Fellow ShareholdersHere is whatthe article in Stock Resources...

Fellow Shareholders

Here is whatthe article in Stock Resources says:

Admiralty Resources - 03 Nov, 2010
Abandon Ship
ADY: Sell around 0.7 cents
Admiralty Resources has sold / exchanged the majority of its iron rights in Chile for a potential series of payments and royalties from an opaque British Virgin Islands incorporated company with no obvious mining credentials and uncertain financial capacity ? which in turn is guaranteed by a similarly opaque Hong Kong incorporated company. Is this really the best deal Admiralty can do for its shareholders?
?Admiralty?s directors appear to have chucked in the towel in their efforts to create a serious mining company - and we recommend abandoning ship at this time.?
Last week Admiralty?s shareholders voted in favour of an agreement selling their key remaining asset, the Northern portion of its mining tenements south of the town of Vallenar in the Third Region of Chile, as well as its rights to the maritime concession at Punta Alcalde.
Key financial terms of the agreement are:
? the purchaser has responsibility for the repayment of US$4m in debt owed to Admiralty, and will repay that amount in the following installments:
? US$1m at completion;
? US$1m eight months after completion;
? US$1m sixteen months after completion; and
? US$1m twenty-four months after completion; and
? the Purchaser will pay the Vendors US$10,000 at completion.
In addition, there is a royalty agreement whereby, for the first 10mt of iron ore extracted, Admiralty will receive:
? 7.6% of the sale price for superior quality iron ore fines (less US$35/t); and
? 5.7% of the sale price for iron ore fines that are not of superior quality (less US$35/t)
Thereafter, Admiralty will receive:
? 1.4% of the sale price on any tonnes extracted above the 10mt level
The sales agreement is with Icarus Derivatives Ltd (a company incorporated in the British Virgin Islands) and is guaranteed by Corsair Capital Limited (a company incorporated in Hong Kong). However, it is apparent that the purchaser is yet to raise the funds necessary to support funding for development, with Admiralty simply stating that the purchaser ?expects to have access to sufficient financing to fund the full development of the Mineral Concessions within a year to 18 months.?
Given that any future financial benefit to Admiralty shareholders relies on the ability of Icarus / Corsair to deliver (both financially and technically) it is perplexing why there is so little disclosure on its capabilities. Equally, these technical and financial functions are something that shareholders should reasonably expect Admiralty to be providing in the normal course of its business.
Perhaps there is a clue in the investor presentation material for last week?s EGM (correction released earlier today), as well as in the text of its recently released annual report, where Admiralty repeatedly misstates its resources, confusing the difference between ?millions? and ?thousands?. These are very basic errors that do not inspire confidence.
Proposed Capital Consolidation At the forthcoming AGM (30th November) Admiralty has put forward a resolution ?That in accordance with, and pursuant to, section 254H(1) of the Corporations Act 2001 (Cth), the issued share capital of the Company be consolidated on the basis that every five existing fully paid ordinary shares in the capital of the Company be consolidated into one fully paid ordinary share, and where this consolidation results in a fraction of a share being held by a Member, the directors of the Company be authorised to round that fraction up to the nearest whole share.?
This should reduce the number of shares on issue from the current unwieldy level of around 2.41 billion to around 482 million ? a more manageable, but still relatively large number.
Discussion and Recommendation Following the Icarus / Corsair Capital deal, Admiralty will have significantly diminished leverage to any exploration and mining activities, with no obvious corporate vision beyond creating an annuity income assuming Icarus / Corsair Capital can deliver ? and with the risk of sinking into oblivion if it can?t. Against this backdrop Stock Resource recommends Admiralty as a Sell around 0.7 cents.
The Chartist?s Perspective
Some positive action
The share price has been moving in a general downward path from the mid 1980s. Albeit during this path there have been some significant upswings, with the price gaining 48 times its price between mid 2003 and mid 2007. However, even such a strong price trend was not able to turn the overall tide and the price topped out during 2007-2008, breaking down in August 2008 to fall dramatically to 0.8c.
In reaction to the steepness of the sell-off the price bounced quickly back to 5.4c but the action proved unsustainable and the price slumped into decline, but at a slower rate. The price reached a new low at 0.5c in July this year and connected with a support trend line and has experienced a divergence in momentum. This combination adds weight to the recent bounce to 1c but more consolidation maybe required between 0.7c and 0.9c ahead of a break above 1.4c to clear resistance and to signal a rise towards 3.5c and potentially into the 5-6c range.
?The Chartist?s Perspective? has been independently derived by Regina Meani from charting and technical assessment, and has not taken into account fundamental analysis of the company.
Disclaimer
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As at the date at the top of this page, Directors and/or associates of Breakaway Investment Group Pty Ltd currently hold positions in Anchor Resources (AHR), Cue Energy (CUE), Energy Metals (EME), Icon Resources (III), KUTh Energy (KEN), National Australia Bank (NAB), Perseus (PRU), Rio Tinto (RIO), Sipa Resources (SRI), Western Desert Resources (WDR), Westpac (WBC) and Zicom Group Limited (ZGL). These may change without notice and should not be taken as recommendations.
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