next positive news/announcements???, page-34

Current share price seems to have more to do with the offloading of shares from the convertible debt more than anything. Question is, how much more is there to go?

Seems pretty complicated, but I've had a crack at it. The March Cashflow report showed about $2.7m in convertible debt (APG aside, they don't seem to be converting, they want money). So all the conversions since then add up to about $2.3m. Very rough numbers. That's 1.36b shares on issue now. If that last $400k gets converted for $0.0032 per share like the previous conversions, that's another 125m + interest to take us to about 1.5b. Not sure if that's correct though, there seems to be contradictory information all over the place, happy to be corrected.

I'm not surprised the sell side has pushed down to $0.004. Since most of these conversions happened at between $0.003 and $0.004 that represents a very easy nice little quick profit. If they thought the company was going to collapse they'd be crazy to keep converting the debt knowing that buyers will run out, why wouldn't they just get paid back in cash instead? No, they're being clever. All the selling so far has been at a profit for them, and as a bonus keeps the share price down so they can convert even more. It's win win for them, they get cash profits on their loans, more shares for the long term and de-risk all at the same time.

I doubt they'll sell into the $0.003 buy side, as that's a loss for them. They would have got more profit not converting the loans at all, and they're running out of loans to convert, so pushing the price down for a loss just to get slightly more shares is very risky. So I don't see the price going any lower, but I also don't see it going much higher than that for a while either. Still a huge amount of shares that could be sold for a profit, and I'm sure they'd like to de-risk. So by all that logic, buying now at $0.004 is probably the best you'll get, but it probably isn't going up in a hurry.

So what about valuing the company? With the convertible debt gone, and the Silverstream deal likely to take out the APG debt and any capex costs, it pretty much comes down to cashflow. The latest presentation says all in costs US$780/oz with 18koz per annum. That's US$7m in profit, accounting for the fact that Silverstream get 10% of that for US$400/oz. About AU$5m after tax and stuff, so that would value the company around $50m. Which at 1.5b shares is $0.033 a share. All this by the end of 2014.

Now obviously as goarmy mentioned that all comes down to whether the company can be trusted with these numbers, but that's always an issue. They're fully funded, progress is happening and there's a lot of confidence in the company (though you have to read between the lines to see it). I'd say that's worthy enough for a speculative punt at a possible Disallowed.