I note on page 4 they state that "The crushing and gravity components of the Gekko gold processing plan were commissioned back in May 2021 at the Company's testing site in Gnangara WA prior to disassembly and transport to Kat Gap. The Company plans to re-assemble the Gekko gold recovery plant on-site during the first half of 2022 once the formal mining approvals have been received from DMIRS."
I note also that there remains no disclosure in relation to the timeframe regarding the finalisation of the DMIRS approval process or the steps that CLZ have taken to remedy the extensive delays (now in excess of 130 days).
$0.29m borrowed @ 14% interest p.a., due 30 Nov 2022
Secured against R&D refund
Greywood Holdings
Loan facility @ 36% interest p.a.with $1.13m outstanding expires 25 March 2022 (what was the original loan, how long has this been outstanding and what were the funds used for?)
Secured against Company assets via PPSR (which assets?)
Gold Processing Equipment
Loan facility @ 36% interest p.a.with $0.30m outstanding expires 20 March 2022 (what was the original loan, how long has this been outstanding, what were the funds used for and is this appropriate given the related parties?)
I note in CLZ's response to the ASX query they noted that only $17,460 was still owing to GPE (Item 2.2)
I note also that CLZ did not disclose the loan facility with GPE which would have added further color to the nature of the relationship between the entities
Secured against Company assets via PPSR (which assets?)
Foskin
Loan facility @ 36% interest p.a. with $0.40m outstanding expires 29 March 2022 (what was the original loan, how long has this been outstanding and what were the funds used for?)
Secured against Company assets via PPSR (which assets?)
Rotherwood
Loan facility @ 36% interest p.a. with $0.30m outstanding expires 23 March 2022 (what was the original loan, how long has this been outstanding and what were the funds used for?)
Unsecured
Klip
Loan facility @ 36% interest p.a. with $0.70m outstanding expires 24 March 2022 (what was the original loan, how long has this been outstanding and what were the funds used for?)
Unsecured
CTRC
Loan facility @ 36% interest p.a. with $1.00m outstanding expires 25 March 2022 (what was the original loan, how long has this been outstanding and what were the funds used for?)
Secured against Company assets via PPSR (which assets?)
Whead
Loan facility @ 36% interest p.a. with $0.20m outstanding expires 28 Feb 2022 (what was the original loan, how long has this been outstanding and what were the funds used for?)
Unsecured
Did the Company have sufficient assets to cover securitisation of debt?
Assuming the loan facilities commenced 1 July 2021:
Entity
Principle
Interest
Principle plus Interest
Interest Rate
From
To
1
Radium Capital
$290,000
$57,517
$347,517
14%
1/07/2021
1/11/2022
2
Greywood Holdings
$1,130,000
$305,100
$1,435,100
36%
1/07/2021
1/03/2022
3
Gold Processing Equipment
$300,000
$81,000
$381,000
36%
1/07/2021
1/03/2022
4
Foskin
$400,000
$108,000
$508,000
36%
1/07/2021
1/03/2022
5
Rotherwood
$300,000
$81,000
$381,000
36%
1/07/2021
1/03/2022
6
Klip
$700,000
$189,000
$889,000
36%
1/07/2021
1/03/2022
7
CTRC
$1,000,000
$270,000
$1,270,000
36%
1/07/2021
1/03/2022
8
Whead
$200,000
$48,000
$248,000
36%
1/07/2021
1/02/2022
9
10
$4,320,000
$1,139,617
$5,459,617
11
12
Average Cost/Month
$142,452
There was another $15k loan to Aneles Consulting Services which was extinguished in January. Setting aside rounding to millions the numbers line up with those quoted in the report.
There are two significant debt repayment milestones coming up in Feb 2022 (Whead, $248k including interest) and Mar 2022 ($4.86m for all other creditors excluding Radium Capital).
With the only substantiative positive cash inflow from a government grant - which the Board and management should be congratulated on - the question remains how these liabilities can be reasonably serviced. The options appear to be:
1. Capital raise - not a viable option as company stocks are effectively valueless given current share supply/demand impass; 2. Share allocation to creditors - see (1); 3. Leverage the $5m debt facility to repay the debt. This would require careful consideration against the obligations of Section 588G of the Corporations Act which relates to insolvent trading. Insolvent trading says that if a company is insolvent and a director allows the company to incur a new debt, then the director can be personally liable for the new debts incurred. The law makes directors responsible for ensuring that their company does not trade while insolvent. This is in addition to their general duties to act with care and diligence, in good faith, in the best interests of the company and not to improperly use their position or information received for personal gain.. Specifically subsection (3) of Section 588G states that "a person commits an offence if: (a) a company incurs a debt at a particular time; and (aa) at that time, a person is a director of the company; and (b) the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debts including that debt; and (c) the person suspected at the time when the company incurred the debt that the company was insolvent or would become insolvent as a result of incurring that debt or other debts (as in paragraph (1)(b)); and (d) the person's failure to prevent the company incurring the debt was dishonest."
I cannot see an option 4 given the debt to equity ratio which is well out of any acceptable range even for a speculative company such as this.
Considering cash on hand, burn rate and debt levels I do not see how this company could be legally trading in two months' time without an angel investor.
My opinion only. DYOR.
CLZ Price at posting:
0.1¢ Sentiment: None Disclosure: Held
(20min delay)
