From past presentations, we see that cash at June 30 was AUD 17.4 million, at March 31 was AUD 23.8 million and beginning of year was AUD 31.9 million (cash of AUD 6.9 million + AUD 25 million capital raise in Nov 2019).
So, if we assume that cash balance in recent times was going down by around 6-8 million a quarter, then sooner or later (more "sooner" than later), we would have needed to raise cash, as that would mean a balance of around AUD 10 million or less at end of Sep 2020, and around AUD 2-4 million by year end).
ADT has raised AUD 10 million in Nov 2018 and AUD 25 million in late Oct 2019
I’m not sure if there is anything specific for which some funds would be used but if anyone was following past history mentioned above, some capital raise was always inevitable.
When announcement of significantly expanded land package came out, I specifically mentioned that ADT might want to consider doing a proper sized capital raise somewhere in year to come to take advantage of exploration potential and further opportunities https://hotcopper.com.au/threads/an...vares-project.5600162/page-5?post_id=47038241
So, from long term point of view, if USD 28 million (around AUD 39 million) is being raised as speculated, then it is a very good thing as it would give ADT sufficient cash for the next year.
One reason ADT has done very well over last 2 years is it that it has always been very well cashed up to take advantage of opportunities- exploration, new opportunities like Tethyan, etc.
This is the main thing that could keep us in the exciting exploration/speculation phase of mining life cycle/Lassonde curve. Mining life cycle related fall is otherwise always a major risk for most companies.
If the speculation of the new high profile investors is correct, then that is another added bonus as several investors following them will now also follow ADT (just like Richard Warke, earlier)
I mentioned in the past that ADT got a little lucky with timing of 2019 capital raise, some months before covid crash, where there was a rush to cash in March 2020, and capital raise then, would be almost impossible. I’m not sure if luck has anything to do with it this year, but I’m glad that ADT is getting capital raise out of the way when global markets are yet to have a serious correct after the covid crash. I would not at all be surprised to see a sharp correction in global markets overall somewhere next month itself around US election and after.
Always difficult to know what will happen to precious metals stocks in short term as gold/silver often have a mind of their own (also Nov-Dec has been historically a shaky time for precious metals), but as I’ve mentioned many times in past, IMO, in longer term, precious metals (and especially silver) have a very long way to go. I would not at all be surprised if silver hits $35 or even $50 by the end of 2021 but as explained earlier, there could be some serious volatility and corrections along the way
ADT Market cap is somewhere around AUD 400-450 million and around 1/3rd of the NPV8. So, market cap can very easily digest a capital raise of around AUD 40 million
ADT has in the past comfortably recovered from capital raises and gone on to make new highs – so, dilution hasn’t affected sentiment too much in past.
Lastly, it would obviously be nice to see favourable pricing of capital raise like the NXE dealmentioned in earlier comments. But I’m still glad that the cap raise is out of the way so that we can focus on growth and exploration in 2021.
Just a small note on another point that some people might consider a risk – delay in permitting. Although I’d like to see permits being received fast, there is still more evidence of ample government support. Reports of Bosnia’s PM visiting ADT was mentioned here earlier but I’m not sure if this point was specifically mentioned – of ADT’s daily access to Bosnia government, which IMO seems like a great indication of government support.
“Eastern Mining has been founded in Vareš in the former Energoinvest zinc, lead and barite mine and offered a future to this region, which is experiencing real crisis after the collapse of the ironworks in Vareš, said FBiH Prime Minister Fadil Novalićduring today’s visit to the company.
He added that this company is a partner with international experience and capable to implement anything they wish to.
“At the moment, they have been performing operations on which about 20 million dollars have been spent, and the idea is to open a mine of zinc, lead, gold and barite, in which up to 180 million dollars would be invested. The FBiH Government is now servicing 10 large companies that have daily access to it, and this company will also have such a status,” said Novalić.
He announced that the preliminary design for the continuation of the Vareš – Banovići railway could be completed soon, which would connect Vareš with the two largest centersin the Federation, Sarajevo and Tuzla.” - Bosnia PM comments https://www.fena.news/bih/novalic-eastern-mining-offers-a-future-to-vares/
“Novalić also added that as of today, Eastern Mining will have daily access to the FBiH Government in any case of problems, especially in the process of obtaining the necessary permitsfor the successful continuation of the Vareš Project.” - From ADT site https://www.adriaticmetals.com/news/prime-minister-visit-to-eastern-mining/
ADT Price at posting:
$2.03 Sentiment: None Disclosure: Held
(20min delay)