Fortunately, the half yearly result (22 pages) was announced at...

Fortunately, the half yearly result (22 pages) was announced at 8 pm on 16 March 2011 just in time before the ASX deadline on HY report. Two companies GLM (gulf Resources) & TGS (tiger resources) are suspended for not submitting the HY in time and Many shareholders may not have time to digest and hence maybe misinformed.

Key points from half yearly , director comments, auditor declaration (Material Uncertainty Regarding Continuation as a Going Concern) and my view comments (including estimated A$80m debt /capital requirements within 2 years ) are given below.

Key points from Half yearly:
? Net loss A$ 11.53m
? The Company?s cash on hand and funds on deposit as at 31 December 2010 was $30,069,000 (30 June 2010: $8,863,000). The increase in cash on hand is largely due to the raising of capital during the period, namely through a loan facility of $15 million and a rights issue raising which closed at the end of January 2011.

? During the half year the Company completed two campaigns under the Ore Purchase Agreement with Barrick netting 44,953 ounces of gold. Production was negatively affected by unseasonal rainfall that hampered haulage activities. Average cash costs over the period were higher than forecast and had a significant effect on operational cash flows, but with an increasing grade profile this is expected to improve over future campaigns

? Directors states ?There are reasonable grounds to believe, based on the reasons set out in note 2 ?Going Concern?, that the Company will be able to pay its debts as and when they become due and payable?.

SUBSEQUENT EVENTS (after December 2010)
? The $45.5 million Rights Issue capital raising closed over subscribed. The Company raised $48.1 million (before costs) through the issue of 436.9 million new ordinary shares in Crescent Gold.
? In January 2011, Crescent repaid A$5 million of its A$15 million loan facility to Indago Resources Ltd.
? On 17 February 2001, Crescent announced the temporary suspension of operations at the Company?s wholly‐owned Laverton Gold Project due to the arrival of unseasonal heavy rains throughout the Goldfields region associated with Cyclone Dianne. Mining operations have since recommenced.
? Theodore Backhouse resigned as a non‐executive director on 2 March 2011.
? On 9 March 2011, Crescent repaid the balance in full of the loan facility to Indago Resources Ltd.
Directors need to do in the near term:
? Negotiation of short term debt facility of at least $5 million to be drawn down by 31 March 2011. It is currently proposed that the facility will have a three month maturity date from draw down. The final terms and conditions of the facility are still subject to negotiation.

? Preliminary discussions have commenced regarding a potential longer term debt facility of up to $25,000,000, which would be used to repay the short term debt facility referred to in (iii) above.

? The continued support of major trade creditors to defer payment of amounts outstanding to coincide with revenue receipts from the next Campaign.

? Negotiation to amend the terms of the Ore Purchase Agreement to accelerate the timing of cash receipts


Auditor?s (Deloitte Touche Tohmatsu [DTT] ) Comments & conclusion:
Material Uncertainty Regarding Continuation as a Going Concern Without qualifying our conclusion, we draw attention to Note 2 in the financial report which indicates that the consolidated entity incurred a net loss of $11,533,000 and experienced net operating cash outflows of $28,036,000 during the half-year ended 31 December 2010. These conditions, along with other matters as set forth in Note 2, indicate the existence of a material uncertainty which may cast significant doubt about the ability of the consolidated entity to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.
The ability of the consolidated entity to continue as a going concern is dependent on:

(i) The continued support of major trade creditors to defer payment of amounts outstanding to coincide with revenue receipts from the next Campaign.
(ii) Successful negotiation to amend the terms of the Ore Purchase Agreement to accelerate the timing of cash receipts.
(iii) The finalisation of a short term debt facility of not less than $5,000,000 by 31 March 2011.
(iv) The finalisation of a longer term debt facility in order to repay any draw down on the short term facility referred to in (iii) above.
(v) Receipt of the projected net cash inflow from the Ore Processing Agreement with Barrick, commencing with the April 2011 Campaign; and
(vi) Other factors, some of which are not in the control of the directors including future gold prices and gold recovery remaining at levels forecast by the Consolidated Entity.

Forecast production exceeds that achieved for Campaign 5 and 6 due to anticipated increased mill throughput and improved ore grade. In the event budgeted gold production is not achieved and in particular the April 2011 campaign forecast gold production is not achieved, additional funding will need to be raised through equity or debt, together with the continued support of the consolidated entity?s trade creditors to enable the consolidated entity to continue as a going concern.

However, if the consolidated entity is unable to achieve successful outcomes in relation to the matters discussed above, in particular, successfully concluding negotiations on short term cash funding by 31 March 2011 and achieving the forecast level of gold production, there is significant uncertainty whether the consolidated entity will be able to continue as a going concern.
Should the consolidated entity be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial report.

My views & conclusions :

? Fortunate for the company to raise capital via 2 for 3 right issue (to raise A$48m ), A$4.4m from existing share holders, the rest from institutions and sophisticated investors (31/12/2010 ASX announcement). Institutions have longer term time frame for investment and can tolerate investment loss due to larger portfolio and other possible profits from other stocks.
? Second half loss of at least A$16.8m. This is due to Lower than planned production for Campaign 5 and 6, principally as a result of heavy rain and local flooding, has given rise to a shortfall in gold revenue of approximately $28 million ($11.2 million of which is reflected in the loss for the half‐year ended 31 December 2010, with the remaining $16.8 million impacting the second half results),
? 6 consecutive annual loss and 6 campaigns under OPA with 5 consecutive losses and cash outflows (except the first campaign, during December qtr 2009ced 2009 /10 half year profit of A$898k )
? Need to raise capital or debt at least A$80m (debt and/or share issue/convertible notes, etc) within 2 years.
*A$ 25m debt facility, including A$5m 3 months short term facility before 31 /3/ 2011;
* A$20 m unrestricted cash balances (exclusive of debt drawdown) for working capital
* A$33 m Capex for Summit underground gold mine (target production in 2 quarter 2013) which A$20m for refurbishment of CRE?s Barnicoat mill.
* A$2 m for exploration from my conservative estimate based on 6 past quarters total spending of A$ 5.79m (no spending in December QTR 2010 and September QTR 2010. A$2.4 m for June QTR 2010, A$0.913m for March QTR 2010, A$1.148m for December QTR 2009, A$1.324m for September QTR 2009). For further details, refer to Quarterly reports and Appendix 5 B (payment for exploration and evaluation)

? How fast the money was spent? On 23 November 2010, the Company announced a $45 million rights issue, which closed on 27 January 2011 over subscribed and accepting final applications for $48.1 million. Of the $48.1 million, $30.7 million was received in cash at 31 December 2010 with the balance of $17.4 million received by 31 January 2011

After paying A$5m debt, A$43m left at the end of January 2011. At the beginning of March 2011, A$19.5m left. On 10 March 2011, CRE paid the remainder of debt of A$10m. So on 10 March 2011, only A$9.5m cash left. Hence unexpectedly high cash outflow of A$33m taking place in nearly 3 months (2 months and 10 days) due to unexpected flooding and high cost operation (low grade ores and lower volume of ore processed due to flooding)

? Valuable asset with 30Mt of Measured, Indicated and Inferred Mineral Resources that contain over 2.1Moz of gold, and a Probable Ore Reserve position of 445,000 ounces (both as at 30 June 2010),
365.84 million shares traded (about 36.58% of total shares) in 7 working days (9 March to 17 March 2011). 123.6 m shares on 14/3/2011 (record volume in CRE history), 101.06 m shares on 15 /3 / 2011, 2nd largest volume, 70.96m shares traded , 3rd largest volume on 16/3/2011.
? Accumulated loss of A$184m (up to 31 December 2010) that can be used for future profit when the company turn the corner from 6 years consecutive loss.
? Crescent maintains a dominant land position of over 1,400km2 of highly prospective tenements in a world recognised and well endowed mineralised geological domain. 22 Moz has been produced in this region.
? Uranium asset (under 100% owned subsidiary Uranium West) ready to be joined ventured or floated subject to the right market conditions (some delays to latest Japanese earthquake and Tsunami & shut down of its Fukushima Nuclear Power plant in taking place last week).
? Production estimates for the badly rain affected first quarter (campaign 6) are in the order of 15koz (as announced on 4th March, 2011), followed by successive quarterly production of achieving better than 22koz, 20koz and 28koz during the second, third and fourth quarters respectively. Refer to ASX announcement on 15/3/2011.
? CRE need to reduce cost in the next 2 quarters (campaigns 7 and 8) before the financial danger is over. Last December 2010 quarter (campaign 5) and This March quarter 2011 (campaign 6) have been known to be poor due to the bad weather conditions/flooding, etc. It is required to monitor this. It is no point to increase volume to more than 100k oz or more, if the cash cost C1 and total cost C3 cannot be reduced.

As always DYOR and apply your invsetment and trading plan, investment time frame etc.