RE:A few highlights from the financials
I took a closer look at the Q2 financials to try to determine if NWM actually made the interest payment for the quarter. I have concluded that they accrued the interest amount in the Income Statement (to recognize the charge in the correct quarter) and then increased Accounts Payables to show it as a still a to be paid amount. The accounting transaction would be Debit Interest Account (Income Statement) and Credit Accounts Payable (Balance Sheet). The Q2 Accounts Payable balance is $7,018,721. The Q1 Accounts Payable balance was $6,356,571, thus Q2 increased by about $650K in overall Accounts Payable. I then looked at note 11 of the financials. It shows that Accounts Payable is comprised of 2 primary categories: 1) Trade Payables, 2) Interest on promissory notes. The Trade component was pretty much the same from Q1 to Q2 ($4,755,513 vs $4,707,059). However, the Interest on promissory notes increased by about $700,000 ($1,488,760 vs $2,203,121), thus strongly suggesting that the interest amount owing on the debt for Q2, though recognized as an expense in calculating Net Income in the Income Statement, was accrued in the Balance Sheet (to be paid in a future period). Hopefully they can recover all (if not, then most) of the $4.8 million in sales tax receivable from the Mexican government in 2014. These funds can go towards paying down the accrued interest amounts. Also of note, the 2nd $500K demand loan did not occur in Q2 (as I had thought). It was actually a subsequent (to end of Q2) event. It occurred on August 7, 2014, thus suggesting that cash is still a little bit tight in Q3, even with a more positive Q2 showing. Hopefully they took out the second demand loan to launch a drill program, as oppose to an operational cash shortfall. Also of note, they mentioned in the Q2 MD&A report (pg 8) that costs are expected to increase slightly during the remainder of the year due to rates stabilizing. ``Cash costs decreased due to the significant reduction in the strip ration in the quarter. Costs are expected to increase slightly during the remainder of 2014 as mining rates have stabilized and the strip ratio will increase towards the life of mine average of approximately 1:1.``