I realize many do not read my (long) posts but for my own amusement I will make some (hopefully fact based) comments and try and keep as brief as possible:- Unmarketable Parcels – Nothing new here (or in the constitution) and usually used to clean up a register. Noting the structure of our register I always expected (eventually) a move to purchase unmarketable parcels.
The Company, however needs to have the spare funds and is something normally done during some other restructure type event.
At this stage, FMS do not have the capacity and funding by Todd for a purpose such as this may be problematic
A buy back of unmarketable parcels was included in the previous De Listing attempt along with a facility to be used for other holders to sell into. Of course this came unstuck due to a finding of unacceptable circumstances by the Takeovers panel, so not sure they would bother at this stage. What does it all really mean?:- (Note figures below are estimates and used for illustrative purposes)
An unmarketable parcel is a parcel held worth less than $500 so for this exercise lets say any parcel up to 12,500 shares at current price. Looking at table of shareholdings in annual report we can see that 1,421 shareholders hold parcels less than 10,000 shares which total 6,714,254 shares representing .15% of shares on issue! There are also 1,786 holders with 10,001 to 100,000 shares. Let’s assume 10% of those holders hold up to 12,500 that would mean a further 2,225,000 shares in unmarketable parcels (for simplicity - 178 x 12,500)
This would mean a total of 8,914,254 which is .21% of total shares.
If our SP halved to 2c the unmarketable parcels rise to 25,000 shares (or 1,000 shares @ 50c post consolidation).Under this scenario we would still have the 6,714,254 in the under 10,000 category and let’s say 20% of the next category having up to 25,000 would result in 8,925,000 shares from that category in the pot.
This would bring total to 1,778 shareholders and 15,639,254 shares which is still only .37% of total shares.
Obviously further deterioration of sp multiplies the situation however you would think a drop in excess of 50% would only be because of bad news (which stuffs us anyway)
No criticism intended however I can only surmise that many of those holders are stale and have lost interest in FMS and a sale such as this will be neither here nor there. If they have a belief that the Sp will appreciate then adding to their holdings would appear the logical move (and may help with demand!)
As can be seen the unmarketable parcels issue hardly needs to be used as an important plank in any plans Todd may have for further control when they can gain more than those percentage increases from normal CR’s!!
It should also be noted that we were trading under 2c (50% less) as recently as May 2020! Which brings me to the next point:- Consolidation – Firstly I will mention that I am not in favour of a consolidation just for the sake of getting rid of zeroes. I have always thought that a consolidation may be required down the track however logically this would be done when the future of PIOP is known and the market can get a better confirmation of the ultimate earning capacity of FMS either as a 40% owner in an IO mine or from royalties. From my experience it is quite common for an SP to drift down after consolidation, however as can be seen from my comments re “unmarketable parcels” our Sp can be volatile and subject to large percentage swings anyway due to lack of liquidity and current low price. Consolidation will result in a more acceptable (due to perception) SP for some and may also result in smaller price swings. Either way, we will only see any real appreciation in price once we start getting some firmer news on ourdirection! (It is actually a moot point whether we will see greater depreciation in our Sp from current base or consolidated base – no progress is no progress)
Consolidation may provide a bit more stability of SP however often does start another long slippery slope!!
It is also worth noting the disadvantages of current structure listed in the explanatory statements (my comments in brackets):- (a) poor market perception as the Directors believe investors equate the low share price with the perception of a troubled or poorly performing company; (Largely true but not remedied by consolidation!!) (b) vulnerability to speculative day-trading and short selling, which generates Share price volatility; and (Highly unlikely shorters and spec traders in any volume would bother with such an illiquid stock however SP volatility at this level due to our volumes is an issue) (c) discouraging quality, long term institutional investors, equity funds and lending institutions seeking stability and long term growth. (Investors such as those listed above will not be interested in this Company due to current ownership structure and uncertain future – Comment may be true once future is known and current tightly held register is freed up from some outside interest)
Anyway, moving on:- Constitution – I am still trying to match up many clauses however it is not disingenuous to say they are updating a constitution to comply with current listing rules.
Obviously our issue is the lack of trust minority holders have which results in a default position of NO!
I have not found anything yet untoward (although keep getting sidetracked) however I have not seen any explanation why they have to change the constitution other than it’s a good idea so can’t see a reason to support. Unless they can articulate what is deficient (and problems which may arise) in current constitution there appears no real reason to change. Summary provided re material changes does not provide much insight! (I will keep reading but happy if others can point out actual examples of changes which are detrimental to minority holders)
Perhaps our Directors are purely going through the motions as they have nothing else to do!! Couple of general comments – Sorry to be repetitive however as I (and others) have said many times our major defence against increasing Todd control has been for minority holders to support capital raisings.
Unfortunately, regardless of the tub thumping on here there is often a lack of support and then anger at how Todd can just keep increasing their holdings
I am not being critical of any individual as everyone must do what is right for them and their circumstances at the time however we have even seen OCJ not take up their entitlements which really ices the cake. The most recent CR was at 1.3c because they had insufficient support at 2.5c (talk about shooting yourself in the foot)
It is plainly obvious that Todd can play a slow game at present and just keep increasing their percentage. On the other hand Todd may have pressure to get this project rolling as soon as they can and completion of a BFS may well change many things for minority holders in FMS.
More outside interest will create its own liquidity and allow stale holders to exit more freely.
It is also a bit disconcerting that TIO and OCJ now have 80% of shares on issue which means that they will control somewhere around 90% of votes which would normally be cast at any meeting!! We all know that OCJ finally supported Todd to get the infrastructure proposal approved and it will be interesting to see how much more they will support them in future.
My concern is that OCJ have concluded that they may never be in a position to realize on their holdings on the open market (difficult to sell a large holding in an illiquid market) and will be better off working with Todd in future…………….
I am not trying to preach doom and gloom, just trying to outline the position as I see it and I do agree that automatic criticism of everything FMS on HC does not aid our market perception.
As is probably recognized I continue to have much more concern about the continuing increase in ownership by our majority owners through CR’s than I do about the current proposals before us (even though I be voting No).
I am still hopeful that a BFS will confirm this project before we are sucked down the proverbial toilet.
All just my opinion for what it’s worth………
