Katanga Mining Ltd Ord KATFF

RE:quick question

[Lech1988]

There is no risk of KAT being "dissolved" - Glencore cannot unilaterally do this.  What they can do is halt all further debt financing/guarantees (which again is unlikely as the interest they are receiving on these loans is substantial).     

The biggest risk is a delay in Cobalt exports with no real sense of urgency in rectifying the problem with the markets oversupply.  Given we have heard zero from the company since the DRC halted the ion exchange system construction this seems to be the case.  This creates further financial stress for KAT as the Cobalt is necessary to generate positive cashflow, without it further outside financing is needed which they received this year from SA banks to cover their expected $500m cash shortfall.  The likelihood of an equity issuance to raise funds to cover a short term cash flow issue however is extremely unlikely.    

If the supply is further delayed there could be a serious rush to secure material as this is an enormous volume being withheld (willingly for all intents and purposes) from the market.