Double whammy (or maybe triple)Pardon me for saying so, but both bad news bomshells have been totally expected to an objective observer.
1. Nampala. Management has avoided for years disclosing the most basic information about Nampala - the expected mine life. Meanwhile, as I have explained numerous times, they have been maintaining the illusion that the company is profitable, simply by reporting major expenses for Nampala as capital and not operating costs. But the fact is that they have kept on borrowing money just to stay alive, in addition to the borrowing for the fatally stupid plan of starting construction at Kiniero when the conditions are not in place to establish the viability of the project. So now the game is up, they have run out of options to borrow money to keep Nampala turning and pay their salaries. They now say that Nampala will shut down by June 2026 - OR BEFORE. Essentially we can read from this that the operation as of now is on a day-to-day basis. Any number of factors could force the mine to stop working at any time. One of those factors is the Mali government. Reading between the lines, it sounds like they are begging the government for financial concessions that would allow them to continue operating. How likely is that to happen? When the government can just take back the mine and hand it over to someone of their choosing? And by the way the 'valuation' of Nampala at "between CAD 30 million and CAD 55 million" is a joke - who would pay even a dollar for a mine that cannot be operated for a profit? If the mine stops working, it becomes a giant scrap heap and a financial liability due to closure costs.
2. Kiniero. I'm not going to write a book about this, but now it's clear that the chances of the project getting financed are more unlikely than ever. They failed to get the required project financing from Taurus; they announced an updated FS; then they delay the FS for reasons that are not credible. It appears that Taurus is not impressed with the project, or with management, or both. So where will they get the money for further drilling and studies, when they need to conserve cash just to stay alive a little longer? As a result, they are forced to enter that scary place that is often the hospital ward for dying patients - engaging SCP to "to advise on corporate or assets transactions to maximize shareholder value." You can read that as, "is there any way to salvage any value for existing shareholders as the company melts down?" Meanwhile, the project is already mortgaged to Taurus. If there is a liquidation of assets, would there be anything left for shareholders after paying back Taurus and other creditors? Even if they do recover something for shareholders, how will that compare to the still outrageously high market cap of $160 million? So now you can see how idiotic it was for RBX to borrow money to start construction prematurely, pretending that it was a strategy to get into production faster. Who knows, maybe this was a trap that Taurus knowingly encouraged RBX to step into... And what about the long-promised establishment agreement with the Guinea government? This alone could be a show-stopper for the entire project, but due to the lack of transparency, we have no idea where this stands.
Enough said for now. RBX shareholders should be ready with their plan tomorrow morning - jump into a liferaft, or hang on to the sinking ship... Btw I honestly feel sorry for those who are knowingly buying into the meltdown. What possible good news can there be in the coming months to reverse this disastrous scenario?