RE:The return of Western Resources?Not sure I read yesterdays financials and MD&A through the same colored glasses you do, Joedeen.
I really hope they can get this mine up and running, but not at the cost of its shareholders.
Westerns decision to move cash initially designated for the advancement of their Milestone potash project into real estate investments cost the corporations shareholders milions of dollars.
The company still needs 10's of millions to settle liabilities, and likely will require cash up front to get contractors back to the table to finish the project.
They also still need to fine tune their subsurface engineering to improve the project economics
"After extensive analysis of the operating data, and with the help of a number of leading solution mining experts, Western Potash is developing an optimized solution mining plan. The new plan will focus on increasing the solution mining efficiency and life span of the mining caverns. Western Potash has engaged a third-party engineering firm, March Consulting Associated Inc., to review the operation plans and to update its National Instrument 43-101 technical report (the “NI 43-101 report”), which was released on December 29, 2021."
"The Company is required to increase the security for the asset retirement obligation to the Saskatchewan Ministry of Environment by $1,527,018. Such security is to be provided in two parts, $500,000 by January 31, 2022 and $1,027,018 by June 30, 2022."
On September 12, 2019, the Company entered into a Credit Facility Agreement for an aggregate amount of $40,000,000 from the Company’s majority shareholder (Note 14 of the Company’s Financial Statements). During the year ended September 30, 2020, $35,000,000 was advanced under the Credit Facility Agreement. Interest of $1,400,002 was incurred during the year ended September 30, 2021
During the year ended September 30, 2021, the Company repaid the promissory notes with a total face value of $4,020,000 to related parties including the majority shareholder and officers of the Company along with accrued interest of $460,027.
“Western Potash has entered into various capital expenditure commitments for the procurement and construction of the Milestone Project with a remaining committed amount of $15,426,000.
As at September 30, 2021, the Company has a working capital deficit of $36,359,937 including cash of $8,019,661. Furthermore, various vendors have filed builders’ liens for up to $34,338,000 against Western Potash as a result of its delayed payment on the outstanding payables related to the Milestone project and certain vendors have also filed legal claims against Western Potash. The Company’s legal counsel is currently working directly with the vendors on a temporary solution to mitigate legal action. Based on its current cash flow forecast and its existing obligations and commitments, the Company will require further funds to pay its current liabilities, complete construction and successfully commission the Milestone Project and fund its general and administrative expenses for the 2022 fiscal year”
Not to sure about the following statement either:
"Based on its evaluation, the Company’s Chief Executive Officer and Chief Financial Officer as at September 30, 2021 concluded that the Company’s ICFR and DC&P were not effective because of a material weakness identified in the design of review control related to the cash flow forecasts prepared by the Company’s experts and the accounting for complex transactions. The Company does not currently have sufficient technical resources to appropriately verify and review the cash flow information prepared by the Company’s experts. Further the Company does not currently have sufficient technical resources to appropriately research and account for complex transactions and their related disclosures.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The Company is responding to the material weaknesses identified by seeking to strengthen the finance department by hiring new personnel. Because of inherent limitations, internal control over financial reporting and disclosure controls can provide only reasonable assurances and may not prevent or detect misstatements. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate."