Hi Tec!
The writeoff for Blue Dot has already been priced in to some extent, as the company took a charge against earnings to fairly represent the wind down of that project in the last quarter, amounting to about $2.5 million. This is a non-cash event, and not one penny disappeared from the bank, but it does represent the carrying value of the asset and accounting for it thus more correctly states the financial position of the company, where all assets and all debts are valued.
As for the RBZ Bond settlement, this is a huge development in my opinion. ND was obliged by law to have their gold delivered to the central bank of Zimbabwe for sales, and some of this money was witheld from ND, with a bond issued instead. As the Zim currency collapsed it was considered likely that those bonds would be defaulted and this would have caused a great loss to ND, and all other Zim producers.
By changing the laws to allow the producers to sell their gold directly on world markets, Zimbabwe has made a profound concession to build confidence for the mining companies that the country would work to support the industry. This is now even more evident with the full payment of the outstanding money owed to ND. There are many who are reluctant to invest in a company like ND because they fear political risk. This demonstration of good faith should help to build greater confidence for money to come back into the country and build on the early success for the mining industry.
And having that extra cash in the bank is a nice bonus for ND shareholders. It is like completing a financing for another 3 million or so shares, with no dilution at all.
cheers!
mike
