The situation is dire- The so-called profit is fake, a result of accounting rules that allow them to classify urgent expenses to continue mining as 'capital'.
- They report an increase in the value of their mining assets (hence the fake profit), but the real value of these assets could go to zero at any time when they are unable to squeeze any revenue out of operations.
- The company is essentially living on credit cards, which are pretty much maxed out. Net debt has again increased in the quarter, contrary to what the company says.
- They negotiated a small line of credit from a Malian bank, which may be already spent by the time this report came out.
- Nampala is becoming more and more expensive to operate, as expected with a mine in its late stages with no additions to reserves (in spite of throwing money at exploration for years). Any little setback could cause the mine to shut down, as we have seen with other companies.
- Taurus has got them by the balls, and may be in a position to seize assets in the near future.
And suppose by a miracle, RBX survives and builds another mine. That mine has a highly theoretical, high-risk NPV of $US200 million, and does not even have a proper feasibility study. And it requires an up-front investment of at least $144 million, which has NOT been obtained. Other companies who are promoting similar projects have market caps of $10-$50 million. How on earth is RBX's market cap justified? RBX is lucky to have the blind loyalty of a certain type of shareholder. But how long will it last?