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Strong and credible management ultimately determines the future of a junior. That, plus who you've pissed off in the previous 2-3 decades. The Canadian mining industry is loaded with people who'd just as soon slit your throat as look at you. lol
Maybe if we're good this year Santa will bring us chocolates intead of the usual lumps of coal.
It looks like we probably have about 15M more Wega shares to go through (not factoring in any transactions they may or may not have already been done via Canaccord). I’m hoping they burn through at least 2M shares per day (similar to Friday). If so, then maybe they will be completely gone in about 7 or 8 days.
I hope the MRI deal is pretty much a done deal, as it is CRITICAL to us, naturally. Perhaps it might have been signed for a few days now (who knows though, right?), but perhaps it was conditional (i.e. dependent on curtailment of production). Apparently, it was mentioned at the AGM that PK was in conversation with 4 other companies also (for additional bridge loans – not sure how advanced the discussions were though), but PK hinted that the terms offered were not favourable to shareholders – then again, who knows if it was all just fabrication though, right? My guess is that PK looked at the MRI deal as a sure thing otherwise one wouldn’t think she would have tossed aside the other 4 opportunities, right? In our desperate state, even $.09 (highly dilutive) financing would be better than no funds (if MRI doesn’t get closed off). They just need to hurry up and close it off so shareholders can breathe a bit.
Also, my guess is that Century figures that with the funds from MRI, coupled with profits from San Juan over the next 5 months, they will have sufficient cash to meet basic obligations. You would think so anyway, otherwise (if the math didn’t add up) one would think that they would have attempted to secure some extra funds (even at $.09, from 1 of the 4 sharks).
I’ve taken a look at the Y/E ’07 balance sheet and it looks somewhat manageable over the next 5 months, assuming they get the funds from MRI and San Juan pumps out some good cash. My primary concern is the high accounts payables (even after netting out A/R). The statements are from 6 months ago so we don’t know what the current situation looks like. We don’t know what the terms are of the payables and accrued liabilities either. Also, we don’t know what items were purchased. Most likely, many of the purchases were for raw materials to be used for normal operations. Many companies tend to purchase their materials in bulk (to get better rates), in advance – I have no idea if this was the case here though. Working capital is then used to pay down the payables, within the payables window (30 days, 60 days, 90 days, etc.). Once the materials are used (in the end product) to generate revenues, the working capital then gets replenished. The definition of “current” liabilities is 1 year – anything over 1 year is defined as “long-term”. However, the typical accounts payable invoice has very short terms. As mentioned, it has been 6 months since Y/E ’07. Typically, payables that are not paid after 6 months are well into the past due bucket, with interests being paid on the past due balance. It is not clear how the company has managed the payables over the past 6 months. My guess is that large chunks of the various financings (as well as profits generated via the San Juan operation) have gone towards covering the minimum required payments. A similar approach will most likely be used over the next 5 months. If they manage things well then the next 5 months could actually provide a small opportunity for them to reduce the ongoing payables balance by a little bit (ongoing pay down and less purchases equates to a lower carry forward balance).
Their interest payment on the IQ debt for 2008 is probably around $1.0M. It’s not clear when payments are due (monthly, quarterly, Y/E or otherwise). Some of it may have already been paid for 2008, but then again all of it could be due at Y/E – we don’t know. It’s probably best if it’s all due at Y/E, as it wouldn’t pull from current cash position and it will be funded via Fortis (if successful). Either way, at $1.0M (assuming we get the MRI $’s) it is not a show stopper. By the way, no portion of the IQ principal amount is due in 2008.
There are 2 capital lease obligation payments ($2,212,491 for 2007 and $925,536 for 2008) that will most likely need to be made in 2008. I believe they are both related to the 100 ton trucks. The trucks were still on the books at Y/E ’07, as an asset (the capital lease obligations are on the books under liabilities – essentially an offset). Selling the trucks should provide sufficient cash to cover these 2 payments. As such, I am not concerned with these payments.
There will be new capital lease obligations showing up on the books in 2008 (from u/g equipment purchases), but I don’t imagine we will have to pay much (if anything) in 2008, other than interest payments of course (which shouldn’t be material, as they are not 100 ton o/p trucks).
Century has a working capital gold facility with a gold trading firm. The facility is capped at $2.25M. It is also revolving which probably means they can get away with just making minimum payments for the next 5 months. It might be a bit more challenging to manage it, as I assume their payments are usually in the form of gold ounces produced. As a side note, it’s secured by in-processed gold at the Val d’Or operations only.
As a side note, apparently, under the collective agreement they can lay-off employees for up to six months without having to pay severance or termination benefits. However, I imagine that the employees should be able to apply for EI benefits for that period (similar to seasonal workers), but that’s only my own thinking.
It looks like Wega chose to rest RBC today. Instead, it looks like perhaps they've decided to use their tactic of shorting and selling through Canaccord (they might also be selling through anonymous).
Canaccord (the broker/advisor) is suppose to be working with Century to find buyers. Perhaps things will start to pick up now (with the price now so low). They had a decent day on Friday, with about 550,000 shares bought. They seem to be having a very strong day today. I think Canaccord is the primary buyer today (so far).
Optimusprime, unfortunately we do not have strong & credible management at CMM (as we are all painfully aware of).
Production05, based on your usual comprehensive analysis above, CMM may not have 5 months, only days (?) to survive; unless the MRI deal is truly in the bank. I can already see the next pressrelease: "Due to evil external forces, CMM is forced to seek court protection from its creditors. We regret the harm this is bringing to our loyal shareholders...but...etc..etc.."
Bigjohn, a friend reminded me about Grande Cache Coal (GCE) today. In 2005 they were over $11.00 but due to rotten management and a few other factors, they slid to as low as 45 cents in early 2007. They changed management, coal prices improved, and they were at close to $11 earlier this year. Down 56 cents today, closing at $6.78.
All we need is a new CEO, some money, a mine plan, and some luck, and we'll be off to the races. lol
I predict, in this order - luck; money (MRI); luck; a mine plan; luck; money (Fortes); luck; and a new CEO. CMM will have to make their own luck! This is all IMO.
5 comments:
Strong and credible management ultimately determines the future of a junior. That, plus who you've pissed off in the previous 2-3 decades. The Canadian mining industry is loaded with people who'd just as soon slit your throat as look at you. lol
Maybe if we're good this year Santa will bring us chocolates intead of the usual lumps of coal.
It looks like we probably have about 15M more Wega shares to go through (not factoring in any transactions they may or may not have already been done via Canaccord). I’m hoping they burn through at least 2M shares per day (similar to Friday). If so, then maybe they will be completely gone in about 7 or 8 days.
I hope the MRI deal is pretty much a done deal, as it is CRITICAL to us, naturally. Perhaps it might have been signed for a few days now (who knows though, right?), but perhaps it was conditional (i.e. dependent on curtailment of production). Apparently, it was mentioned at the AGM that PK was in conversation with 4 other companies also (for additional bridge loans – not sure how advanced the discussions were though), but PK hinted that the terms offered were not favourable to shareholders – then again, who knows if it was all just fabrication though, right? My guess is that PK looked at the MRI deal as a sure thing otherwise one wouldn’t think she would have tossed aside the other 4 opportunities, right? In our desperate state, even $.09 (highly dilutive) financing would be better than no funds (if MRI doesn’t get closed off). They just need to hurry up and close it off so shareholders can breathe a bit.
Also, my guess is that Century figures that with the funds from MRI, coupled with profits from San Juan over the next 5 months, they will have sufficient cash to meet basic obligations. You would think so anyway, otherwise (if the math didn’t add up) one would think that they would have attempted to secure some extra funds (even at $.09, from 1 of the 4 sharks).
I’ve taken a look at the Y/E ’07 balance sheet and it looks somewhat manageable over the next 5 months, assuming they get the funds from MRI and San Juan pumps out some good cash. My primary concern is the high accounts payables (even after netting out A/R). The statements are from 6 months ago so we don’t know what the current situation looks like. We don’t know what the terms are of the payables and accrued liabilities either. Also, we don’t know what items were purchased. Most likely, many of the purchases were for raw materials to be used for normal operations. Many companies tend to purchase their materials in bulk (to get better rates), in advance – I have no idea if this was the case here though. Working capital is then used to pay down the payables, within the payables window (30 days, 60 days, 90 days, etc.). Once the materials are used (in the end product) to generate revenues, the working capital then gets replenished. The definition of “current” liabilities is 1 year – anything over 1 year is defined as “long-term”. However, the typical accounts payable invoice has very short terms. As mentioned, it has been 6 months since Y/E ’07. Typically, payables that are not paid after 6 months are well into the past due bucket, with interests being paid on the past due balance. It is not clear how the company has managed the payables over the past 6 months. My guess is that large chunks of the various financings (as well as profits generated via the San Juan operation) have gone towards covering the minimum required payments. A similar approach will most likely be used over the next 5 months. If they manage things well then the next 5 months could actually provide a small opportunity for them to reduce the ongoing payables balance by a little bit (ongoing pay down and less purchases equates to a lower carry forward balance).
Their interest payment on the IQ debt for 2008 is probably around $1.0M. It’s not clear when payments are due (monthly, quarterly, Y/E or otherwise). Some of it may have already been paid for 2008, but then again all of it could be due at Y/E – we don’t know. It’s probably best if it’s all due at Y/E, as it wouldn’t pull from current cash position and it will be funded via Fortis (if successful). Either way, at $1.0M (assuming we get the MRI $’s) it is not a show stopper. By the way, no portion of the IQ principal amount is due in 2008.
There are 2 capital lease obligation payments ($2,212,491 for 2007 and $925,536 for 2008) that will most likely need to be made in 2008. I believe they are both related to the 100 ton trucks. The trucks were still on the books at Y/E ’07, as an asset (the capital lease obligations are on the books under liabilities – essentially an offset). Selling the trucks should provide sufficient cash to cover these 2 payments. As such, I am not concerned with these payments.
There will be new capital lease obligations showing up on the books in 2008 (from u/g equipment purchases), but I don’t imagine we will have to pay much (if anything) in 2008, other than interest payments of course (which shouldn’t be material, as they are not 100 ton o/p trucks).
Century has a working capital gold facility with a gold trading firm. The facility is capped at $2.25M. It is also revolving which probably means they can get away with just making minimum payments for the next 5 months. It might be a bit more challenging to manage it, as I assume their payments are usually in the form of gold ounces produced. As a side note, it’s secured by in-processed gold at the Val d’Or operations only.
As a side note, apparently, under the collective agreement they can lay-off employees for up to six months without having to pay severance or termination benefits. However, I imagine that the employees should be able to apply for EI benefits for that period (similar to seasonal workers), but that’s only my own thinking.
It looks like Wega chose to rest RBC today. Instead, it looks like perhaps they've decided to use their tactic of shorting and selling through Canaccord (they might also be selling through anonymous).
Canaccord (the broker/advisor) is suppose to be working with Century to find buyers. Perhaps things will start to pick up now (with the price now so low). They had a decent day on Friday, with about 550,000 shares bought. They seem to be having a very strong day today. I think Canaccord is the primary buyer today (so far).
Optimusprime, unfortunately we do not have strong & credible management at CMM (as we are all painfully aware of).
Production05, based on your usual comprehensive analysis above, CMM may not have 5 months, only days (?) to survive; unless the MRI deal is truly in the bank.
I can already see the next pressrelease: "Due to evil external forces, CMM is forced to seek court protection from its creditors. We regret the harm this is bringing to our loyal shareholders...but...etc..etc.."
Bigjohn, a friend reminded me about Grande Cache Coal (GCE) today. In 2005 they were over $11.00 but due to rotten management and a few other factors, they slid to as low as 45 cents in early 2007. They changed management, coal prices improved, and they were at close to $11 earlier this year. Down 56 cents today, closing at $6.78.
All we need is a new CEO, some money, a mine plan, and some luck, and we'll be off to the races. lol
I predict, in this order - luck; money (MRI); luck; a mine plan; luck; money (Fortes); luck; and a new CEO. CMM will have to make their own luck! This is all IMO.
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