The convertible notes when received according to accounting rules a discount is recognized which is then amortized over the life of the loan, that doesnt change the face value of the convertible. Thta is why to determine the face value that can be converted you add the two together initially. When the note is converted, it is at a discount to the market price, and as far as I know that event doesnt effect the books of the company. Thus if you look at their filings they had over $200,000 face value of convertibles. A dropping stock price only increases the amount of shares to be issued- and vice versa. That is why the provider of the convertible couldnt care less what the price is, they just want volume to sell into as their profit is locked in- what I dont know is with a DTC chill when they convert how do they speed up their proceeds when they sell.
As far as $40,000 per quarter cash needs I am only going by their last 10q and accepting for the moment that a company gearing up to go into production, and having to meet permit conditions, doesnt need more cash than previously. This is a huge assumption and would perhaps be unique in the annals of mining history, but then again I have only followed this company for a brief amount of time so perhaps there is something I am missing.
I am unaware of any bank that would provide a conventional loan without established reserves or ongoing profitable cash flow -which if I understand limited information company has provided they plan to go into custom milling a year before they process their own ore and in any case I see nothing that indicates they plan to establish reserves.Risky but they wouldn't be first company to produce before establishing reserves.We have no idea terms of orders, nor for that matter their terms to collect money from sales- which means some working capital is needed for this factor as well.
So if they have existing convertibles to be settled in shares, the s8 shares registered, how many shares will they issue for other services and expenses this quarter and next ? I would hazard a guess wouldn't be too dissimilar to the last quarter.
$500,000 isnt a lot considering need for working capital in months leading up to production and once into production, property deals to negotiate, costs of being a reporting company etc etc. Especially as we havent a clue what sort of custom milling deals have been worked out.So how do I come up to 150 million plus shares ? (a) cash needs at least the same as last quarter (b) some share issuance for s8 plus some for vendors estimated per filings and last quarter (c) additional convertible financings of $100,000 minimum this year.This would be an optimistic scenario in my opinion.But if they dontget anotehr convertible in place fast my opinion is company could be in serious difficulties.
If they could do this - only $100,000 in convertible financing + $80,000 in other cash sources that would be quite an achievment- and with some improved IR ,if the mill truly to be operational by september/october, certainly they could turn situation around based on these optimistic assumptions.
Just my opinion of course !
