ProductionIt comes down to production and cash flow. They need to produce gold and become cash flow positive asap (they said somewhere they were going to be cash flow positive sometime in q4) whether they declare commercial production or not. Capitilize or expense doesn't matter when you aren't producing anything. I think the idea is that once you know you can produce material amounts, then you figure out the best time to announce commercial production and the proper accounting to minimize taxes etc.
I know there has been over a year of these amazing press releases and very little production to show for. Irumafimpa was a lot more difficult to mine than management forecasted and this problem was not communicated to shareholders very well and is the root of the credibility issue. Now, they have started to mine Kora which was always the main goal.
The positive is that in Nov/16 the press release states "is pleased to announce the first concentrate from Kora production has been shipped to the Port of Lae, pursuant to a new offtake agreement, with the provisional payment (90% of total value of shipment) received by K92". Will find out what the cost of the offtake agreement in in the q4 financials but it has bought KNT time. So they are producing from Kora and the offtake agreement bought some time.
2017 was a complete disastor and I agree the credibility of this management team is at an all time low (some would even call them liars). Could write a page on how investors have been mislead last year starting with the 50-55k ozs that were supposed to have been produced and no dilution and on and on. Trusting these guys is a major problem but two financings (26mil) and an offtake agreement tell me other people belive gold is there also. Irumafimpa was a big problem last year, hopefully Kora won't be. From the dec4/16 press release "We will continue to mine from development within this area and expect to commence stope production from Kora North in early 2018".
Expecting good prouction and cash flow positive news soon! Good drill results will help. This would help restore some credibilty. Still very risky but I am positive. GLTA