Ann: Loan Agreement , page-7

I guess it’s a bit disappointing that the loan is again for ‘working capital purposes’ as we’ve heard that for the last 12-18 months whilst being led to believe that we were close to being a producer. Thankfully, it’s a small amount at reasonable terms and they told us about it.

Really what they’re saying is another $1.3m ($453k + $825k) is for ‘working capital purposes’. I found it interesting they mentioned the $825k recently raised as they can still raise more money that way at a later stage if the stars align again.

Anyway, it sounds like the struggle to commercial production is still ongoing if they need another $1.3m of working capital. Add to that a declining gold price over the last 6-8 weeks and maybe a short term loan isn’t such a bad thing.

How LG managed to only issue 8.46% of their capital to more than double their NTA and secure a 76% “meaningful” or controlling interest is a mystery to me and you have to wonder what the previous lot were doing. As CUB has implied the previous team couldn’t cough this project up quickly enough in their rush to the exits.

Yet contrast that with what Mark Gillie said just last week “Signature shareholders can look forward to increased gold production under the supervision of a strong operational team now established at site, together with targeted growth in the resource inventory. We are pleased to have the support of LionGold, our new controlling shareholder to realise the value of this investment “

I also thought this from the same announcement was interesting … “Mr Oliver is retained as a consultant to the company and will specifically focus on the exploration and expansion of the resource base at the Konongo Gold Project as well as advising on resource development and new business opportunities”. New business - could it finally be the manganese?

For now I say let’s give LG a chance to see what they can do. Don’t sell, hold tight, be prepared for illiquidity over the coming months and let LG do the heavy lifting that the previous mob couldn’t/wouldn’t.

In LG’s defence they have recently:
- Sold assets or share holdings of S$24.6m
- Intend to raise S$30m via Convertible Bonds
- Raised S$12.4m via two private investors
- Intend to reclaim S$10m from a Profit Warranty given by the vendor held for a previous business (IPT) by selling shares held as collateral. If so desired they could also sell their remaining investment in IPT as well.

Granted LG are paying down some debt and unsecured borrowings with some of the above proceeds, but there should be plenty leftover for SBL at this stage if needed. They did pledge $3m to SBL in one of the Supplementary Bidder Statements.

Other than a rising/or capitulating SP there should be no pressure on us to sell whilst we flush out exactly where SBL are at. LG now needs this to work just as much as we do, so let them get on with it. Surely LG’s focus now has to be on making SBL work and I think they’ll leave us be for quite awhile, but they will mop up what they can if investors are prepared to bail in the interim. If you can, sit tight until we know more.

Just out of curiosity has anybody emailed or spoken to our new CEO yet?