I like NCZ not attending Diggers:• NCZ is based in Melbourne and...

I like NCZ not attending Diggers:
• NCZ is based in Melbourne and Queensland with only one directors (Nick Cernotta*) in WA, which creating hassles if directors fly to Kalgoorlie in August 2021.
• It indicates they don't intend further diluting shareholders with another capital raising.
• it indicates their investor relations budget is now tighter than it was a few years ago. Hopefully this budgetary approach extends to other admin stuff so good mining results can lead to a positive eps and much nicer valuations.

NCZ were never profligate enough to spend over $20,000 on a Hotcopper bulk email (a warning sign for me to wait until a junior explorer is running out of cash with a much lower share price and frugal admin costs after earlier investors paid for a bit of exploration and a lot of directors'/nepotic parties' lifestyle) but their non-share based payment KMP disclosures used to be far more generous than some entities that now have a higher market cap. This year NCZ's directors have accepted shares issued instead of directors' fees - a good sign for me. I always expect bloated cost structures (by junior explorer standards) when entities have obvious investor relations budgets, big 4 accountants and directors in several states.

I actually expect NCZ to have a positive accounting profit this financial year because:

• The cost of looking at the Goro acquisition then pulling out won't be repeated.

• The foreign currency translation reserve balance ($4,058,372 at 31/12/2020) should be zeroed and recognised in profit or loss after the disposal of the US Kodiak project - unless they still control related foreign subsidiaries at 30/06/2021.

• The accumulated tax losses of about $110 million (per 31/12/2020 half-year report but possibly inclusive of US tax losses that might only end up as capital losses in Australia) down from $193 million at 30/06/2020 indicates they've done more conservative analysis. If they fully recognise $110 million of tax losses as an Australian deferred tax asset (DTA) then this will immediately boost net profit after tax by $33 million. While they could be more conservative than accounting standards permit (which is easy to do if they document expectations for the auditor more conservatively than they document expectations for the market) or their auditor might only permit recognition of deferred tax assets to the extent deferred tax assets are used in the cash flow forecast client gives to audit, this number is easily manipulated by selective accounting judgements/conservative forecasting. Although auditors used to prefer conservativism, ASIC now also ping auditors for excessive conservatism. In 2021 it can be easy getting bulldust past auditors if your documentation is rigorous on the surface, ticks all the boxes on auditors' (and ASIC's if client file is selected for review by ASIC) impairment testing checklists, and is thorough/long enough to sap overworked junior auditors' will to live.

• Audit didn't have a going concern emphasis of matter for the 31/12/2020 half-year report, despite this report having over a page of going concern verbiage and negative net current assets. This indicates to me that forecasts provided to audit in early 2021 were solid enough for audit to conclude there was no material going concern uncertainty. I expect this went past at least a four partner circus inside Deloitte because auditors never get sued for excessive going concern emphases of matter but it creates legal risk for auditors if auditors breach Auditing Standard ASA 570 Going Concern. https://www.auasb.gov.au/admin/file/content102/c3/ASA_570_Compiled_2020.pdf

• Comparing movement in employee benefit provisions ($3,534,588 (at 31/12/2020) - $2,642,422 (at 30/06/2020) = $892,166) with employee benefits expenses ($18,093,491 for 31/12/2020 half year) is vague because some payroll costs end up inside inventory or PPE but an increase of 4.93% over 6 months indicates something between total payroll rates increased by under 5%, minimal annual leave was taken (as if there may be a pandemic or something) and/or there was minimal staff turnover. This isn't necessarily good but it indicates one common warning sign isn't there.

• The low movements in (right-of-use assets - total net lease liabilities) between ($748,319) at 31/12/2020; ($709,724) at 30/06/2020 and ($596,546) at 31/12/2019, along with depreciation/(obal of PPE) and amortisation/(obal of right of use assets) for the 31/12/2020 half year of 8.9% and 12.8% respectively together indicate there is no rapid depreciation that will hit profit quickly. IF leased assets are amortised linearly over expected lease terms but depreciated assets are depreciated on a units of production, then the expected remaining mine life underlying the depreciation schedule was about 5.1 years of production at about the same rate (usually based on reserves not resources) at 31/12/2020 while leased assets had expected remaining terms around 3.4 years.

• I know far less about mining than about accounting, but I can't see any publicly disclosed matters that would hurt expected profit before depreciation/amortisation/FX gain/loss/interest. The final commissioning of the Jameson Cell will hit the balance sheet far more than the P&L. BUT I can't unpack he minimal difference between expected operating cash margin and Adjusted EBITDA for the June quarter (both $AUD25-30million in the Noose presentation). "Adjusted EBITDA" as defined in the March quarterly report included no adjustments for FX movements/hedge accounting, but effectively valued increases in the inventory at the sale price (not production cost). From comparing the quarterly cashflow report with the adjusted EBITDA, I suspect there was a large increase in inventories in the March 2021 quarter.

The above may be more detailed/honest than it is polite to flash in public, but I am also organising my thoughts in writing for my own benefit. I'm not selling yet but I'm also not confident enough to buy more.

* NCZ Director Nick Cernotta is also a non-executive director of ASX:NST Northern Star Resources (presenting at Diggers on Tuesday), a non-executive director of ASXLS Pilbara Minerals (presenting at Diggers on Tuesday) and Chairman on ASXan Panoramic Resources (booth 97 at Diggers), so I'm sure you'll be able to corner him if you wish.