Just doing the quick math on the "KVM Investment Agreement" is not encouraging: A single put is limited to 200% of the 10-day average volume for the 10 trading days immediately before the put is received, and will be priced at 80% of the 10-day volume weighted average price. The 10-day VWAP is now $0.0322 and the 10-day average volume is now at about 51000 shares, according to the Charles Schwab web site. So a single put will give LSTG about $2630.00 in gross proceeds. Its average daily cash burn rate is $2888.00 according to the last 10-Q. So a single put almost covers a day's cash requirements for the business. There is no money for investing in a processing plant under this agreement.
Since the Investment Agreement restricts LSTG from issuing puts less than three days apart, there's not much help here, even for daily operating expenses.
There is no restriction on KVM as to a minimum time the shares must be held; they can be sold on the open market as soon as they are delivered. As KVM divests itself of shares at below-market prices, it will depress the market price for LSTG shares still further. On that account alone, this agreement is bad news for shareholders.
KVM can make money, even if it sells shares of LSTG at 90% of market price. It costs KVM about $2700.00 to accept a put, and it can sell 100,000 shares today for $3220.00 At 90% of that, it realizes $2898 from a sale, for a 7.33% profit. It can do that all year, and never have more than maybe $10K at risk, unless volume increases drastically or LSTG's stock price rises sharply. Absent any news from LSTG about the success of its mining operations, neither of these events is very likely to materialize. Then this agreement is an excellent mechanism for transferring wealth to KVM, assuming a ready buyer for LSTG stock can be found at or above 90% of market price.
Once again LSTG finds itself in the unenviable position of having to get what amounts to a payday loan just to try to keep the doors open. Its "6000 tons of tailings at the processing plant in Parral" have either evaporated in the heat down there, or proven worthless, or worse, never existed in the first place. I have no idea what the truth of that matter is. The bottom line, however, is that the tailings project has completely failed to generate any revenue, and that failure, IMHO, spells the end for this company.
