Running out of cash fast, page-40

One of the most annoying bits for me is that the directors will still get their ‘performance’ bonus :

1) even if the funding and finalisation of the deal takes years to get finalised ( cos they conveniently left out a deadline from the criteria to qualify for the bonus). This is eventhough any delays in getting the deal done is costing the company and shareholders precious funds because we still have to keep paying the very directors that are unable to achieve what they are getting performance bonuses and a salary to do. The delays will also prevent the company from getting the much needed revenues from the quarry and the sales of tungsten that would have eventuated which could possibly result in the company carrying out another capital raising at a discount to market as we are fast running out of funds...AGAIN!

2) even if the deal they manage to secure is a terrible one because they conveniently left out any details and performance criteria (KPIs) for them to qualify for the bonus. I’m starting to question why the deal with the quarry owner has been kept confidential. Was the deal too generous ie. did we offer to buy the quarry for too much? Is that why the quarry owner suddenly changed his mind about selling when he was reluctant to sell not that long ago? Is that why the banks do not want anything to do with the deal? As shareholders who are essentially funding the operations of the company and will most likely be asked to help fund the purchase, shouldn’t we be informed about how much we are paying for a key asset of our business especially when we were asked to approve a performance bonus that has everything to do with the purchase of this very asset?? If shareholders were informed about how much we offered to pay for the quarry and it was blatantly overly generous, would shareholders have approved the performance bonus? Isn’t successful share investing all about making good ‘INFORMED’ decisions??

3) even if the share price drops after the deal is done as the requirement for the share price to rise was also not a criteria to qualify for the bonus. In my mind, a performance bonus should only be paid to directors if they succeed in creating value for shareholders. This will clearly not be the case if a bad deal is eventually finalised and the share price tumbles or goes no where as a result. Directors will benefit from their performance bonus while shareholders will be left with more capital losses from a fall in the value of their shareholdings. Absolutely zero repercussions and accountability for bad performance!

I also find it very annoying that we were informed in April this year that the financing and off take deals were ‘WELL ADVANCED’ with ‘SEVERAL’ interested debt funders only to be told recently in the latest Chairman’s report that there was ‘NO INTEREST’ from traditional banks and private equity funds were too expensive! So how did we go from WELL ADVANCED to NO INTEREST in 4 months?? I would have thought that well advanced would mean that the company had already identified a favourable or several favourable lenders who were willing to provide the funds on reasonably favourable terms and it was just a case of negotiating the finer details of a deal! Now we are informed that some lenders are only just starting to carry out due diligence 4 months later?? How is this well advanced?

Did I mention that I was annoyed??