A good deal ?, page-16

Thought I might shortcut the need for research on ELK's prospects and look at what shareholders have been saying on HotCopper. Well it was truly depressing, ELK seems to have a long history of optimistic promises and then, not just under delivering, but totally failing to deliver at all.

One indication of the very low enthusiasm for the stock can be gained from looking at the last Company’s Share Purchase Plan which closed on 16 July 2014. The SPP provided for all shareholders to subscribe for up to an additional $15,000 worth of shares at an issue price of $0.12 per share with subscriptions capped at $3,000,000. There was also one free option attached to each share acquired. So 25,000,000 shares were on offer. But only 2,600,000 shares, just over 10% of those on offer were taken up by shareholders. Only two (of the five) directors took up the offer and then at less than 50% of their entitlement. Of course it didn't help that the ELK share price was only $0.13 at the time the SPP was announced and then promptly dropped below the $0.12 offer price and stayed there for most of the offer period. And the ELK share price has never been above $0.12 since.

Great vote of confidence by the apparently badly disillusioned shareholders. Further it looks like the underwriters and sub underwriters bailed, taking up only $688,000.08 of the underwritten $1,000,000. One sub underwriter for $150,000 looks like they bailed totally.

But the other interesting thing is that only one of ELK's long term posters has bother to post anything to HotCopper about the merger. Maybe they are all laying low, hoping like Christ that the merger goes through. The register is dominated by large holders, with the top twenty holders at 30 June 2014 holding 60.63% of the issued shares. This is a little down on the 64.28% held by the top twenty at 30 June 2012 but substantially up on the 39.62% held on 30 June 2005 just after listing.



The AUD1.25 million loan due to be repaid on 8 January 2015 was from private individuals, likely to include some of same large shareholders from the top twenty.

It is beginning to look like the MEL proposal may have more to do with giving these large shareholders a way out of ELK rather than any grand opportunity for MEL. And it certainly guarantees repayment of the AUD1.25 million loan which was looking very shaky indeed. Maybe MEL is looking at these grateful shareholders to provide the proposed March funding.

So who are the large shareholders in ELK? Well that well known doyen of small explorers, Robert Healy is shown as holding 23.25%. His son Matt, a Director of ELK, also holds another 0.69%. Which means he could well end up holding at least 5% of the combined group together with a bunch of options. The other big holder is Begley Engineering showing just under 10%.

There are a couple of other interesting names on the register: -

• Magnim Pty Ltd shown as holding 0.82%, who is already on the MEL register with at least 1.04%
• It also seems Craig Marshall, that old friend of EGO, is holding 4.39% through his wife. I wonder what MEL's largest shareholder EPW thinks of throwing Craig Marshall a lifeline.

There is obviously a lot that MEL shareholders are not yet being told.