Colossus Minerals Inc COLUF

By-Pass the Bondholders?

[wwadehammer]

You're right Paul, the bondholders are in charge now.  They can force bankruptcy Jan 1 if interest checks not in the mail.  If they think they can get most of their money via forced sale then they will pull the plug.  Company could sweeten their offer to bondholders via warrants to buy some time. Then it's either a white knight or a bankruptcy sale.  Arias could come up with a better offer if he wants to protect his investment.   Arias was willing to go $25 million on Wensday, but going to $70 million plus interest payments would burn thru all his cash.  My guess is Arias would try to put together a group of investors to bid on the company in a bankruptcy sale.  What the sales price would be is anybody's guess.  I can't see Arias just walking away from his investment but you never know.  Like you say Paul, Arias is very, very smart and will probably land on his feet.

Stockholders are in a bad position.  We are counting on a NI 43-101 that shows large quantities of precious metals can be mined within one year.  Assuming a good NI 43-101, and that the plant and mine can be fully operational in six months for $70 million, then milling 1,000 tons per day at 17.5 equivalent grams per ton gold gives you 562 equivalent gold ounces per day.  The 17.5 grams comes from a poster who said gpt would average between 15 to 20 based on what drilling results we have.  Cash costs per ton would have to be around $500 with that rich of ore.  So that gives you $700 profit per equivalent ounce or about $400,000 cash profit per day.  At that rate, it would take you 175 days to pay-off a $70 million dollar loan.  This is where we stockholders have a chance.  If someone will loan us enough money to start the mine a keep bondholder interest payments up-to-date we could make it.  Let's say it takes $90 million to keep bondholders off our backs and start operations ($20 million for bondholder interest).  We would have to give the new loan first rights to proceeds from a bankruptcy sale, plus give 20 percent interest plus some warrants but that's a lot better than bankruptcy.  I don't know if the bondholders have the right to block loans that put them in worse position in a bankruptcy sale.  If not, they would have no say if the new loan was approved by the board without a shareholder vote.  Fine by me.