And what are the fundamentals after July?Revenue Covenant –...

And what are the fundamentals after July?

Revenue Covenant – without the $1.4M sale receipts from SA; CMQ is likely to breach the $4M revenue covenant. IF Stark cashes in their $60M bonds it will put CMQ into receivership.

EVEN IF Stark do not cashes in their bond there are a few vital milestone CMQ must achieve to survive the next 12 months namely:

MP1 achieving nameplate capacity – CMQ targets this to the later half of the year. The huge expenses on ‘working capital’ and history of CMQ’s announcements on MP1 indicate there could be more problems than just the filtration problem. Until MP1 achieves nameplate capacity, how far can investors rely on CMQ words many predictions were repeatedly proven wrong and CMQ see roses in every situations, even resigning executives and sacking of production key personnel was commented as ‘strengthens CMQ’s position as it moves towards commercial production’.

Rapid expansion of production capacity – until CMQ overcome the technical difficulties to achieve MP1 nameplate capacity, how can CMQ plan for expansion?
CMQ has to expand capacity many times over the 20tpa nameplate capacity to have any hope of financial viability. ASSUMING for a minute that what investors had been told could be achieve, (Sale price of $1M per ton and CMQ can sell every kg it produces and actually collect sale receipts for goods delivered – CMQ history is against all these occurring!) the dream-about $20M revenue is far outstripped by the $2 to$3M per month cash burnt.

And where is the capital for expansion going to come from? (Assuming technically possible to expand). Under the bonds conditions, CMQ cannot incur any secure debt and requires Stark’s consent for incurring $200,000 unsecured debt (for a company burning more than $2M per month)!

Sales & Revenue: When is this going to occur? In previous years the excuse was they cannot sell until they can produce. In 2004 a $1.5M SA sale contract signed was not supplied despite the APVMA approved pilot plant having a 2tpa capacity. Why?
In 2005, a new $1.4M SA contract was signed (this $1.4M contract satisfied the Mizuho sale covenant just in time); goods delivered last year and not reflecting sales receipt. The contract was reported as UNCONDITIONAL; not financed by CMQ and on NORMAL COMMERCIAL TERMS. Why no sale receipts?
If we were to believe CMQ hopefuls, we would have seen telephone directory sale figures by now!


Approvals: Delays in approvals of the products will delay the sales (miniscule sales to date!)

ASIC court case – ongoing and draining company resources. Someone should ask Mr Williams what he was trying to imply in his ASX announcement against the facts available on the Federal Court Website. How much should we rely on Mr Williams’ announcements on other issues against this background?

There you have it – CMQ fundamentals in a nutshell.

Cheers.