Member Info for TheMoss

The auditors have expressed doubts as to whether the company is a going concern. It will be interesting to see the price when it resumes trading.

Either experienced investors or suffering from cognitive dissonance. Time will tell.

As I said not worth arguing about.

Not worth arguing about?

I struggle to understand where the funding is coming from. The auditors don't think it's a going concern. From what I remember the mine can't be used to guarantee the loan. This reminds me of Sirius Minerals and Anglo American. In fact Sirius Minerals were better placed than Gcat.

A 30% to 40%. drop is annoying but probably the best route is to sell. Even if it goes up and down 10% the spread and dealing costs would make it too risky.

I think these will relist at a very low price. The auditors are of the opinion they are not a going concern.

I would have thought a very large rights issue is the way forward. I don't know how successful it would be but it seems to have some enthusiastic supporters.

There is no reason to assume the reason the company hasn't been delisted is because they have given extra time to complete the audit. It's not as if it's trading in any case. I'd love to know who they have lined up to advance all these millions the company needs to advance the project. I will remain silent from now on but will return to admit I'm wrong if this ever pays a dividend

So you would stand to take a full share of any profits but would have to weigh up the pros and cons but you would expect any lender to take the same risk for a set interest rate leaving enough for shareholders to make it worthwhile to continue trading. I hope you're right it's just I can't see it.

They should have a massive rights issue and if Jersey is so confident he can fill his boots.

Well have to differ on this one. Time will tell.

A lender isn't normally a massive risk taker that is the role of the shareholder. He normally would want the assets secured against saleable assets or guaranteed by directors

Apparently the mine can not be used to guarantee the loan and the last accounts questioned whether it was a going concern. The situation doesn't seem to have improved since then. This reminds me of the Woodsmith Mine. That was a viable mine but Sirius mineral ran out of cash. You won't get someone to effectively take all the risk while shareholders whose company has run out of cash take any profit. Isn't going to happen.

"But PKF are running a real risk here, because GCAT could go under here as a result of the time taken to do the audit, or lose financing as a result, which RM has already alluded to. I'm just surprised that a company like PKF would take on such a risk, and why they would even take on such a potentially poisoned chalice audit if they are so stretched."

People saying PKF is stretched in this particular audit is pure speculation. We are not talking a massive audit here. They said in a previous audit they had doubts whether it was a going concern. This causes the following problems.

1 If it isn't a going concern that would have a massive affect on the valuation of assets and the subsequent profit or loss.

2 If they say they do not consider Caraca l a going concern and no loan is forthcoming their audit fee is on the line unless a director guarantee has been secured.

3 the big risk is they pass the accounts on the basis of it being a going concern, someone advances a multi million pound loan on the strength of the accounts and it subsequently goes under. They would be sued for millions. If they say it isn't a going concern there would probably be no loan.

Massive shout. Would You like to make it?

The obvious answer is a rights issue but would you put more money in?

"Agreeing a figure for a Balance Sheet isn't really that difficult"

If the company was a going concern that would be true but the auditors could have concerns over whether future revenue and profits will be available to write off development costs that have been capitalised. If they are not convinced that is the case such costs should be written off immediately.

The other problem is the required finance. Lenders are not shareholders they are more risk averse. However the mine can not be used as a guarantee and with the auditors expressing their opinion they have doubts about it being a going concern it would be perceived as a high risk loan,

I can only see this going two ways either it runs out of cash or someone buys it really cheap.

All I see is a company incapable of doing routine tasks, unable to offer any security for desperately needed finance and investors in over their heads.

If this company is such a winner the answer is surely one big rights issue.

I wouldn't touch this audit with a bargepole. It's easy enough checking figures but it's the going concern that's the crunch.

So you spend a million dogging a hole. The intention is to write that off against future revenues. If there is lots of gold there that's fine. If there isn't enough gold to generate sufficient profit to write off the capital cost it's just a hole and worth nothing.

Saying that you agree that is a valuable asset leaves you open to action should someone rely on the audited balance sheet to advance a loan. There is plenty of reasons to doubt if it's a going concern.

Checking the receipts and payments is easy. Agreeing it's a going concern is a big shout.

I'm a qualified accountant and I would not like to audit this company. There are some tough calls to make and I can see why issues are taking time to resolve.

There would also be repercussions if they audited the company on the basis of it being a going concern and it went under shortly afterwards.

It's been a dead duck since the original finance deal fell though. The situation is similar to Sirius Minerals and Anglo American. All the power is with the organisation with the cash. I'm not saying it will never be a successful mine but the rewards will go to the people supplying the finance.

This is a massive call for the auditors. You can't blame them for taking their time.

I'd be more concerned at managers getting nervous at checking out the going concern status. The auditors would look daft if they signed off the accounts which contain a statement that it is a going concern and it then ceased trading.

The only criticism I would have of the auditors is taking the job on. It's risky at best.