There is a disconnect between what the company says and our current share price. Why?
Has the graphite disappeared?
Have they put out bad news?
Is there any red flags like directors leaving or insiders selling on a large scale?
From the market point of view and a growing list of shareholders, ZEN has painted itself in a really bad corner financially with low cash on hand ($1.33M as of Sept 30th + $90k from options for a total of $1.4M). Their burn rate for the last quarter was $243k. Based on this, they have enough funds to last till through till the end of 2016 but cannot tackle the PFS.
Why does the company act like being low on funds is not an issue?
Why does the company not care about protecting the share price?
The mood at the office is very high, very busy from people on the ground in TB and those who manage to get through on the phone. Why no panic there?
Does this come back to this public statement at the AGM from Aubrey to everyone in attendance:
We are talking with the governments and we are talking about smaller amounts of money sooner and larger amounts of money later.
From my perspective, there is only 2 things wrong with ZEN: The share price and the money in the bank.
If you believe the company, everything else is good.
So, I think we can agree that if ZEN could fix the money problem, then the share price would take care of itself in very short order. Aubrey also said that they only raised $2M because that was enough money to get them to a catalyst.
No one has postulated what that catalyst is. Here is my guess for the catalyst: They are waiting on an end user to confirm they would be a buyer of a guaranteed amount of graphite that would be big enough to warrant building the mine. Once they receive this guarantee, probably from one of their large multinational end users under NDA, the governments, both provincial and federal will kick in the funds for this project to move forward.
The smaller amount will be to complete the PFS/BFS and the larger amount will be to build the mine.
If Aubrey has received those assurances from both levels of government, then it would make sense that he does not care about starting the PFS. It makes sense that he does not care what the share price is. It makes sense that he is not worried about money in the bank.
For him to stand in front of the AGM and tell shareholders that the government would give a smaller amount sooner and a bigger amount later confirms that discussions with the government has happened, that a catalyst has to be achieved and when achieved, money would come in - A smaller amount sooner, a bigger amount later.
For the liberal governments, they each spend $200M to get a green initiative launched that will be generating tax revenue for decades and to which they can point as a successful green initiative that was made possible by them. Talk about a feather in their caps that will be a showcase for them to point to for the next 10 elections!!
If you manage to get through to the office, ask them what their #1 priority is right now.
Hint: Market development
We are trading at about 7% of the NPV from a very conservative PEA. What happens to our share price if we are financed to production with no dilution?
Dreaming...maybe but this sure fits with what I see.
Glorieux
