I've modified my previous post folks to take out ALL specific references to other posters. I have also included at the bottom some other critical framework of the ESP vis-a-vis information from Annexure B So while I feel somewhat obligated to those shareholders who I have shared views with and have enjoyed here on the Forum. , I equally make no apologies for for not responding necessarily to the ' calling out ' of others as I have other Interest at this time of year - particularly our ownership of several Race Horses who have been and are involved in events over the the spring racing carnival.
There are so many Great People here on the AUZ forums , and while it is impossible to thank you all , I would simply say it has been an absolute pleasure in discussing and sharing ideas's among the holder's who have and continue to share the ups and downs - high's and lows of Investing in the Markets. Most of all remember that it is and has been ' no fault ' of your's . It is a reflection of what we do , and a clear product of the opportunities which will and always inherently be there in the Markets for the taking.
Having already been correct on several occasions Since May last year in so far as movements and Calls on the SP - as you can see , I have now exited my positions including my SPP ' double down ' allocation in order to preserve the $40 - $50 thousand dollars I have netted over the course of these last 6 months. I will continue to follow AUZ with great interest , as well as the view to setting myself for my next trade , and so will throw in my comments which I hope are well balanced and will NEVER outright donwramp with continuous unfounded negative claims which obviously are only for the sole purpose of ' bagging ' out the company for a individuals own personal self gain. I can see no other reason why ....unless it is alternatively for the pure recognition and ' notoriety ' of Hot Copper. I've always believed that if you can't provide some substance to the conversation including being first mover with pertinent facts - then you should simply stay out of the conversation in general.
With respect to ' First ' mover , I can refer my recent quick analysis of the Quarterlies which immediately flagged the reduction in ' Salaries ' and the possibilities of Marcus leaving. There is also the point in regards to ' Consolidation ' which I also realized this issue a long time ago in that it would most likely be a requirement of any prospective Financial Consortium in assessing their willingness to provide finance. The reason's are of course obvious in that a higher SP will and should provide much more credibility , stability and obviously less unnecessary ' volatility ' which we have once again recently seen in just the last week alone. At the same time , lets not forget as well , that ' Volatility ' in this game can , is , and will continue to be your friend if you can actually read between the lines and get yourself set on the right side of the probabilities of the many varying outcomes. I was also first to bring to the attention the significance of the November date of the ' non recourse loans ' , and no doubt am ' First ' to bring to this forum the information I am including in this post ( below ).
For instance to suggest that Management saw it coming from as far back as the SPP is absurd , and I'll leave you all with this analysis in regards Marcus to explain the reason's why.
All this speculation and aspersions over Marcus's tenure and reason's for leaving Australian Mines. While obviously unusual for CFO of his calibre to leave after being in the job only 1 year - some positions of this nature can be seen to be only defacto ' contract's with minimum agreed terms starting from 12 months. Given this , ha anyone cared to think that perhaps he had developed , and executed all that he felt he could up until this juncture .....including the cleaning up of other's messes , developing appropriate financial structures ,reporting , and other disciplines. Creation of the ESP , and even the beginning establishment of the relationship of putting AUZ forwards in so far as NAIF recognition.
So lets look at some of the facts around the ' issue ' of Marcus's leaving by starting with a review of some of the early comments as found in the ASX announcement of his appointment .
" Marcus’ immediate past engagement was with major Australian iron ore producer Fortescue MetalsGroup, where he spent eight years as a Finance Group Manager of the ~$12 billion Australian SecuritiesExchange-listed mining company. "
" Marcus has also held various senior roles including Manager, Tax & Finance for multinationalinfrastructure group Lend Lease as well as Specialist Tax Adviser for global diversified miner Rio Tinto,where he was involved in the capitalisation of a $1.5 billion alumina refinery constructed in Gladstone,Queensland "
" I look forward to Marcus’ contribution to the executive team at this critical time for the Company, includingleveraging his experience managing regulatory authority compliance, risk reviews and audits. In themedium term, we will also benefit from his expertise in building finance functions through the initialproduction phase of mining operations, as well as supporting project expansion activities once operationsare established "
So from that we can then review the financial aspects behind his appointment as follows :-
" In addition, 10,000,000 Plan Shares were issued on 2 January 2019 at $0.04183 per Shareto an employee of the Company who is not a related party. "
10,000,000 = $418,300 Required to be paid as per vesting dates with his first $104,575 due by 3rd December 2019 ( as per the vesting table found in the Annual Report )
Issue price is $0.0418315 day VWAP is $0.0399Source of VWAP calculation is IRESS
" On 3 December 2018 the new key management executive Mr Marcus Hughes was invited to participate ina Loan Share Plan. The shares were purchased at a market rate of $0.0418 per share. The key managementpersonnel plan shares are divided into 4 tranches and are subject to service period vesting conditions. As aresult of the plan 10,000,000 shares were issued. The fair value of the shares was estimated at the date ofgrant using the Black-Scholes model. Refer to note 19 for further details. Of the 10,000,000 shares, no shareshave vested during the financial year "
M Hughes 3/12/2018 2,500,000 3 December 2019 - 0.042 0.0197
M Hughes 3/12/2018 2,500,000 3 December 2020 - 0.042 0.0234
M Hughes 3/12/2018 2,500,000 3 December 2021 - 0.042 0.0263
M Hughes 3/12/2018 2,500,000 3 December 2022 - 0.042 0.0285
So by reviewing further information contained in the Annual Report 2019 , we find the following facts which support and tie back to his original allocations and accumulations which culminate in the Top 20 listing disclosed as at September 2019.
Note 12 (e) Annual Report
M Hughes Held at1 July 2018 = NIL - Purchases= 17,500,000 -
Held at30 June 2019 = 17,500,00
So we know as per the Annual Accounts that Marcus had received as part of his Remuneration Structure $141,111 in share based payments , and we also know per the above note 12 (e) that he acquired 5,750,000 ( 7,500,000 above less the 1,750,000 issued in lieu of the $73,500 signing bonus - refer below ). That makes the 5,750,000 average price obtained for his $141,111 share base component of 2.4541 cents per share ( by mathematical deduction )
Short term Incentive Bonus ( as per Annual Report )
" The Company has no scheme to pay discretionary bonuses based on short term performance. However, abonus of $73,500 was paid to Mr Marcus Hughes during the year as joining bonus. "
But we know that he ( Marcus ) took a Share placement @ $0.042 ' in lieu ' (Sign on Bonus) = $73,500 = 1,750,000 shares issued during 2019 as per Note 20. of the Annual Report . So that then leaves 5,750,000 shares which as stated were issued as part of his Remuneration Package during the year.
We also know that Marcus was sitting in 13th spot in the Top 20 as recently as 16th September 2019 with a total of 19,363,356 or .56 % so that would mean he would have acquired on market or in the SPP a further 1,863,356 shares since effectively and by definition the disclosed amount in the Annual Report 30th June 2019. So not exactly a move or moves you'd expect from someone who was intending or about to give their notice I would have thought.
So at this stage he loses the all the 10,000,000 shares issued on his behalf mostly do to the fact that 7.5 million haven't even vested yet , with the 2.5 million positioned to have vested by 3rd December 2019. Further to that , they also voided on account of his " Employment , Office , or Contractual relationship with the company ceasing ". So as a result of all this , that will see Marcus dropping out of the Top 20 with his assumed remaining holding balance of 9,363,356 shares at September 16th 2019. ( which weren't free ) SO , I think it is fair to assume and say that he acquired his additional 1,863,356 in the SPP in July( and not someone who then knew it was going to play out this way - as suggested by another poster ). Bottom line is this all would result in his average price paid across this remaining balance being approximately 2.6104 cents per share. So in effect , Marcus with ALL his financial background and ' nous ' would have pretty much been in the same boat as many on this forum , and was obviously endeavoring to average his position at the lower available prices as alternative to offsetting the effects of his shares being acquired under the ' loan scheme ' arrangements and the vesting amounts of 4.183 cents per share.
So it's important to stick to analyzing the facts instead of what seems to be the case in purely speculating as to why and when , and for what reasons Marcus made his decision to leave the employ of AUZ, because it could be as simple as the obvious fact that should he have continued in this role under the current arrangements with respect to the ' Loan Scheme ' arrangements , that he would in fact potentially have taken a financial loss which would have far exceeded the acceptable terms in so far as the interests of his family were concerned.
However in saying that , it is not as though the ESP is being completely ' set aside ' in so far as the removal of resolutions 5 through 8. The reasons are that Resolution 10 still allows for the creation of the ESP , the powers , and how it will relate to the process of rewarding recipients moving forwards from the date of the AGM.
So in effect by passing resolution 10. , you will still be granting the powers to the BOD of implementing the ESP to in effect issue shares under it's broad terms. So they will have to re-draft this resolution as well I would think. In any event , perhaps Marcus saw a need for the ESP , but also realized it was not going to get up and so therefore submitted his resignation as he was in fact the Architect behind it.
RESOLUTION 10 – APPROVAL OF ESP
(d) The Company intends to make an offer to the Participating Directors as soon as possiblefollowing this Meeting, and in any event, within 12 months after the date of Shareholderapproval.
(e) A voting exclusion statement in relation to Resolutions 5 to 9 (inclusive) is included in theNotice of Meeting.
(k) In respect of Resolution 9, all Directors recommend that Shareholders vote in favour ofResolution 9.
The granting of the ESP options will have no effect on the Company’s cash flow. EligibleDirectors will be required to pay the exercise price of the Options before convertingthem into shares, increasing the cash reserves of the Company.
Background
The Board has adopted the ESP to replace the Loan Share Plan previously approved byShareholders at the Company’s 2014 annual general meeting and 2017 annual generalmeeting.
Shareholder approval is sought for the purposes of ASX Listing Rule 7.2 (Exception 9(b)) toapprove the ESP, and to issue securities to executive and non-executive directors, full-timeemployees, contractors and consultants of the Company or its subsidiaries, as selected by theBoard from time to time (Eligible Person).
Annexure B
Summary of the key terms of the ESP.
The key terms of the ESP are set out below:
At the discretion of the Board, the Plan Securities may either be directly issued to EligiblePersons, or existing Securities purchased on-market and transferred. If Plan Securitiesare in a class of listed securities, the Board will apply for quotation of the Plan Securitiesissued (or any unquoted Plan Securities transferred) within the time required by theListing Rules after the date of grant of the Plan Securities (Grant Date).
(c) Purchase Price: At the Grant Date, the exercise price of the Plan Securities will be atleast market value, or another value as determined by the Board.
(d) Forfeiture / Vesting: The Plan Securities offered under the ESP may be subject to vestingconditions, forfeiture conditions and disposal restrictions (the Conditions) as determinedby the Board and specified in offer documents to be provided to Eligible Persons. TheBoard has discretion to waive or deem Conditions to have been satisfied.
(i) a Participant’s employment, office or contractual relationship with theCompany (or a subsidiary of the Company) ceases;
(iii) a Participant acts fraudulently or dishonestly or in breach of his or herobligations to the Company (or its subsidiaries); or
(iv) a Participant becomes insolvent.
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