CMC Releases Update On The Non-Accomplishment Of Subscription To Securities By Winshine

China Magnesium Corporation Limited (ASX: CMC) is a mineral exploration and production company. The Company mines for and produces Magnesium and Magnesium Alloys.

The company stated through a release on the exchange that Winshine hasn’t accomplished its subscription for the 87 Mn ordinary shares at $0.05, along with the 87 Mn free attaching options from the shortfall from the rights issue, which was announced on the 18th of October 2018. CMC advises that the conditions and warranties advised to the market on the 13 December 2018 were all satisfied. Winshine will continue to review strategies to support CMC going forward.  

For the FY ended 30 June 2018, the Group incurred a net loss of $3,100,137 and an operating cash outflow of $1,057,062 for the financial year ended 30 June 2018. At that date, the Group was in a net current asset position of $361,002. Included in net current assets is VAT receivable of $814,904 that will only be recovered once the Group generates sufficient income in China.

As per the annual statement, the company’s net assets included trade creditors of $3,029,219 with which the Group has entered into formal arrangements to extend payment terms for work completed up to 1 year after the commencement of production. The Group also has $2,092,125 capital commitments concerning its Pingyao operations.

The Pingyao operation was powered down and remains in pre-production state. Management has been proactive in confirming with EPP and other producers the discharge limits for the specifications relevant to the Pingyao plant, and initiating relevant additional scoping work to ensure continued compliance with EPP emission standards.

CMC is confident that the Pingyao plant will satisfy the disposal/emission specifications and thereby pass the inspection and review by the expert environmental team as the prerequisite for production recommencement. SYMC management has conservatively projected additional initial emission discharge control work will be completed for production resumption by April 2019 at the total cost of $1.1 Mn.

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In forming a view that the Group is a going concern, the Directors have assumed: –

  • Continued financial support from creditors who have agreed to extended terms of payment;
  • Access to funding from capital raising completed;
  • Fengyan continuing to provide working capital facilities to SYMC according to the Investment and Co-Operation Agreement announced 17 December 2013;
  • Production commences at Pingyao by for MgLi by 30 September 2018 and magnesium production by 30 April 2019.

Should any of the above assumptions not eventuate, there exists a material uncertainty regarding the Company’s and Group’s ability to continue as a going concern and realize its assets and settle its liabilities and commitments in the ordinary course of business and at the amounts stated in the financial statements. If production were not to commence, there would be risks of further impairment in Property, Plant and Equipment.

Now, let us have a quick look at China Magnesium Corporation Limited’s stock, the stock last traded at a price of $0.020, with a market capitalization of ~$7.05 Million. It had a 52-week high price of $ 0.033 with an average volume of 436,545 approximately.


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