There's nothing like a long weekend for reflection.
Celamin’s 2014 Annual Report included 17 holes drilled at Chaketma that intersected phosphate but the results have never been announced.
- What is the cause of the delay in reporting assays for these holes?
- What impact did the results have on the Mineral Resource?
- What impact would these results have had on CNL’s share price if were available to the market?
On August 5 CNL announced that the company announced that it have secured a $2 million loan facility from Africa Lion at 12.5% interest payable on 31 December. Tim Marwell from AFL joined the CNL board.
On August 6 CNL announced the launch of the formal phase of the BFS for Chaketma.
- If all assay results from the drill holes aren't included the current Mineral Resource of 130 Mt at 20.5% P2O5, how could the company commence a DFS study?
October 21 Celamin received a cash call for US$3.3 million (approxA$3.75m) from Chaketma Phosphate SA -CPSA (
CNL announcement 13 April 2015).
On November 3 Celamin received “a firm binding offer” for 19.9% at a price of $0.035 as well as a loan and further equity funding (subject to shareholder approval) totalling up to $8 million from Psons, (
CNL announcement 10 November /Takeovers Panel Reasons for Decision 12 December).
On November 4 Celamin announced the intention to raise $8.8 million by way of a 15:4 rights issue to shareholders at an issue price of $0.01.
- more than $2 million of this was needed to repay the loan the AFL plus interest.
The Cleansing Notice attached to the announcement made no mention of the results for the above holes nor did it make any mention of the offer from Psons the previous day. No mention was made of the US $3.3 million cash call from CPSA.
On 10 December, the day the Rights Issue closed Celamin signed a new/amended agreement with Tunisian Mining Services for the funding of CPSA deferring the cash call to 15 January 2015 and reducing the amount payable to US$2 million.
- Was this agreement signed in Melbourne or Tunis? There is a 10hour difference when Eastern Australia is on daylight savings time. In any event Celamin were aware of this issue from 21 October until the 10 December.
CNL announced on 12 December 2014 that the Rights Issue closed on 10 December.
On 18 December 2014 CNL announced it had successfully raised A$7.575 million, the minimum.
Due the short fall in subscriptions control of Celamin passed to Polo Resource (12.73% pre-issue) and African Lion (12.11% pre-issue) with these companies holding 33.23% and 33.08% respectively post Rights Issue.
The December Quarterly Report showed that Celamin had funds totalling $3.12 million after the costs of the Raising ($215K). The loan and interest totalling $2.7 million payable to AFL was converted to equity.
In the six months to December 2014 $1.3 million was spent on Administration, but only $1.0 on Exploration and Evaluation. Note the latter figure would include Salaries, Wages and other expenses, so how much actually went in to the ground? How much was accrued from previous Quarters?
Payments to Directors and their associates were $355K. Throw on top the costs of international business travel and accommodation and you have a very expensive board for a junior company.
The budget of the March Quarter was estimated at a $2.65 million, but would have included the US$2 million agreed to on December 10. So how does that work given the exchange rate and the need to budget for overheads and admin?
On the 4March Celamin went in to a trading halt and was voluntarily suspended on 6 March. The reasons given were a pending announcement in relation to the “Joint Venture arrangement in Tunisia”.
On the 18 and 27 March Celamin made two uninformative announcements saying that the company would remain suspended until its legal position had been clarified. A month later shareholders are still waiting for news.
There was no more news from Celamin until 13 April when the Company put out an announcement presumably in response to an article that appeared in
African Mining Intelligence N°342 on April 7.
The article explained what had transpired from TMS point of view:
“TMS, which previously owned a 49% stake in the JV, increased its holding in CPSA following the failure of a cash call by Celamin, which had previously held 51%. According to our sources, Celamin already struck out in a first cash call last November, after which the partners reached an amicable settlement on Dec. 10. It called for a fresh cash infusion by both sides on Jan. 15.
“Under that agreement, TMS also agreed to a request by Celamin that the participation of both sides in the infusion, originally set at $3.3 million, be reduced to $2 million. On Jan. 15 TMS paid its $2 million but not Celamin, according to TMS. The Tunisian company says it has not heard from Celemin since then. TMS had a bailiff take note of Celamin’s failure to produce cash and legally announced the default.”
On April 24 Industrial Minerals published an article in which Taoufik Mansouri, the manager of TMS was quoted as saying:
“the dilution of Australia listed Celamin Holdings NL was the "only sanction available" in response to continued financing weakness and "delaying tactics" deployed by Celamin regarding the joint venture (JV) Chaketma phosphate project in Tunisia”.
Presumably the delaying tactics include the failure to report assays for holes already drilled.
Also on April 24 Celamin announced that it had entered in to a short term funding arrangement with Polo and AFL for $500k at 15% interest at a time when the interbank rate is 2.5%. The announcement said that Celamin had $40k in the bank at the end of March after paying the US$2 million (A$2.4 million) cash call to CPSA.
If all the facts relating to the Pson’s offer were known in November would the two major shareholders, Lion Selection and Polo Resources have been able to get control of Celamin by way of a highly delusionary discounted rights issue?
ASX Listing Rule
Ch 3.1 Continuous Disclosure requires that:
“Once an entity becomes aware of any information concerning it that a reasonable person would expect to have a material effect of the price or value of the entity’s securities the entity must immediately tell the ASX that information.”
Wouldn’t an offer at 3.5 cents a share when the shares were trading at 1.5 cents, a 2 cent premium, be material?
The
Corporations Act 2001 says of a director must:
- be honest and careful in your dealings at all times
- know what your company is doing
- take extra care if your company is operating a business because you may be handling other people’s money
- make sure that your company can pay its debts on time
- see that your company keeps proper financial records
- act in the company’s best interests, even if this may not be in your own interests, and even though you may have set up the company just for personal or taxation reasons, and
- use any information you get through your position properly and in the best interests of the company. Using that information to gain, directly or indirectly, an advantage for yourself or for any other person, or to harm the company may be a crime or may expose you to other claims. This information need not be confidential; if you use it the wrong way and dishonestly, it may still be a crime.
- If you have personal interests that might conflict with your duty as a director, you must generally disclose these at a directors’ meeting. This rule does not apply if you are the only director of a proprietary company
A company would also normally prepare the following statements regularly to manage its business performance:
Statement of Comprehensive Income: a statement showing the company’s revenue and expenses and the profit or loss that results from these items,
Statement of Financial Position: a statement showing the things of value the company owns and
the debts the company owes,
Presumably this would include announcing unpaid cash calls in the Cleansing Statement accompanying a Rights Issue.
And;
Statement of Cash Flows: a statement summarising cash inflows and outflows.
(20min delay)