interesting read on idg

Got this in my inbox today



Dear Fellow Indago Shareholder,

I would like to take this opportunity to explain why GoldLink IncomePlus is moving to replace the Board of Directors at Indago and to seek your support for the strategy we have devised to improve returns for all Indago shareholders.

The push to replace the three Indago directors with three highly experienced mining executives is not a decision GoldLink takes lightly. But we believe Indago shareholders, including GoldLink, have no choice but to take this action if we want to end Indago’s seemingly endless waste of shareholders’ money and improve the Company’s poor returns for investors.

And while GoldLink acknowledges that John Fitzgerald has been an Indago director for only four months, it believes it is in the best interests of Indago for him to be replaced along with fellow directors George Bauk and Geoff Chapman.

The simple truth is that Indago is a company going nowhere, while its directors have churned through about $20 million of shareholders’ funds over the past two years.

Those who have been Indago shareholders since the current directors (George Bauk and Geoff Chapman) took control of the company in 2006 will be all too familiar with the hollow promises trumpeted by those in charge.

“We are acutely aware of the need to deliver results for our shareholders,” managing director George Bauk claimed when he joined the Board in June 2006.

But they have failed miserably. Shares in Indago, or Western Metals as it was then known, have plunged from as high as $4.30 in April 2007 to 65 cents (on a post consolidation basis) at the time of writing to you – hardly an acceptable result for an exploration company during what has been one of the most lucrative resources booms the world has ever seen.

When Mr Bauk and Mr Chapman joined the Board, they acknowledged it was the perfect time for resource companies to rack up lucrative returns for their shareholders. “The resources sector is experiencing an unparalleled period of growth and I expect the formation of the new team at Westerns to capitalize on the many opportunities available to us,” the Board said in 2006.

And they were right. It was unparalleled, but they failed completely to capitalize on it.

In the three years that have passed, George Bauk and Geoff Chapman have reaped annual salaries of many hundreds of thousands of dollars between them. This is the sort of pay normally reserved for those running substantial mining companies that are generating significant profits for shareholders.

In the process, they committed Indago to a string of exploration deals in all corners of the globe, ranging from uranium, to base metals projects and now gold. These projects all had one thing in common – they have never produced anything under Indago’s ownership.

Long-suffering shareholders will recall the Company talking enthusiastically about its Tanzanian uranium project and how fantastic it would be. That was three years ago. It has since cost Indago shareholders millions of dollars and is still a long way from being developed, if ever.

The Directors then announced a deal to “pursue uranium prospects” in the USA. Three months later, just when shareholders could be forgiven for thinking their company was in the uranium business, the Directors committed Indago to exploring for copper in Peru. And a month later they signed up to a base metals project in Queensland. At the end of 2007 Indago entered into a Canadian nickel and base metals project and, four months later, it unveiled a deal to buy a Welsh copper-zinc project.

Of course, these deals required Indago to spend substantial sums, and the $3.3 million they raised from shareholders in November 2006 just wasn’t going to be enough. So in May 2007, they raised another whopping $32.25 million.

Instead of being predominantly used to progress their projects, many of these funds have been frittered away on excessive administration overheads. In their first year in charge, the Directors spent $2.6 million on “administration” compared with just $1.8 million on exploration. This gross imbalance was hardly surprising given Mr Bauk’s remuneration totalled $406,388 in 2006-07 and Mr Chapman’s was $390,038. They also managed to spend more than $210,000 on travel.

It was the same horror story for shareholders the next year, but worse. More than $6 million was spent on “administration” compared with $4.6 million on exploration, which was Indago’s key reason for existence. And it was another good year for Messrs Bauk and Chapman, whose remuneration hit $461,811 and $370,251 respectively.

To add insult to injury, the directors saw fit to take up luxurious new premises, sending the annual rent bill soaring to over $300,000. The company also amassed a travel bill of $549,170.

As shareholders’ money poured out the door, Indago announced it was quitting both the US uranium project and the copper project in Peru to concentrate on its “flagship exploration asset” – the Tanzanian uranium project. But in February this year, the Company’s spotlight switched to exploring for gold in Tanzania.
And in a window dressing exercise, the directors announced the company would change its name from Western Metals to Indago – noting that Indago came from the Latin meaning “to investigate”.

This appalling track record has prompted GoldLink to do some investigating of its own, and the conclusion is obvious: the Indago directors must be replaced so that, as shareholders, we can all stand a chance of generating an adequate return on our investment.

GoldLink’s action is not a case of just another mining company trying to grow by taking over a fellow miner. GoldLink is not a miner. It is an investor, like every other Indago shareholder, and it wants to improve the returns for all Indago shareholders.

GoldLink’s commitment to Indago and all its shareholders is highlighted by GoldLink’s announcement to the ASX on 17 June 2009 that it intends to make conditional offers to acquire 10 per cent of the shares it does not already own in the company by way of a proportional takeover bid.

And to further help achieve a sharp improvement in Indago’s performance, GoldLink has secured the services of three respected and successful mining executives in Miles Kennedy, Karl Simich and Matthew Fitzgerald.

Mr Kennedy has a proven track record in the financing and development of mines, particularly in gold and diamonds. He was the driving force behind the highly successful Macraes gold mine in New Zealand (still the only operating gold mine in that country) and was executive Chairman of Kimberley Diamond Company from 1993 to 2007 and non-executive Chairman of its exploration subsidiary, Blina Diamonds NL, from 2002 to 2007.


As Chairman of Kimberley, Mr Kennedy led the strategy that resulted in the acquisition, financing and development of the Ellendale Diamond Mine in Western Australia, eventually leading to a takeover offer for the Company by the London-listed Gem Diamonds. This enabled shareholders to crystallize value during the recent resources boom.

Mr Simich was Finance Director and later Managing Director of Kimberley Diamond Company and has worked closely with Mr Kennedy for over two decades, including during the establishment of the Macraes Gold Mine in New Zealand. Mr Kennedy and Mr Simich are currently respectively Chairman and Executive Director of Sandfire Resources, which is associated with one of the most exciting new copper-gold discoveries seen in Western Australia’s Northeastern Goldfields in recent times.

Mr Fitzgerald is a Chartered Accountant and was both a Director and Chief Financial Officer of Kimberley Diamond Company and its ASX-listed exploration subsidiary, Blina Diamonds NL. He has worked closely with Mr Kennedy and Mr Simich over the past 10 years and has over 20 years experience in the management and administration of listed companies, specializing in resource finance and corporate management.

GoldLink is confident that Mr Kennedy, Mr Simich and Mr Fitzgerald have the skills, the experience and the business acumen to oversee the successful development of Indago’s Nyanzaga gold project in Tanzania. We believe Nyanzaga has the potential to be a profitable goldmine. However, the difficult nature of the deposit means it will require dedicated people such as those nominated by GoldLink to make it work for the benefit of shareholders.

As fellow Indago shareholders, we are appealing for your support in making the boardroom changes we believe are crucial to turning around our company.

Please support the election of Mr Kennedy, Mr Simich and Mr Fitzgerald by completing the proxy form which will be sent to you in coming days.

Yours Faithfully

Peter Pynes
Director, GoldLink Income Plus
On Behalf of the GoldLink Board of Directors





Promises, Promises, Promises
Indago, in their own words

“The resources sector is experiencing an unparalleled period of growth and I expect the formation of the new team at Westerns to capitalize on the many opportunities available to us.” – The Indago board’s hollow promise to take advantage of the resources boom. June 26, 2006

“We are acutely aware of the need to deliver results for our shareholders.” – Indago chief George Bauk proving that being aware of something and doing something about it are two very different matters. June 26, 2006

“This is a very exciting program for Western Metals.” – Bauk touting the benefits of the Tanzanian uranium project. July 24, 2006

“This is an exciting opportunity for Western Metals.” – Bauk talking up the US uranium project. October 30, 2006

“Western Metals has decided to divest its interest in the Glade uranium project in Colorado, USA.” – Bauk talking down the US uranium project. August 13, 2008

“Securing this highly prospective opportunity in a tightly held and competitive area in Peru is very exciting.” - Bauk emphasizing the Peruvian copper project. January 18, 2007

“Western Metals will not exercise its option over the Lukkacha copper project in Peru.” – The company admitting the Peruvian project is no longer so exciting. August 13, 2008

“Western Metals’ flagship exploration asset is the Mtonya uranium project in Tanzania.” – The company announcing its focus is on uranium. August 13, 2008

“Western Metals is pleased to announce a strategic focus on building a significant gold business.” – Same message, same country, vastly different product. March 17, 2009

“This year is shaping up as a watershed for Western Metals shareholders.” - Bauk promising happy days for investors, though some might well have thought they had heard it all before. March 17, 2009