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0.7¢ australian mines limited

AUZ Management - BBs Track Record, page-27

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Flippa01

3,068 Posts.

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02/03/18

00:16

Post #: 31467040
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Originally posted by thaiinvest ↑

DB
I have done many deals in my time in Korea, though not in the mining space
My views are there is nothing better than a Korean company who wants a deal they cannot do enough, if on the other hand you want a deal from a Korean company - good luck it very difficult. Its no doubt that SKI really wanted this deal.
Also you have to bear in mind that there are 2 languages (English and Korean) so everything takes longer and there will also be a Korean Agreement though I would hope the English one is the operative one and arbitration in the event of dispute is in Australia or in the International Court of Arbitration (that would be normal for international agreements of which SKI would no well). Also in Korean Companies everybody and there brother is required to sign off / chop internally on external agreements including from experience HR, Accounting and every department head this takes time and increases the number of people where leaks can occur.
AUZ had 9 potential partners and with all considered thought this was the best deal and I have do doubt that all considered AUZ supported by Medea selected the best deal available and I think this will be proven.
I believe the Koreans are significantly better and more professional at "partnerships" and trustworthy than Chinese entities and from what we have heard from Flippa and JD the Korean kit supplied by Korean manufacturers is significantly better than Chinese. In the end my view is that Chinese Companies always want to be Top Dog and want to own and over influence a company in which they have shareholdings and ultimately want to own you. For JV's with Chinese Companies my feeling is that the Australian Company shareholders get shafted often they put in a Chinese sales company in-between the miner and end customers and thats where the real profits are made.
So I am very happy with 19.9 % SKI shareholding they have enough skin in the game to in helping to successfully build the Sconi mine and plant and help finding finance but not enough to overly influence the company. Its good that there will probably be a Korean Director on the Board. For AUZ I am sure they were on the radar screen and had possibly been approached by potential buyers for a takeover, for the AUZ Board and Ben who want to to see this through from explorer to full scale miner the SKI deal provides the security of a friendly /semi institution share block to ensure protection from a takeover and makes sure Shareholders will get the full benefit.

As regards what happened in releasing the information on the deal. My experience is if there is a leaky ship on information its always in Korea. Up to now information has not previously got out from AUZ and Medea are use to deal making/ assistance and are a very professional company used to the importance of secrecy in such deals.
My sense is that this deal leaked in Korea the day before it was announced first by AUZ in Australia. I think someone said there was a press article in the Korean press a day before. I remember when I worked in Korea the Korean press was publishing details of our supposed confidential salaries and stock options.
So I think if indeed it the deal was in the Korean press the day before the original release, it put pressure on AUZ to release something in more of a hurry than they may have originally planned and when you do thinks in a hurry there are normally screw ups.

I think the agreement with SKI will prove to be better than good for AUZ and its shareholders. Its 100% of production so easier to deal with the complete supply chain. AUZ - SKI - Mercedes (and others), I am sure samples sent by AUZ will be put into sample batteries that will be trailed in new EV Mercedes prototypes. Its not just AUZ that will be building the Sconi mine and plant, it will be SKI that are building their Hungarian Battery factory and expanding their Korean Factory as well as Mercedes that will be tooling up for their new EV models - these are all very long lead time things that all new to come together at the right quantity and quality parameters at the right time.

So yes its very normal to have agreements with clauses based on, specific hurdles time and quality requirements and time hurdles. Remember all agreements for any company will after all other hurdle and conditions have been met and mines and plants are in production will still have quantity and quality control clause requirements on supply of products, this is normal not a reason fro down ramping.
I have no doubt that Ben has been talking to SKI (along with the 8 others) for at least 8 months since he first went to Korea and a good sense of "partnership" between AUZ and SKI staff has developed, the ability to work with your "partner" company is as important as the financial factors and what they can bring to the table.

I also have no doubt as others have said that SKI will be able to bring a lot of project management experience and manufacturing contacts to the table and will assist in helping find financial partners. With 19.9% SKI shareholding in AUZ and a binding agreement on supply and payment from SKI, I have no doubt that the over capitalized Korean banks, of which there are many and which SK has significant relationships with, will be falling over themselves to participate in financing the Sconi project in "very safe" Australia. The Korean banks have long and significant experience in support and financing of Korean companies and Chaebol like SK infrastructure projects all over the world.
My read of the clause that SKI can participate in future finance is simply so that if there is the need for any future fund raising CR's in the future that SKI can keep its shareholding at the 19.99% as envisage in the current agreement. Also as noted by Ben in the AUZ AGM Q&A's he envisages that future dilution will be minimal. (i.e Sconi Project I anticipate will be 100% debt financed however AUZ will still have funding needs for Corporate needs and drilling and proving up Flemington and Tackaringa.

Up to now Ben Bell and AUZ Board and Management have not put a foot wrong, in 2 years (24 months) they have completely transformed a minnow of a non successful gold mining entity to the pre-eminent non DRC highly focused EV Battery (Cobalt and Nickel Sulfate) and High tech mineral (Scandium Oxide) Company in the world. From a Market cap of under A$10 million to a significant company that is capitalized at A$280 million enough to be part of the ASX 300 (ASX 300 participating companies are selected by ASX committee). Posters should read the AUZ presentation of Nov 2015 to see how far AUZ has come I do not know of many companies that have made such a successful and shareholder beneficial transition.

In the interest of Shareholder and minimizing expenses and shareholder dilution have Ben and the team tried to do too much with too little resources - probably. However in a fast growing company like AUZ HR resource hiring is always playing catch-up to the opportunities.

Net net was the SKI Agreement release well handled - NO, though there were probably mitigating circumstances that we do not fully understand (i.e Korean press leak, new team and advisors working together - new company secretary, new corporate advisors Medea and possibly a few other factors we do not know about)
So like everyone we all make mistake and live and learn plus hopefully correct and learn from our mistakes. I have no doubt at all the Ben Bell's heart and commitment to shareholders is in the right place and so yes I am willing to cut Ben Bell some slack after what he has achieved in the last 24 months for long term shareholders thats the very least he deserves.

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Hi Thaiinvest
You are correct arbitration will not be in Aust it will proably be based in Singapore as Samsung used in the Roy Hill job, was not good for the many disputes that our many construction companies and vendors brought against Samsung.(For the Aust companies)
I regards to SK being involved in Project Management of this project I would hope not. Once again I go back to my time working with Samsung, they have no idea how our construction firms bid on tenders. The firms read the SOW and project specs backwards to see all of the holes then tender on that and hit you with variations and extra works for everything not captured. The Koreans are to used to works in other parts of Asia and the Middle East where the firms are much more compliant. Everything is above board by Aust law here you have to know how it works and write SOW's and Specs to suit. You are correct about time to get answers as every little thing has to go back to Korea.
They also struggle with the power that our OSH Act and Mines Act have with the ability to shut projects until compliance has been met.
For sure they would be able to assist with finance, lets leave it at that with maybe a little Eng support.

AUZ Price at posting: 10.5¢ Sentiment: Hold Disclosure: Held
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