FinancialsLet’s see if the yappy dogs of ZEN prove their lack of comprehension once more when they are told what is actually in their company’s financial disclosure. Last time around, they couldn’t comprehend simple math that demonstrated that the company had spent a lot of money for only a bit of progress. I posted:
“So they spent $1,584,292 hoping to recover 5.94 tonnes of graphite, which is an embedded cost of $266,716/tonne, or $0.2667/gram.
Now that does not consider any other costs, such as the actual cost of flotation concentration or chemical purification to reach 99.8% purity, or any other costs related to it (shipping, consulting, report generation, G&A, etc.). We’re already at about $267k/tonne for unrecovered graphite in ore sacks stored in Hearst.”
Unrecovered graphite in ore sacks stored in Hearst. Nothing more has been done subsequently to advance the production of graphite concentrate, let alone graphene. There’s no money to do so. From the MD&A: “At June 30, 2019, the Corporation had working capital of $230,490. Subsequently, the Company has received a $290,192.72 reimbursement grant payment for the eligible expenses during the quarter ended June 30, 2019. The Company has also received a HST rebate payment of $88,623.85. Combined, these funds are sufficient to fund the Company’s general administration, environmental baseline study fieldwork and other activities; however, additional financing will be required to allow the Company to continue to fund its ongoing project development activities.” (emphasis added)
In case that wasn’t clear enough for the yappy dogs, the MD&A makes clear that the flotation to graphite concentrate (the first of a two steps including purification) had not yet been performed on the bulk sample. Note the verb tense: “The updated process flowsheet (flotation and purification) will also be further tested and verified for scale-up with the 110 tonne bulk sample. Once this material has been purified to approximatively 99.8%, it will be exfoliated into graphene and graphene oxide products for continued larger scale end user evaluation.” Let’s also remember that they failed to sample the West Pipe material, so they will at some point have to ensure that it “will also be further tested and verified for scale-up” for inclusion in any updated economic assessment of the Albany Project. Just wait until they find out how much it actually costs to concentrate and purify the graphite, and convert it into graphene.
Some time ago, I warned about the Company’s reliance on flow-through financing to advance the project development activities. We’ve already seen the impact on the share price when the 7.5 million flow-through shares hit the market. At a purchase price of $0.40 per share, the subscribers’ actual cost was at about $0.24 or so, which led to a number of 52-week lows in the share price. Moreover, it would seem that they have mis-spent some of the flow-through funds, as they no longer have capital in hand to meet the requirement of “incurring and renouncing … $826,848 in qualifying exploration and evaluation expenditures”. Oopsie. “As part of previous flow-through share issuances, the Company is committed to incurring and renouncing, under the "look back" rule, $826,848 in qualifying exploration and evaluation expenditures during the fiscal year ending March 31, 2020.”
The Company needs hard cash, and lots of it. Wait until you see the next financing effort.