PTQ.TO - Not excited with Balance Sheet
I you back out $13M of Convertible debt that was rolled into Deutsche bank facility/silver loan, adjusted current liabilities at Feb 29th were 56M vs. Current assets of $25M for adjusted current ratio of .4
Plus only 1M of cash.
Plus 42M of 56M adjusted current liabilities is AP/AL so they owe a lot of suppliers a lot of dough. As CFOps before working capital changes (Pure CFOps) for Fiscal 2012 (ending May 31st) looks like it will land around $30M ($22M PCFOPs YTD / 75%) it'll take a year to get rid of the W/C deficit assuming they don't spend anything on Capex or drilling.
Low cash cost producer with low market cap and expansion coming yes, but it looks like financiers and suppliers own PTQ for the next year. Would need to see signicant expansion imminent and/or rising gold price before entering.
Here is a peice on working captial from Feb 29th MD&A:
Cash position has decreased by $2.7 million to $9.8 million as of February 29,2012, compared to $12.5 million as of November 30, 2011. On the other hand, working capital deficiency increased 40% as of February 29, 2012 to ($43.5) million compared to ($31 million) as of November 30, 2011. Working capital is defined as current assets less current liabilities and provides a measure of the Company’s ability to settle liabilities due within one year.
Although there was a 40% of increase in the working capital deficiency during the third quarter of fiscal 2012, 58% of this increase was originated by the disclosure as current liability of the outstanding Notes and Convertible Notes that have been fully paid out after the end of the third quarter of fiscal 2012 using a portion of the funds received from Deutsche Bank in connection with the Loan Agreement and the Silver Prepaid Agreement (see Note 22 to the unaudited condensed interim consolidated financial statements for the nine months ended February 29, 2012). After considering this exceptional increase, the increase in the working capital deficit during the third quarter of fiscal 2012 was at $5.2million.
The Company managed this increase in the deficiency in its working capital needs through short term financing borrowed from financial institutions in Panama and long term financing entered with Deutsche Bank through a Convertible Loan Agreement and a Forward Silver Purchase Agreement signed both after the end of the third quarter of fiscal 2012 (see Note 22 to the unaudited condensed interim consolidated financial statements for the nine months ended
February 29, 2012).
The 2012 fiscal year budget approved by the Board of Directors indicates the Company will be able to continue as a going concern without obtaining additional financing. Although this, due to
the decrease in the gold sold during the third quarter of fiscal 2012 compared to previous quarter of fiscal 2012, the Company in addition to fund its operations including its working capital
deficiency via its internal cash flows from the Molejon gold mine, during the nine months ended February 29, 2012 borrowed short term financing from financial institutions in Panama and long term financing entered with Deutsche Bank. The Company will continue to strategically seek external financing to reduce its overall cost of capital and to support further expansion of the Company including the drilling program of Iberian Resources Corp and the Company’s infrastructure business.
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