While many of us seem to discuss the prospects of increased production I prefer to watch the debt and preferred obligations. The company said not to expect anything to be paid down in Q2, and has stated some big goals in Q3 and Q4.

By reviewing the Consolidated Balance Sheet for June 30th end, I prefer to compare it to the last quarter or March 31st. All available on sedar.

First, while the company explains that the accounts receivable (monies owed from Xstrata) has doubled, it has actually stayed flat from Q1. This makes sense as the amount of nickel processed is almost the same. Actually it was down a bit do to the down time that Buba points out to in April.

Looking at the main debt items that involve JIIL as the creditor here is a summary of those debts from quarter to quarter.

The accounts Payable increased by about $2.3M from Q1.

The Promissory Note has increased by $1.0M.

Dividends Payable has increased by $400,000.

The Current Portion of the Long Term Debt has increased by $1.3M from Q1,

All together the debt and obligations has increased from $37.1M to $42.0M in Q2. To this amount you can add in the fixed Preferred Shares of $8.2M which is fixed until purchased back from Jilin.

Its understandable that extra costs are incurred to get production going, but the above amounts do not include the extra $1.4M that was borrowed from JIIL on July 16,2010. This "extra" note payable is now due on Nov 7, 2010 (as stated in point 9 p.18 of the financial statements - last sentence).

The Notes Payable are interesting in section 9, but thats a different story.