help needed!

Hi all,

I just had a look at the prospectus and found something that I completely don't understand, so I need some help from anyone who understands.

The company clearly states that the $108.6 million ($101 million after costs) raised will be used to repay the $53 million senior secured notes which represent all of the company's debts except the financial lease liability, and the remainder of $48 million will be used to fund mine development and working capital.

When I look at the liability and equity sections of the Proforma Balance Sheet on page 14, I realised that the reduction of loans is only $27.5 million, the balance of $25.5 million ($53-$27.5=$25.5) is treated as a loss in the retained earnings account. Could anyone tell me why they treat the repayment of loan liked this?

Further, the company still owes creditors $45 millions (short term payable within 1 year) and has a provision of $30 millions. It seems to me that AXM is lying to the public again. After paying their creditors $45 million, they only have $3 million left at best. I just don't understand how they are going to fund their development and pay their creditors with only $48 million.

Any suggestion will be welcome.

Regards,
TT