Ann: Significant Upgrade to K2 DFS, page-11

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  1. 14 Posts.
    I too am grateful for Timber7's précis and would suggest the board cannot possibly return to the market in search of more capital. 2.75bn shares on issue with a further 2.04bn unissued is a difficult story to sell. A share consolidation might return some confidence to the stock although we do know such consolidations never translate share price in direct proportion to consolidation and I wonder if the board has any idea about consolidation; they should have considered this matter quite some time ago. Nevertheless, it will be a start.

    Ord must source and spend $4m between now and 1 Jan 16, in 3 tranches ($1m + $1m + $2m) at 5 month intervals, with the next tranche expiring 2 Mar 15. Given Dec/Jan is the holiday season, time will be of the essence.

    Such expenditure will be insufficient to bring the mine into production, which means additional cash for operations is required. My bet is the board will also be conscious of further dilution of their own share holding and that of the new big investors and will seek debt hybrid or debt finance.

    Debt in a high risk micro cap will come at a cost, both with respect to fees, interest rate, repayment terns and if Ord defaults on repayment, the lender will probably expect to gain control of the company.

    Also, if you have been watching Northern Star, it is no secret they have bitten off more than they can chew with the acquisition of Barrick's Plutonic Dome assets including the mill. 10 out of 10 to Ord for stitching up a toll treatment agreement, however a number of commentators are suggesting Northern Star will be in trouble because they do not have sufficient ore to keep the mine active. This might partly explain why N Star has announced a $50m drilling program. N Star operates with an all-in sustaining cost of approx $1,100 per ounce. This is too high in an unstable price market and if N Star get into trouble they will have no choice but to shut the mine and then Ord is in dire straits. I hope the Ord board has a contingency plan.

    10 out of 10 for Ord's corporate video. The selling points are excellent, however there is no sausage behind all that sizzle.
 
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