Technically they have -92 million in debt but 50% is immaterial. What that means is that they can kind of pay it off at their leisure. i.e. -19 million is for a loan outstanding to Guandgong that can be repaid from metal inventory as opposed to cash.
ANZ, their primary lender these days also seems relatively comfortable with KZL's forward looking cash flow statement and extended their refinance facility by 60 days and seem quite willing to support KZL further. (balance -62)
However, given the tight conditions, creditors are demanding more cash up front for various services etc and KZL is equally making similar requests of it's debtors.
Creditors are however comforted by the injection of cash but diligent in their payment of funds. KZL, under Kim was notorious as a late payer.
I am friends with a lot of CEOs worldwide, and I know Geoff personally through various circles. He is a hard and honest man and good fit for KZL. I think his finance team let him down. They either severely miscalculated or under-estimated the effects of lower commodity prices and FX impacts during Q3. I did not. I was bang on. I calculated that they would report a significant loss and I said so.
However, that's all water under the bridge. Looking forward KZL will return to positive cash flow and I believe will endure the present storm but I am interpreted as the worst of enemies to bulls and bears. Probably because I depict the truth and shift from buyer to seller as often as I change clothes.
KZL Price at posting:
17.0¢ Sentiment: Buy Disclosure: Held
