Update from this morning. I was there from about 10:30 to 12:45 when they broke for lunch. Lots of scribbled notes, so I'll just summarise them as I wrote with occasional commentary.
BT and JD both took the stand today and were questions by lead Q lawer (A Meyer I believe?). Overall impression was that they performed pretty well. Both were asked very specific questions about their thinking on specific dates and during meetings up to a year ago, and while there were a few "I don't recalls", neither came across as evasive (maybe with the odd exception).
BT was on the stand when I snuck in. Being asked about a meeting concerning Q marketing plan. Lots of quoting of minutes of meeting and questions like, "what exactly did xx say concerning that point?". I don't think there was any interesting extra info gleaned on top of the notes (minutes) read out. Some things I wrote down that were apparently notes from the meeting (I didn't catch the timing, but presume last year). NB - it was a serious marketing plan to optimize results for the JV. SJ - plan didn't reflect ACE's needs and ACE needed revenue to survive. DR - by mid-2015, 2 million lbs stockpile, can then deliver product. SJ - Can ACE's product be sold, especially shipped product?. DR - not in best interests, will depress prices. NB - no sense marketing small amounts. SJ - sales from late 2015 don't suit ACE's interests. Are HG interested in buying AGS product. NB - can be considered. [my notes - that's interesting, but obviously it didn't occur.]
Asked about email with draft letter attached, underlined words at bottom apparently additions by John Fast from Dragoman. Did you read it? Did you agree? BT basically said he was cc'd for fyi purpose and didn't recall the specifics of the letter. Came across as honest and upfront. There were a couple of other documents Meyer asked about but the line of questioning didn't seem to go anywhere. BT was then released.
JD took the stand. Also questioned by Meyer (I hope I've got that right). Was asked about whether he'd seen Dragoman contract - no. Asked about the Gandel metals service agreement and what it entailed. Answer about office use, shared staff, overheads, software etc. This line of questioning also didn't seem to get anywhere. July board meeting minutes refer to "track 1 litigation finalised" - asked what track 1 means (by judge). Said it referred to the attempt to regain the 75%.
Then along line of questioning about the decision to sell, and where and when the decision was made. It got a bit complicated, but I think the gist is that the decision was made (or contemplated) at a meeting of the legal subcomittee in the offices of the Dragoman, with all board members in attendance, as was John Fast and Mr Heathcote (?). JD said the actual decision was made via a circular resonlution, while Meyer was suggesting that it was taken at the meeting at Dragoman [my thoughts - it seemed clear that the decision was made at the meeting, which was 13th June 2014 btw]. There seemed to be issues with regards to whether it should have been board meeting. Meyer also asked about who's idea it was, to which JD initially said he didn't recall, but ended up saying John Fast. Questioned asked about what potential buyers were discussed, and JD said HG and Itochu. Was it discussed that people wanting uranium themselves might be buyers? JD - I don't recall. Was there discussion about needing sales rights - JD I don't recall. Would this have influenced buyers - JD I don't recall [this part looked a little evasive].
Then some questions about an information memorandum prepared by Deloittes about the sale. Meyer asking about board input and approval of the document. JD came across as very reasonable saying that Deloitte was handling the process and it wasn't something the board need to manange (my paraphrasing of course).
JD asked if he is aware there have been uranium sales - no he's not. Not mentioned in monthly reports. [!!]
There was then a lot of questioning concerning the timing of realising they needed capital and the discussions they (the board) had with each other. Was it known back in August? JD - we monitored the situation month by month. Did you know you'd probably need funds by year end in August - JD - yes. There was a 9th October email where IG and SJ recommended they maintain a full participation in the JV and $15-$30 million would be required. This seemed to be there opinion at that time. Some discussion about discussion with IG regarding capital requirements. JD said he discussed things with IG on the basis that he was a director of AGS, not as a shareholder [nice answer]. Some questions about IG seeking input from JF - JD I don't know his views. Why didn't the CR go ahead at that time? JD - I don't recall the sequence of events.
Intriguing questions about notes form a meeting in october on Como engineers letterheads - not attributed to anyone, no one knows whose they are. JD doesn't recognise handwriting.
Was stopping the sale a board decision? Yes
Did anyone at AGS have uranium marketing experience in Aug last year - no
Was he familiar with the email to SJ where he was advised not to sell at spot? - yes. JD pointed out that the directive to Q was to sell uranium, not necessarily to sell at spot. [one point to JD]
Proposed Q marketing plan from Oct 2014, what was wrong with it? JD - no sales in 2015-2016. But Meyer draws attention to paragraph where it says sales could be achieved in 3rd quarter 2015. JD answered quite well that in general the plan was focused on stockpiling, not selling, notwithstanding that paragraph. He read it in totality as not aiming at sales. Meyer brings attention to two Q letter and a JV meeting where sales in mid-2015 are mentioned. JD - I don't recall that.
Letter from Dragoman to Q 25th Aug - did you approve. JD - yes we all did. It was instructions NOT to sell. JD - yes.
Our guy (Roberts I think) asked more about the marketing plan to give JD more of an opportunity to clarify why he read it as not suggesting sales [I think I already summarised this above, possibly out of sequence].
JD finished for now but not dismissed.
Then a final thing about a new cash-flow document prepared by Mr Gower updating things based on new information from SJ from yesterday (extra bills, different price?). Also, prepared as of November, rather than October, but no significant difference according the Roberts.
Hoffman for Q - not happy at all. Just given document, inappropriate, needs time to consider...
Break early for lunch and will decide on whether the new document can be admitted (or something like that) on resumption.
My impression - didn't look too bad today. Q lawyer clearly had a few aims, including who made decisions (i.e. to sell, about CR, do cancel sale) and when. Particularly interested in JF's input. However, I didn't hear anything that seemed bad for AGS's case.
Given that what I saw yesterday and today has been the cross-examination of SJ, BT and JD (and TL in the morning yesterday), I assume that the first day, where we didn't have anyone to report, was when they presented their side under examination by our own lawyers. Any legal eagles correct me if I'm wrong about the process. I think I might feel more positive if I'd seen that, and I'm hoping to catch our lawyers questioning Q people.
AGS Price at posting:
8.9¢ Sentiment: Buy Disclosure: Held
