are these guys for real. the half yearly has some gems1. "the...

are these guys for real. the half yearly has some gems

1. "the directors consider it prudent not to declare a dividend, as investment of operational profits are best employed to expand production" (or words to that effect)

mmmmmm dividends can only be paid out of net profits (ie not gross profits), or retained earnings. the loss for the half year. was more than a million dollars.


2. the company remains bank debt free (finacial highlights)

mmmmmm - great, but there are borrowings of $7.5m. maybe if there was bank debt, the bank may have taken charge of certain assets (eg a floating charge over the mine - which would have been a disaster)

3. the company has current assets of about $5m (financial highlights)

mmmm - well, closer to $4.5m, and also has current liabilities of about $11.5m.


the company's financial position last year, was similar, and the company needed to raise $23m, to stay afloat during the year.

the company mentions in the half yearly report, mentions that if the company can produce 50,000 pa , then the company will be cash flow positive (ie, all development costs, should be covered.

if production for the current quarter, is still only 5000 oz, then to reach the 50,000 oz target, production would have to crank up to 15,000 oz per quarter, for the following three quarters. if production for the current quarter, was approaching 10,000 oz, then no doubt, the company would release the good news, in an attempt to get the spp over the line.

a look at the spp in 2009, indicated that 2300 shareholders took up the offer - and it also seems that the shareprice did not dip below the offer price. for this spp, the share price, has consistently been below the offer price, so it is hard to see that many shareholders will take up the offer.

most mining companies , when they release quarterlies, give a indication of tonnes mined, and grade. one wonders why citigroup do not do this.


it is most unlikely that the company will go under, because of a possible failure of the spp. however, do not be surprised to see a heavily discounted placement, as it is possible that the company can still place shares, under the 15% rule - nd then maybe another spp, at a far lower price, than 12c