I expect today's share price fall to a new low of 12 cents (or 0.4 cents in the pre-thirty-for-one-vanity-consolidation era) has been achieved in part due to MAK dumping UCL shares to obtain as big an offer as they possibly can out of UCL. I expect Jordinson, having as much business acumen as an ant, will duly oblige by increasing the offer and by diluting us about 90% out of a $36m debt we are, in effect, owed by the Iranian government. This would be true to his past form at Copper Resources Corporation (a company that went bust about a year after Mr Jordinson resigned as MD):
Board strategy to disconnect from past historic record:
Vanity company name change
Board strategy to lose money and feather their own bed at the same time and please a cornerstone investor:
Selectively dilute small shareholders out of a $36m debt and retain control of the debt asset (ensuring no fall in directors' salary) and ingratiate themselves with one large shareholder by correspondingly increasing his stake in the said asset.
Be coerced by an ex car salesman (Mr Drummond?) into overpaying for an asset we don't need by getting us to exchange an Iranian mine that requires no further expenditure to pass the BFS for an Australian one that requires a two-year wait and an expenditure of $35m to reach the same development stage, and finally, by using a transfer value of less than $1m for our asset when it would be worth $36m after a regime change in Iran.
Board Strategy to deceive small shareholders:
Dispense a terminological inexactitude on Board Room Radio to the accompaniment of disarming synthesiser music stating that small shareholders' position will remain "unchanged" by taking over MAK. Make no mention of diluting us out of the $36m debt (the debt is made up of $18m past expenditure on a BFS and a discovery fee, which I estimate to be reasonable reward for the exploration risk taken in discovering the world's largest undeveloped zinc mine, assuming one out of every two amounts of drill expenditure result in discovery of an uneconomic mine).
Strategy for quality decision-making on whether to selectively dilute small shareholders out of an Iranian zinc mine:
Do not employ anybody with Iran business experience. Do not bother to learn Persian or comment on the political changes going on in the Middle East in the company reports (it could reveal ignorance?). Do not publish any papers or author any books or take any advice on the prospects for regime change in Iran. Assume a regime with
no legitimacy an appalling human rights record a record of disrespecting minority religions a corrupt judiciary a record of poor decision making on economic matters a censored press an ideology based on preserving difference a record of micro meddling in personal matters of dress and socialising a record of discriminating against half its population by denying them educational opportunities and by giving them fewer legal rights a record of disrespecting stronger nuclear armed countries a record of creating decision makers on the basis of loyalty to a dogma. a record of avoiding situations where its dogma can be de-constructed. a record of avoiding public scrutiny on many matters. a brain drain of the citizens who could most benefit the country. a record of making those least able to pay to contribute proportionately the most to the cost of acquiring nuclear weapon making know-how. a record of using hostage taking and defiance of diplomatic conventions to get what it wants. a record of using its scarce resources to wind up neighbours rather than care for its own citizens. a record of showing an inability to reconcile competing demands satisfactorily: to be modern, to be democratic and to be Islamic. All it can do is go for acquiring brute force to get what it wants namely the destruction of competing ideologies that undermine its rationale for existence and its hard-to-justify decisions.
is secure and will last for ever more, even though more powerful countries do not want it to if it does not submit to intrusive inspections of its nuclear program that stop it using "nuclear ambiguity" to project power over its neighbours, and even though the regime has a good chance of collapsing if it has to back down on anything (the cost in lost oil sales will have been for nothing).
Two directors' behaviour (Jordinson and Ross) shows decision-making outside their core competencies and a lack of business acumen when acting within them. It may also indicate they are accounting illiterate and are self-interested at the expense of their small shareholders: they don't appear to be able to communicate a satisfactory explanation for their perverse behaviour other than in the most general terms that appear to be a convenient smoke screen to queris from inquisitive, accounting literate shareholders (e.g. "Sandpiper is easier to finance...if we buy MAK").
Reasons to buy these shares:
only if you think that these two directors are going to resign or drop dead shortly. That would prevent them crystallising an unnecessary accounting loss in the coming months.
All IMO. DYOR.
UCL Price at posting:
12.0¢ Sentiment: Hold Disclosure: Held
