Hi allI thought I would open a separate thread on this as it is...

Hi all

I thought I would open a separate thread on this as it is still raising its head in various threads. It would be good to discuss as a subject of its own.

The Board have decided to allay market fears of liquidity by holding a stronger financial position through a partial sale of LH. It doesn't elude me that it is also because the Board are worried there may be a time gap between them running out of working capital and the U308 price rising enough to put them back in positive territory. Maybe those two points are the other way round!!

In 30 odd years of business the single cause that I most often see a business get into hot water or indeed go broke is, over borrowing (too much debt). Very manageable when things are rolling along but throw in one or two wild cards (in this case Fukushima and also extended, languishing spot price) and it can quickly throw a comfortable situation into a very tight situation financially. Hence comes the tightrope act of risk (debt) 'v' too much caution (little debt). Too smaller debt may mean objectives and feasibility of the project are not achievable. So debt is necessary to get the project up but it is a canny operator that can get the Company to walk the tightrope of risk that doesn't forces the company broke but achieves viability.

Thus far we have survived and a vote of confidence in the Board as obviously there has been a balancing act going on.

RE sale of other assets 'v' LH
I hate going backwards and I look at LH and in an emotional sense say NOOOOO!! but business sense tells me that it is the best move. I DO NOT like the proposition of losing part income of LH, I do not like that someone else will have a vote in that project, I do not like this solution but I think it is the only one that is safe. LH will one day make big bucks, make that BIG bucks. It will be better to have 75% of that than none. There has been put on this site the suggestions of selling other assets, namely in Aust. How I wish that were viable and also safe in terms of PDN surviving but we need to keep in mind the very situation we are in now is because it was never envisaged that there would be such a turn down lasting so long. Similarly it would not be envisaged now that the other assets could take longer (possibly a lot longer to sell) or possibly not sell at all. That could be a disaster. That may mean a T/O on unfavourable grounds.

So when debt is in play, manageable debt what happens if the conditions change and there isn't any leeway. There is no buffer. That is when as so very often debt turns from being a supportive tool to being a wrecking ball.

AS much as LH is the Jewel in the Crown, and as previous I hate to say this, I think it is the safest move as it is an attractive proposition for a buyer.

I think U308 will rise in price from this point but what if it doesn't. What if it goes up and then slips back and bubbles around 40 until 2015?

I hear what others are saying re sale of alternative assets (and I wish it viable too), I hear the positivity on U308 price rising (and I share the sentiment) but it is cutting it a bit fine. I am not averse to taking risks (enjoy skydiving etc) but this risk could well be goodbye PDN unless handled carefully and prudently. If we get it wrong there is a chance we will not get another shot.

I hope this is not perceived as too negative, it is not meant to be negative. It is just calling it as I see it.

How I wish the U308 price would skyrocket and solve this temporary glitch.

The Board did say they are OK until 2015 so I hope that is the case and surely by then we will be wondering what all the angst was about!! I am not sure if that comment was allowing for the 25% sale of LH or not. I think maybe it was as it was mentioned shortly after speaking about LH sale.

What have I missed.
Please someone tell me I am wrong!! :-)