RE: RE: Vote NO and lets go into bankruptcy!! I am inclined to agree with you Lefmike. And am currently in the same spot as you.
The 335 m Anglo is paying is enough to pay off both debts. But with closing costs will leave us with no cash basically. I'm not sure how that would work with the escrow account either. But it is a least a possibility and it prevents dilution, which is our biggest threat. We absolutely do not want that if we can avoid it, unless the share price was much higher. However, I'm doubting that's going to happen without a competing bid.
On the plus side, we aren't paying any interest past this month on any debt. So with no interest and the 5 mil or so savings a quarter from the reduced royalty at current production at Ez, we should be overall cash flow positive past March 31st as far as I can see, unless something dramatic has changed at one of the mines. So in theory it is possible that there are more assets, and the longer this deal drags on the better off we are in terms of final payout if I am correct in my assumptions.
However, I'm at a loss to explain how they projecting such a horrible cash flow from Ez in their projections in Q4 in the last report.(see below) Even worse then q3 when we had a shutdown due to the accident there. What am I missing? How are they projecting worse cash flow there from Q3? Did they project multiple accidents?
So to go through what I was thinking. We were negative 5 million in cash flow in the last reported quarter. This quarter we had to pay a coupon payment, (Around 3mil) and another bigger one is on the 31st, so we probably were still negative. However going forward till this deal closes, that's it. So all else equal. 5 mil in reduced royalty, and add the reduction in interest back. The only thing I can think of for the awful cash flow projection this quarter is increased costs due to severance for laid off workers. So I don't know... If that's the cost, and the numbers are at least as good as Q3, which they should be because we didn't have any work interruptions, issues or anything, we should be cash flow positive going forward past March 31st all else equal. With all that's happened, I'm not holding my breath, as they have missed target after target, but it is in the realm of reasonable possibilities I think at this point. In which case we would have cash on hand when this closes, and not owe anything on the Gold One loan. If that's the case, we should not be selling at all in my opinion, but at 15c, that's a lot of dilution.
We need more info to decide what to do. If I wasn't in the middle of it with a big position, this would be an interesting case study in business decisions about what a rational investor should do...ugh
The information circular should be interesting. If the Gold One CEO is going around bragging, we may have a pleasant surprise in that they cannot get an independent valuation saying 70mil for Ez is a fair deal. I was surprised they hadn't completed that already when they announced this like they have for MWS.
My one worry, even if we do decide to vote for MWS and against Ez being sold, is that the MWS deal is a lot easier to block as all the big insider shareholders can't vote for that, while they can for the Gold One/ Ez sale. So there is already 30%ish of the vote in favour, while this doesn't count for the MWS deal for the majority of the minority... So we just shoot ourselves in the foot, giving them enough votes to put that through, while not stopping the Gold One deal. Obviously we would need to know we had the votes first from some other big holders first if that was our plan and that we were voting with them. Otherwise this won't work and we probably are better off voting No to both as it stands.
Anyway, just talking some of the things through that I've been thinking about... Please share your thoughts.
Oh also btw, we should have a big accounting gain under IFRS 2 reports out, due to Franco Nevada reducing the max ounces under their royalty deal on MWS. As under this we have to put the total value of the derivative stream as a loss. So this will reduce our net derivative loss we already booked. Resulting in a huge one time gain. And, on paper, increases the value of MWS too, as around 100k less oz are deliverable now under the contract then before. 312k oz from 400 and something before the royalty is done. That's a 120m paper gain at 1600 gold. Over the life of the contract, it would be attributable to us also in increased profits, if we said no. Another factor to figure in even if we do get diluted. Although its a long way out, it does increase the NPV of the cash flows from MWS. And its value to whoever.
BTW I have a bit over 2.5m shares on our list now. Amongst 10 people. Hopefully we can add to this
