Hi gsmaree,
Thanks for your long post and I will say from the outset that I have asked the same question you have in a previous post being WHO THE HELL IS BUYING? AND WHY? maybe not exactly those words but in essence I am somewhat confounded at the level of support KBL has. The only explanation I can come up with is that most of the buying is for parcels that predominantly range in value between $1-5,000 which leads me to conclude that its retail 'punters' choosing the 'glass is half full' option and you know what, I hope they WIN the bet.
Now as for why I have spent so much time making my point about the balance sheet and will continue to do so is because a lot of people on HC will have seen/received a mail out on July 29, which claimed in big bold letters,
With that vital haul road having just been reinstated, and production set to increase, all debts are on schedule to be paid off by the end of the year.
I don't believe this statement to be true and it flies in the face of what the balance sheet clearly states and unless these types of statements are challenged then there are more people that get burnt to the detriment of the broader market.
Now as for the valuation and how the share price has dropped, well, in fact whilst the share price has indeed dropped, the actual valuation has barely moved because of the increase in the number of shares on issue.
Let me ask you this, overall do you think people that read my posts and sold their stock at say .006 or .005 or in fact held back on buying any KBL shares at all are upset with what I have highlighted?
IMHO and in the absence of a production update, assuming the company raises $6m, the funds will be used to pay down the trade creditors only and there will be very little left to develop Pearse North.
Now I can't recall how much they have raised but it isn't $6m which means they have to issue more shares and may end up with circa 3.5-4billion shares before considering the funds required to develop Pearse North and the ~13m repayable to the bond holders in February 2017.
As a backdrop, consider as a best case scenario based on what we currently know, the fact that KBL will run out of high grade ore by say December or January and assume they are able to move on seamlessly to the low grade ore at Pearse North deposit. Well if C1 costs for Pearse are about AUD1100, what will they be for Pearse North? it's got to be much higher due to the significantly lower grade, so if that logic follows, then where do they find enough money for other expenses, debt repayments and exploration and development? the answer is more capital raisings...
I have never said that the management won't raise more money, or that the company is headed for the VA or worse, what I have said is that significantly more shares will need to be issued for this company to remain viable which in turn diminishes the current value of the shares.
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