Ady's debts are trivial compared to their assets and they have time to repay the hawkswood and YA Global loans. Just four handymax shipments should clear all their debts anf two are already at the port ready for shipment. So ADY has no debt problem. ADY is also suing Santa Fe, Belalso and Wyndham for US$150m over breach of supply contracts relating to WISCO.
As Santa Fe is now 70% owned by JSW Steel who are cashed up. So I would expect that debt will be cleared quickly. In fact it appears JSW have already done a deal with WISCO and ady on the owed shipments to WISCO and damages to ady.
As for getting cashed up to move forward in the credit crisis, I'd say a JV is ady's best bet. Santa Barbara's sister mine Santa Fe just entered into a US$500 JV with JWS steel. So no reason why ADY - Santa Barbara cant do the same. If fact I believe that's already happening with WISCO.
If you have been reading the press lately, WISCO in August said they are intent on forming a JV with ADY. This intent to form a ADY/WISCO has been confirmed by ADY in their reports and updates lately. BTY WISCO just set up a base in RIO only an hour's flight from Santa Barbara. Also, Farkas Klein to 40% coowner of CMSB appears intent on exiting CMSB if the most recent press release is to be believed.
"Minera Santa Barbara distances itself from Leonardo Farkas and Changes its Name." Click here
Farkas Klein was the 100% owner of Santa Fe and Besalco when the WISCO supply requirements got stuffed up in 2007/8 and therefore he is responsible for the damages caused to ADY's for breach of contract on the supply obligations with WISCO.
The ligation underway over that is worth approximately US$150m to ady. But Farkas Klein is cashed up. He just sold 70% of Santa Fe to JSW for an undisclosed sum and JWS has injected a further US$500m into developing Santa Fe into a 5mtpa mine. So he is probably going to just walk away from Santa Barbra and hand over Besalco and his 40% share of CMSB to ady as settlement.
BTY in that article (see link above) ADY is shooting off its mouth that they are about to become a 5mtpa mine too. Second biggest mine in Chile. They refer to the new tenements and the doubling of their resources as evidence of this. All that's missing at this point is the JV partner. IMO, an announcement on that should see the sp back to 10-20c
Kacy
ADY Price at posting:
4.6¢ Sentiment: Buy Disclosure: Held
