Member Info for addicknt

BSR, you haven't been on here long enough to follow the discussion which has taken place over the past few years. If you had, you'd understand that I've always referred to the need for dilution if we attempted to take this the whole way. I've also explained why the figures make the prospect so unattractive.

So, sorry, but you're way behind the curve.

Pad, provided we avoid a significant equity raise, I agree with your prediction.

Trading in DGR's shares has now been re-instated.

RK, thanks.

Nal, me gloat!? Good heavens no! I'm sitting here crying into my cornflakes. I feel for you, I really do.

The annual report was filed yesterday and yet the suspension happened today.

That'll save the day, won't it.

And yet you invested in both Solg and DGR. Obviously you weren't following your own advice. Btw, I'm certain everyone is very upset that the prospects for your investment in DGR are looking so bleak.

Interesting to note DGR decided not to inform its shareholders of the various breaches when they actually happened and one assumes they're still in breach of the minimum cash balance covenant.

Bozi, the reason given by ASX was failure to lodge certain documents on time.

Eloro, of course you're expecting the worse, you're our resident Eeyore. I still haven't forgotten your claims that Ecuador was in the middle of a civil war and that the cartels would steal Cascabel.

I see the shares have now been suspended. Has Mather managed to produce a rabbit from the hat, or have the solids finally hit the fan?

If it's the latter, we'll find ourselves in an interesting but potentially unsettling situation. The best outcome for us is the sale of shares to a financial institution such as Norges. The next best is a sale to one of our existing major shareholders or another mining major. The very worst situation is Choice trying to dump the shares on the market, although it's difficult to see how they could do that.

Pbow, you're right, I've been referring to the audited accounts, hence our crossed wires.

Fort, indeed. One has to assume that FNs dd would have involved a great deal of discussion on the timing question with both the company and the government and that the timetable was derived on a mutually agreed and deliverable basis.

Pbow, as you know, the year end accounts are simply a snap shot of the balance sheet on one day. If, as I argue, the retainer was no longer extant and all payments had been made, there would be no entry in either the creditors or accruals captions. They would be recorded as an admin/financing charge in the p&l and there would have been the balancing movement in the cash position on the balance sheet.

The more pertinent question is, should there have been a provision? Would the company have preferred to increase losses in last years accounts, or were they happier to record the cost this year? It seems the answer is the they preferred to take the hit this year.

Did you miss my point about the length of time retainers last? I spent the first half of my career as a corporate financier for a City investment bank and was involved in plenty of transactions as a principal after that, so I'm fairly familiar with how these things work.

There are two ways an accrual may have been necessary 1) if we hadn't paid them for one or more of the monthly payments or 2) if the retainer was open ended and the June payment was outstanding.

Finally, the CGP deal would not be a guide. M&A transactions are priced on a different scale to fund raises. Specifically, an M&A success fee will have a sliding scale depending upon the value achieved and a fund raise will not.

No they wouldn't. As I said earlier, the process started at the end of last year and it's extremely unlikely they had a retainer which lasted that long; possible, but unlikely. In all likelihood, as at June we owed them nothing and everything depended upon the successful conclusion of the transaction. So I believe your premise to be erroneous.

Of much more interest than arcane discussions about the difference between an accrual and a provision, is the question of the quantum of fees involved in the deal and how much of the 22m will have disappeared in the direction of advisors, lawyers, pr and our nomad. It won't have been cheap.

Pbow, I should add I'm making an assumption here, which is that we paid them. If we didn't actually pay the retainer fee due to a shortage of cash, then an accrual would have been required.

I've not come across many advisors who'd operate on that basis, but who knows, Maxit may have done so.

I'm not sure you're getting my point.

The financing process started at the end of last year. Maxit - assuming they were the advisors to the company, would have been paid a retainer that would have lasted for a minimum of three months (this is the norm, sometimes it's possible to get longer than this). These payments would have gone through the p&l in the normal way on a monthly basis. Let's say the retainer period ran out in March, at which point Maxit would have been on-risk and there would have been no guarantee of success. The lawyers would have been rewarded in the same way.

If you then look at the definition of accruals you'll see why none would be required as at 30th June. As I said, there may have been a discussion about a provision, but not an accrual.

Pbow, I can assure you that is the way corporate finance advisors are rewarded. They receive a retainer which pays for their overheads during the negotiation phase - although it's often time limited - with the bulk of the fee being success related and only payable after the event. So it isn't quite no-win-no-fee, but the advisors are very much 'on-risk'.

The argument against the need for an accrual would have been that the fees were contingent upon a successful outcome, which at 30th June could not be guaranteed. A number of years back I was in a similar situation and my accountants signed-off without a quibble. It's worth having a look at the difference between an accrual an a provision. We most certainly had no need for an accrual. However, there may have been a discussion about the need for a provision. Whatever the case, we didn't make one. In the old days, and as a means of reducing taxation, every CEO running private companies would make as many provisions as possible. Eventually HMRC got wise to it and made life more difficult by forcing accountants to challenge their clients more rigorously.