Just look at the jump in trade payables for Alexander Mining’s (LSE: AXM) balance sheet for the period up to 31 December 2014:
Note also the reduction in cash and cash equivalents.
These two features of the Alexander Mining balance sheet has made it a financial basket case.
From a balance sheet valuation perspective, Alexander Mining Plc as a business is worth minus £274,000.
It’s inability to commercialise it’s offering has been well documented but further reduces the value of the business as a whole.
The net decrease in cash of £282,000 during the year begs the question: where did it all go?
But even more alarmingly for shareholders is this little nugget from note 2 to the accounts:
Based on a review of the Group’s budgets and cash flow forecasts, the directors have identified that if current and near-term corporate development opportunities are unsuccessful in providing adequate funding then the Company will need to raise finance within the next twelve months in order to continue its operations and to meet its commitments.
To be fair Alexander Mining are not averse to placings:
- 5,000,000 shares on 25 January 2015 issued directly to an advisor and a consultant of the company
- 222,222 shares to it’s nomad, 88,889 shares to it’s investor relations consultant and 730,369 shares to pay advisors and consultants on 26 September 2014
- 4,604,762 shares for general working capital purposes, 487,387 shares issued to ‘various advisors and consultants’ and 235,762 shares issued directly to it’s nomad on 20 February 2014
That’s well over 10,000,000 shares.
Robbing Peter (shareholders) to pay Paul is Alexander Mining’s real business and it excels at it.
It’s just a shame that management have allowed trade payables to balloon and cash to dwindle at a time when the prudent businesses in this space have been cutting costs and streamlining operations.