Financials ObservationsSome observations on the recent financials, which are not new as most appear in previous quarters but worth considering when looking at whether WHY is a viable investment. It is one thing to have the property, but if you can't manage the financials needed to advance the project then you don't have anything other than property rights and financial obligations. Many people get caught out on bankruptcy/receivership because they didn't pay attention to financial standings of their investment.
- financials are not audited - usually a red flag
- Loan of $1.7m to company owned by Frank M - Big Mountain Development Corp - has so far accrued almost $400k in interest payments. Loan renegotiated to be due July 2018.
- Another loan for $1m (source not clear) where if company changes hands before end of 10 years, loan and interest payout is $3m. A nice 200% return over 10 years.
- MD&A states that if company cannot fulfil its financial obligations, loan to Big Mountain puts it at the front of the priority line and could result in forfeiture of all assets to Big Country (a privately held company) - as per the MD&A:
- The Company has entered into a general security agreement (the "GSA") with Big Mountain, pursuant to which Big Mountain has a general security interest over all of the existing and future assets of the Company. Pursuant to the GSA, in the event of a default by the Company on the Big Mountain loans, Big Mountain may take actions to recover monies owing to it, which may include the seizure and sale of the Company's assets.
- Accounts payable as at end of quarter was over $800k, so private placement just announced just covers that, appearing to leave very little remaining cash to accomplish all the objectives they said the money would be earmarked to address
Another observation or two:
- have not updated their corporate presentation since Fall 2016 - usually a red flag, especially for a company that is trying to gain investor interest - presentation is the honey to attract initial interest and then they can worry about data room
Best move yet is declaring that they want to try to go with a Quarry Permit and just sell the rocks to someone else to process. There is a manganese-focused company in the Prairies that does that and lets someone else dealing with maintaining processing facilities