a greater commitment to the breakfast than the chicken".  Regarding alternate motives (maybe I am being naive) but I tend to discount them since no creditor wants to operate a graphite plant and as I previously said Ian P is a major casualty if the company goes down; the company's asset are also unlikely to pay back creditors (including staff entitlements/termination benefits) if the company goes bust.  I would hope that VXL management/board show commitment by getting skin in the game (and forgoing remuneration) and they can find a "white knight" to put in adequate capital to cash flow +ve - a possibility could be their offtake customers (if they are as keen as Aushed says).  A good example is AGO (Atlas Iron) who were on their knees but managed to get commitment from their credits to allow them to continue to operate.