Katanga Mining Ltd Ord KATFF

Rights Offering: why now and not in 2021?

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Another observation from my SA KvN KAT Blog:

We always knew about the Rights Offering risk and have posted and talked about it here lots too. Simply, I think we just got left behind & blindsided by a commodity that got whacked left right and centre and mostly by macro issues totally out of our control.

One point I wanted to add and to share more widely: did anyone actually look at KAT's cash position at the end of this past Q?

And do we fully understand what CapEx cash is still required to get all of our projects, optimizations as well as power and acid 100% commissioned and completed? No.

Nevermind that $ money still needed simply to run our mines. I read the 89 page Preliminary Prospectus and the discussions outlined in it between the Special Committee and GLEN and CIBC and the South African banks paints a dire picture.

Now. Not next year. Or in 15 month's time.

So do/did we actually have any dry powder $ left to even get us to 2021 and a possible repayment?

I suggest, no, we don't/didn't. We were tapped out.

It's clear to me the company has no chance whatsoever to go another year nevermind all the way to 2021. This is an important distinction and the crux of the matter. It's why this is all happening now. Suddenly.

If KAT had pushed back against Glencore and insisted it was to be left alone until repayment time, we would have imperiled the entire company.

In fact, were we to have defaulted and/or our Op Cos in DRC defaulted, where do you think all those great assets would go next? To the creditors? Does anyone really think a bankrupt KAT would be allowed a lengthy and formal period to retain its assets and recapitalize?

No. It's the DRC. Glencore would be out. Gecamines and Kinshasa would likely take back everything and then GLEN would truly be screwed given its bigger Co and Co trading aspirations.

I think the above is very important.

These are my views only. Thanks for reading.