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Why hasn’t WKT accessed any of the working capital facilities available to them"
Hi Sapreacash
WKT detailed in the HYR report that they expected to secure US$4mil working capital facility from Tanzania Banks, THey then updated the market in the March QTR report to advise the negotiations are still ongoing.
One can only assume WKT's loan for this working capital facility is yet to be secured as there is no evidence to suggest WKT has now obtained the loan.
Gemcorp's US$5mil back up facility, I am of the view that this loan facility might provide WKT with the 2 QTR of loan repayments which is required to be held at all times as stated in the original loan agreements with Gemcorp. This would then be drawn upon in September to provide WKT the US$5mil to satisfy the loan requirements.
I have to admit, that wasn't my first thoughts on the facilities, it wasn't until WKT updated shareholders on the 7th of June, where they advised they would be paying Jinpeng's final payment in shares. that I thought that this loan may not be available to cover working capital costs.
"Following FCC, it is not expected that Lindi Jumbo will make any post commissioning cash payments to
Jinpeng as the mine has incurred a substantial amount of in-country costs on behalf of the EPC contractor
and the remaining net balance will be settled by way of the issue of shares"I would have thought if WKT was production and sales were living up to the HC hype, WKT would have been paying this final payment with cash or drawing down on Gemcorps US$5mil back up facility to make the final payment. This would allow for Jinpeng to be paid and it would save shareholder dilution.
My assessment is completely different from the positive posters, you all see the plant running as expected due to a few tweets, if you read back through all of WKT announcements, all of these works were expected to be finished in Jan and we still have no confirmation from WKT on the total amount of graphite they have produced, its flake size they are achieving or the purity.
You also fail to mention the limited cash WKT had, only $4.15mil, which needs to be covered;- the operating costs of the plant,
- cover gemcorps interest (approximately $480k per month)
- Directors fees
- Staff/corporate
- mining costs
Based on WKT's cash balance at the end of the March QTR and covering just the interest from the US$20mil loan, WKT funds could be a low as $2.71mil without covering any of these other costs.
This is where my and
@R08 opinions differ, I think all investors need to know how many bags of graphite are being produced, if the sales are covering interest or making a small profit it makes the investment in WKT more appealing, if they are still unable to cover their costs, the appetite to invest is significantly reduced.
Mike's tweet on the 12th of June, indicated production only indicated 9 bags were being produced on that day,
Mike's vague post, could be related to WKT's total daily production, or it could be related to large flake graphite, this is the issue of having Tweets as your marketing, I consider this as WKT total daily production, which would indicate the plant is only operating at 8% of its planned output. Which is concerning when you read his other post from that day.
"Most bags are now in spec" - that could mean that 5 of the 9 bags are within the specifications where 4 need to be reprocessed. before the 12th of June, how many bags were failing to meet the specifications and has the reprocessing impacted the flake size?
This is why I believe WKT needs to address these vague posts so investors are fully informed on the production at the Lindi Jumbo miine along with the total production being achieved, it will kill off all speculation.
Anyway, to make things very clear.
All thought WKT has US$5mil of back up facilities available from Gemcorp, it is unclear if these funds will be used to provide the US$5mil required under the loans 2 QTR of loan repayments, "at all times" or if WKT will need to secure additional funds if this loan is drawn down, it is also unclear if WKT revenues will be at a point of providing free cash flow in 4 months time to cover the loan repayments and operating costs.
(20min delay)