interesting view points and your calls

Once the secondhand filter has been refurbished and installed early in March 2016  and may take a few weeks to test, etc (as pointed in December 2015 quarterly) and regeneration kiln installed by the end  February 2016 (note  this item is a surprised as it was not mentioned in December quarterly report) ,  KBL stated that it will be able to increase the throughput by over 75% in the floatation circuit and 50% throughput  the CIL circuit.  The c1 cost ($1106/oz Au, including silver credit) should reduce to about $600/oz.  NB, C3 cost or ASIC cost was not given.   Share holders need to wait till half-yearly report (29 Feb 2016, the latest date for its  release) to know whether the cash flow is positive. In my humble opinion,  the underground operation may not meet the expectation in term of profit and cash flow, hence it was necessary to have  "restructuring arrangements with major service providers" for details, refer to the ASX announcement on 22 Feb 2016 (link given below)

http://www.asx.com.au/asxpdf/20160222/pdf/43571tb8gxp2k7.pdf

As at 30 December 2015, the service providers were owed $17m plus interest, some service provides are willing to accept shares at 25% discount in lieu of cash payment for $2.9m. KBL  has to issue between 100 million to 200 million of shares to pay the $2.9M debt. It is a pity that major share holders  eg Quintana Resources that had invested USD 23 million in April 2015 or MRI Trading (offtake  partners) cannot or does not  lend KBL more money for short term loan.  There will be more than 15% dilution due to these new shares and there may not be any escrow for those new shares. Hopefully these service providers will keep those shares for medium or long term.

The good news is that KBL has stated the caderated from Pearse open cut mining (gold & silver production till October 2016) should be able to cover all the debt plus interest owed to the service providers as stated in 22 Feb 2016 announcement. However it important to note that  KBL still to pay for about $13 million note issues (because the share price is below 38c) . It was issued at 38c , 5 years, 10% interest pa convertible notes, Refer below link for details.
http://www.asx.com.au/asxpdf/20110727/pdf/41zzndmwhgxj5r.pdf

As always, do your own research, read the quarterly, asx announcement, speak to the company , etc and take into account market volatility and your risk profile.