Does anyone have any experience dealing with the Takeovers Panel?

[RSD]

Bit of a longshot but we do have members from a wide range of fields and backgrounds on here.

I have nearly $50,000 invested in a small ASX-listed company, shareholders have been long suffering through delays in the company's main project to start a copper mine, but finally the mine is up and running and producing - although not at full capacity as there has been a stuff up in the specifying of one component of the processing plant which is limiting concentrate production to somewhere between 50-60%. The fundamentals of the project are fine, and even at production that is 50-60% of what is planned the mine seems to be profitable, and it will be much more profitable still once the issues are rectified - and all offtake is already sold to one of the world's leading commodity houses at the current LME spot price on the day the shipment is loaded.

Management are simply hopeless, the communication to shareholders is very poor and infrequent, and is usually complete nonsense that reads like something written by a very early form of AI.

Today management released an announcement saying that they are going to do a 5 for 8 rights issue to raise capital - even though there is no urgent need for a capital raise given that the mine is making money. The timing is very suspicious as it is just before the AGM and seems intended to try to help them avoid a "first strike" - and the sub-underwriter is the largest shareholder... very convenient. Obviously the directors aren't acting in the best interests of shareholders.

If anyone here has experience with dealing with the Takeovers Panel I would really appreciate some help!

 

[JIMMYTHEJET]

Sell them ?

 

[RSD]

Sell them ?

I would make a $10,000 loss if I sold them at the current price - they were hammered at the opening today after the cap raise announcement was released before the market opened today - down 30% for the day.

 

[JIMMYTHEJET]

I would make a $10,000 loss if I sold them at the current price - they were hammered at the opening today after the cap raise announcement was released before the market opened today - down 30% for the day.

You can claim some sort of tax deduction ?????

Best to speak with your accountant.

Post automatically merged: Yesterday at 9:25 PM

Or will you get. A dividend next year from the company

 

[tgh]

I guess you can sit and wait.. nothing lost this way… they may recover
Alternately you can be an organiser, contact other shareholders and try to get a ginger group up and running.
You need some skills tho as well as time and and and……..

 

[RSD]

I guess you can sit and wait.. nothing lost this way… they may recover
Alternately you can be an organiser, contact other shareholders and try to get a ginger group up and running.
You need some skills tho as well as time and and and……..

I don't think that they will recover - the largest shareholder has a seat on the board and we suspect that the board will sell the main assets of the company to the largest shareholder (a company) and leave the rest of us holding a shell company.

Time is my enemy at the moment - I fly to China on Saturday for two weeks of meetings and I have a lot of preparation to do before hand.

 

[RooFlyer]

If anyone here has experience with dealing with the Takeovers Panel I would really appreciate some help!

Why the Takeovers Panel? If you suspect malfeasance by the Directors I think the ASX is the first port of call. But they would probably say first "Have you taken it up with the company?"

PM me with details and I'll see what I can make of it. Will be interesting to see their Reserves & Resources statement and who the Directors are.

Or will you get. A dividend next year from the company

Junior miners do not pay dividends, especially on project start-ups.

 

[Daver6]

Having worked for a small ASX listed company previously, I would never invest in one. ASX and ASIC couldn't care less how much dodgy stuff goes in these companies. I saw it from the inside and was astounded.

 

[moa999]

I'd say ASIC would be first point of contact.

But typically small companies struggle to get underwriting so it's relative common for a major shareholder to do that either directly or as a backstop.

Share price generally only falls if it's a deeply discount issue so your TERP (theoretical ex rights price is somewhere between yesterday and the issue price.. a deep discount is generally there to encourage shareholders to reinvest, not end up with the underwriter.

But agree it would be unusual where the company is making money, unless there is some other disclosed purpose.

-- From a quick dig on HotCopper, assume you are talking about AUQ.
The raise at 3.4c is roughly where the relatively illiquid stock has traded for most of the last six months other than the recent pop so I don't see that as particularly unusual.

Sources and uses of funds is disclosed in the prospectus ( I've got no idea whether this or isn't reasonable)

Install interim replacement tailing filter presses to make up the full capacity $1,700,000
Permanent tailings filter press $3,600,000
Deferred vendor payments $2,554,500
Trafigura loan repayment $2,000,000
Exploration (Block 8, Daris and Block 22) $3,750,000
General working capital $1,535,500
Costs of the Offer $119,000
Total use of funds $15,259,000

 

[RSD]

I'd say ASIC would be first point of contact.

But typically small companies struggle to get underwriting so it's relative common for a major shareholder to do that either directly or as a backstop.

Share price generally only falls if it's a deeply discount issue so your TERP (theoretical ex rights price is somewhere between yesterday and the issue price.. a deep discount is generally there to encourage shareholders to reinvest, not end up with the underwriter.

But agree it would be unusual where the company is making money, unless there is some other disclosed purpose.

Some of the things that they have said they want the funds for are valid (exploration of a new block, payment of old deferred debts etc) - about 41% of the amount that they want to raise. The massive dilution that doing a 5 for 8 rights raise is definitely not needed though.

 

[RooFlyer]

Install interim replacement tailing filter presses to make up the full capacity $1,700,000
Permanent tailings filter press $3,600,000
Deferred vendor payments $2,554,500
Trafigura loan repayment $2,000,000

I'll have a look at the reports, but the first two point to some cough-up in either the design, installation or manufacture of the filter press. May be recoverable from insurance/contractor etc - but may be on the company's head

Second two look like payments to company founders. 'Vendor payment' usually describes the payment for assets (mineral licences/leases/IP) made by the company in question to another entity, and 'other entities' are usually associated with the founders who in turn are usually the key board members. The loan repayment sounds like start-up loan from founders. Not dodgy in themselves, but maybe taking advantage of the capital raise to bring forward.

 

[RSD]

I'll have a look at the reports, but the first two point to some cough-up in either the design, installation or manufacture of the filter press. May be recoverable from insurance/contractor etc - but may be on the company's head

Second two look like payments to company founders. 'Vendor payment' usually describes the payment for assets (mineral licences/leases/IP) made by the company in question to another entity, and 'other entities' are usually associated with the founders who in turn are usually the key board members. The loan repayment sounds like start-up loan from founders. Not dodgy in themselves, but maybe taking advantage of the capital raise to bring forward.

The filter press problem is on the company's head - they haven't even tried to blame the manufacturer so it seems as though the root cause lies with information that the company gave to the manufacturer. They need to raise funds for the interim ones, but the permanent replacement ones are 12 months away so they don't need money for them.

The deferred vendor payments need to be paid, we don't have a problem with them using part of a much smaller cap raise to do that. The company is trying to do a 5 for 8 cap raise which is going to be massively dilutionary. Currently the company is trading at the cap raising issue price of 3.4c per share, and we don't see many current shareholders taking up the offer, and with the largest shareholder being a sub-underwriter this looks like an attempt to give the largest shareholder control over the company.

The Trafigura loan repayment isn't due until 2028 and the interest rate is quite low, so they could easily repay that with cashflow between now and 2028 without adding a massive amount of new shares to the register.

 

[RSD]

I'd say ASIC would be first point of contact.

But typically small companies struggle to get underwriting so it's relative common for a major shareholder to do that either directly or as a backstop.

Share price generally only falls if it's a deeply discount issue so your TERP (theoretical ex rights price is somewhere between yesterday and the issue price.. a deep discount is generally there to encourage shareholders to reinvest, not end up with the underwriter.

But agree it would be unusual where the company is making money, unless there is some other disclosed purpose.

-- From a quick dig on HotCopper, assume you are talking about AUQ.
The raise at 3.4c is roughly where the relatively illiquid stock has traded for most of the last six months other than the recent pop so I don't see that as particularly unusual.

Sources and uses of funds is disclosed in the prospectus ( I've got no idea whether this or isn't reasonable)

Install interim replacement tailing filter presses to make up the full capacity $1,700,000
Permanent tailings filter press $3,600,000
Deferred vendor payments $2,554,500
Trafigura loan repayment $2,000,000
Exploration (Block 8, Daris and Block 22) $3,750,000
General working capital $1,535,500
Costs of the Offer $119,000
Total use of funds $15,259,000

Sorry @moa999 - I missed seeing your post.

Yes its AUQ. Raise offer price is 3.4c, AUQ closed today on the ASX at 3.3c so the chances of shareholders stumping up money isn't look high at the moment. The raise has basically been engineered to give the major shareholder (Al Tansim) a much bigger ownership of the company - the way the raise has been structured with more than 51% of the register being in overseas hands and thus ineligible to participate thus creating a massive shortfall pool and Al Tansim being granted automatically out of the shortfall pool the number of shares required to take them to a 19.9% shareholding and then them hoovering up the balance of the shortfall pool once shareholders have taken any that they want means that Al Tansim is likely to own between 40-45% of the company once this has been done.

As you said 3.4c is where it has traded for the last six months apart from the artificial spike created last week, so really the raise isn't being offered at a deep discount (if you take out that spike).

As far as the uses of funds go they don't need -
Permanent new tailings filter press ($3,600,000) - none of that will be needed until July next year when the next part payment will fall due (prior to shipping), and then the final part payment won't be required until commissioning in November next year. Given that they have a producing copper mine and the process plant is operating much better now (that was one of the announcements that produced the spike), they will have received sufficient income from production to easily pay for this - especially as the interim filter presses will increase copper concentrate production by about 70%.

Trafigura loan repayment ($2,000,000) - this isn't due to be repaid until 2028 and the interest rate being paid doesn't justify a massive issuing of new shares just to pay it off early, and very soon they will be in a position to pay it off early from cashflow anyway. Trafigura are very supportive of the company - Trafigura has an agreement with the company to take 100% of the offtake for the next 7+ years.

Exploration ($3,750,000) - Alara has a 27% JV share in Block 22B and apparently has committed $2 million for exploration for the next 12 months - seems high for a 27% share but like a lot of things with Alara we don't know the details. The remaining $1,750,000 for Block 8 and Daris aren't needed at the moment as they haven't been awarded the licences for the blocks yet and the have been waiting since 2018 for them - things move very slowly in the Middle East.

General Working Capital (1,535,500) - this is another one that has been "created" to increase the number of shares that are going to fall into the hands of Al Tansim. On the 30th of September the MD signed a declaration for the auditors for the annual report that stated that the company's cashflow projections showed that they had sufficient cashflow going forward to meet their commitments, and there have been no adverse events since then, and in fact they announced last week that recovery of copper had just increased significantly following some tweaking of the flotation circuit so their cashflow situation will have improved quite a bit since that declaration was made.

I see no problem with them raising for
interim filter presses - $1,700,000
deferred vendor payments - $2,554,500
exploration - the $2 million that they have committed for Block 22B

To pay for the things that really need to be paid they only need to do a 1 for 4 share offer - which is vastly less dilutive than the 5 for 8 they are doing.