Ann: Change in substantial holding, page-24

I think we agree that now is the time to hold. What I don’t agree with is that Aurenne will have to pay more. As of the 19th May, they had 73m. They were quiet yesterday as I believe they’re luring sellers down in an attempt to lower their costs.

When the CNs are issued, they will have around 95m shares.

We know that James and BoD want the deal to go ahead (or why else would they issue the CNs - we didn’t need $4m straight away and with an offer at 5c, they could have raised a few mil much higher than 3c). So add in James’ and the Directors stock, plus the 29m shares they’ll issues to themselves/friendlies, plus the huge amount of unlisted options that they mostly control, and all the Aurenne shares, they have this in the bag.

I’m sure they will have at least 51% of the votes soon which means they’ll have control. They can, if they choose, sack the board and appoint their own directors plus a few ‘independents’.

The project needs cash so they’ll simply launch a massive placement to people that support their cause and inject cash into the business. This will immediately give them control of much more than 51% and the SP will be much, much lower than 3c. Rinse and repeat until current SH are diluted out and/or give up and sell down.

While this is happening, Aurenne will buy the scraps on market.

It’s what I would do if I wanted to wrestle control from small SH.

So we do agree that hold is the best strategy as the only thing that will results in a higher price that today is:

a) the PFS demonstrates a very high value project and the independent report (LOL) demands a higher price so Aurenne lift their bid a few points.
b) another bidder comes to the table. Unlikely as Aurenne control so much now (thanks to James) but still possible especially if Aurenne are interested in selling out for a quick profit (unlikely IMO)
c) the 5.05c offer proceeds as planned as SH get the opportunity to take up the offer.

Outside of that, I can’t see a bloc of small SH having much influence. If there was one major SH in the mix then it might be feasible but our register is garbage. Before the CNs, the T40 only had 26% and inc in that management only controlled roughly 5%. The vast majority of our register is small SH with less than 1-2m. I’d say 50% is very small holdings. That won’t work for the resistance cause.

The only saving grace I can see is that it appeared as though there was someone competing with Aurenne in buying on market this week. Can’t be sure but it did appear that way. They could be playing an arbitrage trade or they could be doing something else. Time will tell.

Selling now is idiotic when Aurenne will certainly take control but refusing the 5c offer if/when it’s made is dangerous.

James has a lot to answer for.