I am also slightly concerned over the 51% ownership, why 51% if they did not have a desire for a controlling interest down the track. Does this not mean they can do anything, from voting in directors, to deciding how the money is spent? Last capital raising was spent on further acquisitions (before these acquisitions the current offer would be a discount not a premium). I am not saying this will happen again, but after this transaction Shandong is required by their share holders to vote in their own best interests, not in ours. Why did they go for 51% and not settle for half that?
The previous capital raising suggested $40M was sufficient for exploration and development then, so surely $80M say would be enough now. Significant resource or production increase from this would be enough to re-rate FML well above the current offer price for any future more capital development such as new mines. All without giving up a controlling interest. $250M will (hopefully) not all be blown at once, so in the mean time is just sitting in the bank. Either management has some reason for wanting the full $250M or else Shandong has a reason for wanting 51%.
Another thought is that the 51% stake will prevent FML ever being a take over target. Any takeover would attract a much more significant premium, which is probably why the current offer was not a take over offer, but a cheap foot in the door. The fact that Shandong did not launch a take over offer MAY not mean they do not want to control FML (or why 51%) but maybe they did not want to pay full price for it.
Anyhow, although on paper this does provide value for shareholders, unless I can get some good answer as to these questions I am definitely not in favour. Why such a large amount required right now, or why Shandong insisted on 51%.
As always all this is just my speculation, but I do have a vested interest again now, and bought expecting a significantly bigger profit than the current offer price.
FML Price at posting:
4.3¢ Sentiment: None Disclosure: Held
