Well it's gone into developing assets. 160 mill has gone into...

Well it's gone into developing assets. 160 mill has gone into Mungana alone to date.

If you look at Kagara's business, they are close to being cash insolvent but far from being balance sheet insolvent.

i.e. assets - liabilities = 477 million

Even if they went into voluntary administration and only got 50% of the asset book values, shareholders would get approx. 30c a share and I'd make a 25% gain or break even at worse if they only got 40%. I'm not risking much.

It's all in the hands of the gods of finance now. If the banks want to destroy 300 families and the local FNQ economy, well there's not much you can do about it. If they are smart enough to lend against 40% of the asset value, given the outlook for zinc then it's game on and all will be well. Obviously I would prefer to see the later happen and I don't like being a predator at this end but my main reasons for buying were the net asset value backing the business and the strong cash rich Chinese partner. I'll come out it ok but a lot of local FNQ families won't.

Significant asset equity also gives KZL a lot of other options and instruments to play with other than just debt facilities. We might still lose our fastest zinc vehicle though but I will just take the funds gained from any insolvency process and put them in IBG later in the year. The next best zinc thing or Plan B.

Minmetals or some other overseas player will scoop up the assets for next to nothing and rob Australia of further links in the value added chain. That's all that might happen here. Let's just hope that the banks are not silly enough to give it all away to some overseas group like they did with every other zinc asset. Mt Isa, Dugald River, Century, McArthur River, Lady Loretta...to name just a few...