excerpt from the afr ..., page-7

You may be right.

If you look at the last quarterly, their production costs rose to $1.76 for zinc and almost $3 for copper. The average AUD incurred was $1.06.

With zinc at 92c and the AUD at $1.03 or above, it strips out about 40-50 million in critical EBIDTA.

If the administrators see zinc hitting a $1 by year end and the AUD falling to parity, then they have a chance. If they judge it solely on how it is now, then they may very well carve it all up and divvy it up, which may be the better option. Mining is finished in Australia unless your a big gun. Labour costs + AUD + Taxation is killing it.

1. Recap = 6c share diluted (trading from 5-8c after listing, eventually rising to 12c, should the AUD/Zinc price fall in line and depending on assets left)

2. Carve up = 12-16c. Real assets are 307 mill. Plants (120) & mines (187). They have 138 mill for capitalised exploration but that won't fetch much as its not as tangible. Fire sales might get 60% with exploration tenements bundled in = 184 mill less 50 for debt or about 16c a share.

That copper mine in Romania OZL bid for attracted some very high bids for the assets, so the whole process may even surprise. Either way you have to mentally prepare yourself for 6c-12c and maybe 16+ with some luck.

1123 businesses Australia wide went into administration in Feb, which is the highest number in 13 years. That's almost 50 customers per bank per state asking for lifelines. No wonder the ANZ said no. I was quite surprised they said no but clearly they thought management were not being up front about creditor payments, which they weren't with shareholders as well. The Aussie economy is also in a much worse state than I thought. ANZ still won't pass on rate cuts for another two weeks. The RBA & the banks have a lot to answer for.

Geoff Day swore in a statement that Kagara had sufficient funds to pay bills as and when they fall due. Clearly this was not the case. If they do relist I think trust has been broken and he may have to go. Having administrators in to look at the books was probably the best option all round.