Sharpshooter (SS) put forward some interesting observations on...

Sharpshooter (SS) put forward some interesting observations on the AFR in a separate thread (his post 8603445 on the Capital Raising Bet topic).

His figures in relation to the half yearly and full year accounts are accurate and there is no argument with them.

When you go further back into the accounts and derive the reasons for the increase in liabilities it becomes a matter of judgement on whether FML should have permitted such an increase in liabilities beyond their then earning capacity.

Just after the issue of the half yearly, SS and myself had a fairly robust discussion on this forum about the matter and from memory one of the comments I made reflected that the liability situation would worsen until such time as FML had completed its then development and exploration schedule, and there would be a requirement at that point for FML to batten down the hatches and reduce liabilities accrued from earnings.

While SS might have conceded a couple of points I made, he resolutely stuck to his opinion that a capital raising was necessary to provide a definitive fix, whereas I was of the opinion it was not warranted at that point in time – it was probably at this point the discussion ended, although I think both of us were aware it would start again at some point down the track.

With the issue of the AFR my position has weakened despite FML at the start of the September quarter entering the batten down the hatches stage.

The liability projections I used in coming to my original stated position have blown out due to FML bringing forward the expansion of the Apollo pit at Laverton.

This not only means that the hatches have to remain battened down for longer, but also casts doubt in my mind whether FML can meet the required funding levels for exploration and development in the March 2013 quarter and beyond (keyword being “required”).

The bottom line is yes, FML could reduce its current liabilities, but at what cost to its, and shareholders aspirations.

Hence I am now supporting SS in his contention that based on the AFR there is need for FML to undertake some form of capital raising.

Can I also point out that it was the presentation of data and logical argument from SS that has seen me change my position on the AFR capital raising issue.