To put it simply - KCN raised $70 million early last year by...

To put it simply - KCN raised $70 million early last year by issuing 10 million shares.

But KCN at 31st. March this year only had about $45 million in cash.

In addition KCN received about $40 million in additional revenue from gold sales over the last year that will not be received this year based on the current gold price.

That's $65 million!

With gold being about A$200 lower means cash flow from KCN's one profitable mine, Chatree is dramatically reduced.
In addition, total costs have been increasing at Chatree.

Today, when reading up on KCN, I saw that the December quarter production was impacted by the temporary closure for a number of weeks at Chatree due to Thai red tape.

However, the March quarter gold production at Chatree was pretty much the same as the December quarter. Plus the gold grade being mined is now terrible - well under 1g/t and recovery is also low at only around 75%.

With a substantial drop in the gold price the $175 million debt that KCN has comes into focus.

KCN has encountered these problems by what looks like a combination of political risk in Thailand, the decline in the gold price and things not probably going to plan when Management embarked on aggressive expansion a few years ago.

The gold produced at Challenger for the March quarter had a total cost of $2,200 an ounce! So issuing about 30 million shares in the takeover of Dominion obtain Challenger does not appear to have worked out at this time, plus has cost KCN millions of dollars since in working capital.

Will KCN need to raise cash by issuing shares at a discount in this very poor market?

I feel like a complete mug selling KCN shares earlier today at what are now 10 year lows.

But while fed up with the terrible market performance of gold equities, and in too many cases also poor operational performances, I have not capitulated in this ugly market for gold equities.

Transferred money into what I now believe is a safer option. NST - no debt and very low total cost of gold production. Time will tell.