I went to the AGM and was reasonably pleased with the team. I am not a large shareholder but if this company goes well I will be a lot more comfortable in retirement.
The overall impression IO got is that the team is looking to build the company. It was said a number of times that the directors have a lot of self interest in building the company up because they all have substantial share holdings.
Where to start? Feel free to ask questions if I don't cover something you want answers to.
GREG BOLTON'S OPENING REMARKS
Greg said it had been a good year, an "amazing historical year" The company had "Found, Dug, and Poured gold". They expect to have full cash from the mining, in the bank in March 2017.
SIMON MILROY'S ADDRESS
Download his slides
Simon said SAU was a " Unique gold explorer with gold production"
Cannon was their Core Business with a high grade mine. The jury is still out about whether to go underground, but Kalgoorlie has a good history withy underground mines.
The money from Cannon will allow them to develop other projects that they previously did not have the money for. Simon specially mentioned Cowarna as one they would like to develop.
Simon ran through his strategies for the company which can be found in his slides, and then went on to present about South Korea. I have posted earlier about these from the EGM.
Simon did mention that he expects the cash that will come from Cannon will be about $13million which is about 28 cents per share. He also said that some independent valuers had assessed the South Korean assets to be worth $1.44 a share. (Does this mean our shares should be $1.72?). Simon did say that he thinks one or two of the South Korean projects may be able to be developed faster than shareholders might expect.
QUESTIONS TO SIMON
WHY DID ASIATIC WALK AWAY FROM THEIR ASSETS IF THEY ARE SO GOOD? Asiatic were good explores and drillers but not much good at he capital raising and management stuff. They had run out of capital.(After the meeting Greg said to me that Asiatic hadn't left the assets, but needed SAU to progress and saw the acquisition by SAU as a way to maximise their returns. A bit like why SAU went to MLX)
WHY AREN"T SAU GOING INTO JOINT VENTURE IN SOUTH KOREA? SAU might if it is right. Also they have only had the assets for 4 months and still too early.
WHY NO MAJOR MINING COMPANIES IN SOUTH KOREA? The history of South Korea is that the leases are typically small and owned by prospectors. SAU is lucky that Asiatic had done all the hard work of securing and amalgamating the tenements. There is no real "use it or lose it" clause in South Korean mining and any investment required by government is quite small.
WHY DID SAU GO INTO JOINT VENTURE WITH MLX? DIDN"T THAT MEAN LESS RETURN FOR SHAREHOLDERS? SAU didn't have the capital to develop the mine. It would have had to make a very large share offer to raise capital thus diluting shareholders equity, or take out large loans, Either way it seemed more practical and less risky to engage with MLX who were right next door. This has allowed SAU to generate cash for other ventures.
The motions were all approved.
WHY WAS MOTION 4 NECESSARY? Motion 4 is a safeguard in case the company has an opportunity, like another Asiatic, and has to move fast. It is not expected the extra 10% will be needed at this stage, but is a safety net.
Overall I got the impression the directors are wanting to build the company. They needed the cash from Cannon to develop the company. My impression is that this building of the company may not be as fast as I and maybe others might hope, but it will happen over a number of years. We are all too impatient
Greg mentioned that they will not announce their Dividend until all the money from MLX is in the bank and they know what they have. The dividend will not be franked.
In a discussion about using the dividend to raise the share price, so any capital raising under the 15% rule could be maximised ,the question was put to me (not by Greg) "What do I think the share price would be if they offered a dividend on 4 cents per share?". I think maybe the share price would jump to 80cents but I am no expert.
These are my thoughts (complete with spelling mistakes). If you want any clarification let me know.
I hasten to add I have no connection with the company or employees except as a shareholder so I think my comments are unbiased. Naïve and hopeful maybe.
Anyway ...Good luck to us all
SAU Price at posting:
35.5¢ Sentiment: Buy Disclosure: Held
(20min delay)