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intelseb

3,464 Posts.

186

10/11/23

17:13

Post #: 70837551
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Originally posted by MM0: ↑

I wonder if any of the shareholder action group or other investors have explored what it would take to initiate a process of discovery (e.g. civil action?) to work out (1) what happened mid last year, and (2) what's happening now.

Because here are some things that don't make sense to me that I would like to understand better after losing hundreds of thousands of dollars:
Spending substantial sums on top lawyers to enter "good will" negotiations on how to walk away from an asset the company has written off and is certain it has no liability for without a satisfactory explanation to shareholders on why the company is doing so (we can speculate reasons, and I can imagine a couple of really big ones, but I don't think I'm alone in saying we don't have one communicated that really makes sense)
The recognition at the end of Q1 22 that there were 2.3 quarters of cash left, the recognition at the end of Q2 22 that there was 1 quarter of cash left, yet an apparent lack of concern about the dwindling cash position reinforced by the decision to still make an equity investment in LLL together with the commentary in the Q2 quarterly that the company remained confident it could continue to meet its business objectives and secure capital as required.
The decision while cash strapped to invest $20m in LLL with $100m in the bank and burning $40m a quarter, only to sell that investment for $12.9m, a sizeable loss, only two weeks after LLL listed.
The ability to reduce cash burn quick so effectively in Q3 and Q4, why that hadn't been implemented sooner, and why if that was possible why the LLL shares were still sold at a loss.
The argument that the ECOWAS sanctions were a key cause of underperformance, that it was only after the June 24 report that concerns were identified about the impact of ECOWAS sanctions on performance and the company remains steadfast that neither the ECOWAS sanctions nor "any other factor" were having material impacts on production up until the June 24 report, that ECOWAS sanctions were in any case lifted a week later on July 3rd, but that a week long concern over these sanctions remains one of the major explanations for the issues we have observed
Did the subsidiary ever get all the equipment we ordered?
The nature of how the company seemingly found itself suddenly running a subsidiary it considered likely to be insolvent despite its communications to the market prior, including to potential investors as part of the prospectus, about the expected and current performance of the subsidiary
The nature and details of the debt incurred by the subsidiary, and in general confusion around the balance sheet and P&L of the subsidiary
The rationale for withdrawing board members from the subsidiary it majority owns on forming a view of its likely insolvency, instead of for instance overseeing a process of administration if it believed the entity to be insolvent and/or whatever other actions the subsidiary has managed to perform on its own to still be operating a year later
Further to the last point, the rationale for "stepping away" if, as seems to be the case given our continued involvement, there appears to be further reasons to remain active in closing out matters in Mali
The rationale for the suspension of trading and related responses and actions, namely that underperformance of 3,666oz of gold for the quarter (20% under target for a mine still scaling up, and a very small amount in the context of anticipated future quarters) for an expected revenue miss of $6.8m (likely offset by additional costs processing that extra ore?) was treated as a relatively terminal outcome in the scheme of a multi-hundred-million-dollar investment. Or to frame it another way, how did it end up in this state, how was it in such a precarious position where that relatively narrow target miss would have been decisive one way or the other, and why was no one seemingly concerned about how narrow things were looking a couple weeks prior?
The belief suggested in the ASX Aware responses that it was possible in a single fortnight to go from 11,205oz of gold for the past ten and a half weeks (or a reasonably steady around 1,050oz a week) to produce a further 5,795oz over just shy of 3 weeks (or suddenly doubling performance to over 2,000oz a week with no obvious mechanism to drive that sudden growth).
The argument that if the mine continued to process 8000oz per day at 90% recovery it would have been sufficient to recover the June Quarter target when the facility was seemingly already hitting around that performance for the quarter with a 0.55g/t average grade, which would have yielded around 2,419oz for the remaining weeks which at 13,624oz is awfully close to the 13,334oz finally yielded. Unless I'm somehow miscalculating this, even if grade had moved up to the 0.84g/t being mined and ore to 9000oz per day it would have still fallen shy of target. So what was the reasonable basis for saying the target could still be hit? The responses identify the target ore and recovery rates, but if I'm calculating right it would have needed gold to average around 1.3g/t? What was the basis for believing we could suddenly hit that over a two week period?
The nature of how it has lost control of a subsidiary that it still has majority ownership of and is attempting to sell, despite the Chair of that subsidiary apparently remaining an FFX employee beyond the date of losing control and continuing as a key executive leader in LLL with whom FFX still have good communication.
The nature of how it has also lost the ability to report on the financial and operational status of that subsidiary despite the above, while representatives of that subsidiary claim they have tried unsuccessfully to communicate with the company, continue to make positive public statements of operational performance, and are sitting next to representatives of our company in the same room of a government commission to work out what happened.
The nature of our auditor's statements that the company could not produce satisfactory financial data to support the books, apparently (if I'm interpreting the somewhat vague auditor commentary correctly) even for the period in which FFX still had formal control of the subsidiary.
The reasonable argument for keeping FFX suspended throughout the latter half of 2022.
What I would describe as a highly emotive determination by the current directors prior to and at the recent general meeting to reject new shareholder representatives on the Board and remain steadfast in being the ones to see this close out despite limited to no equity skin the game and no other clear personal motivation to be so staunchly adamant about staying on muddling through this mess (if purely out of an ethical commitment to serve shareholders that's fantastic, but I have trouble squaring that entirely with the previous track record to date including what I would characterise as reluctant levels of transparency and a serious destruction of shareholder wealth occurring under the watch of the board)
The coincidence of everything blowing up within two trading days of LLL listing: that everything seemingly held together right until that IPO before spectacularly falling apart

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any civil action is pointless until a point we have officially realised losses otherwise legal action would just be paid for with ffx money, we need to see what happens by escrow time next year.
FFX Price at posting: 20.0¢ Sentiment: Hold Disclosure: Held
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