KBL (ASX) Ann: Revenue Generation Recommences-KBL.AX

Originally posted by w27 ↑

It is simply untrue to say that any liability on the balance sheet has to be repaid. I don't know exactly how the streaming is accounted for, but I would expect to see a large liability created which will be the streaming deal. The accounts of an entity like this would be complex and it is probable that the "deferred liabilities " are not repayable in the normal sense. There is also a large liability created by the requirement for rehabilitation which is not "payable" while production continues. As to mine life, it is probable that the underground deposit will extend at least to one thousand metres. It simply has not been drilled and it is not economical to do so except from the bottom of existing workings. Mines do not prove reserves more than two or three years ahead. They know where their ore is coming from for a good few years yet.

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In the case of KBL there is no complexity to their accounts at all. All liabilities are either current (payable within 12 months) or non-current (not payable within 12 months) there are no items under contingent liability which means that all these liabilities are payable.

As at 31/12/15,

Current liabilities are stated as

Trade Creditors $17.5m,
Financial Liabilities $9,347,432 ($8,431,558 is owed to a company called MRI Trading AG)
Deferred Revenue (Streaming) $3,675,147
Provisions $459,296 (I assume provision for interest)
Total Current Liabilities $31,026,028

Non-Current Liabilities are stated as
Financial Liabilities $1,905,285
Provisions $684,488 (I assume provision for interest)
Deferred revenue (Streaming) $26,897,238
Convertible notes $10,524,332
Total Non-Current liabilities $40,011,343

I will agree with you that typically companies prove reserves 2-3 years in advance but in the case of KBL i'm seeing statements such as we will be out of ore by November and with regard to Pearse North, all I have seen is a statement to the effect that the Pearse North has 15,000 ounce reserve which is produced from ore containing 2.5 grams per tonne.

If they struggled to make ends meet with grades on 7 grams, how do they pay back all this debt whilst delivering 25% of production at significantly below cost to Quinanta without doing a significant capital raising?