azure capital report, page-15

OMG,

Thanks for your information. It is good to know that current management has looked at these options for a low-cost approach. I have now had the chance to speak to reps of both camps, and based on what you have said in your post, and the info I have obtained, we can be assured that both camps are across the various options for developing Coburn, including low cost approaches as you and other posters have mentioned.

I think it is a difficult decision for shareholders to make as to vote for or against the Tilbrook motion. I appreciate you stating publicly how you intend to vote. The best outcome would be that Tilbrook and the company are able to agree on an accelerated succession plan for the GM, and the meeting is then called off. However, I don’t see this happening.

Unlike voting at a political election, where you can see both sides and the candidates, and their policies have been spelt out, for this vote we are very much in the dark. Even more so if, like me, one is an investor having no mining knowledge or experience. As to my voting intentions, sadly I have to admit that I keep changing my mind, based on who I last spoke to or what posts on Hot Copper I have just read. That’s pathetic, but it is because of the unknowns we face.

In his statement, Tilbrook put together some convincing criticisms and hence reasons for change. If we were to base our voting decision merely on outcomes, I think most people would vote FOR the resolution. It certainly has the effect of punishing the GM for the lack of an outcome. However, the trouble is that the best way forward may not be to throw out the head of the firm. I think the following factors are relevant:

• There are mitigating circumstances behind the failures. On the basis of fair play, it seems unfair to vote out the GM, while the Board and senior executives are not made to carry their share of responsibility for the bad place in which we find ourselves.
• DH as far as I know, DH did employ some key personnel – someone from Iluka I recall, someone else with finance background at a high level, to work on securing the deal, and another person with key credentials – I forget the details. So he surrounded himself with executives with managerial and mining expertise to guide the company through the negotiations to get a deal done for Coburn. That it failed suggests to me that either it was just too difficult at the time, or these managers were, collectively, failures. I think the former, but don’t have enough details to know. In any case, if you vote FOR then you should be saying there is a collective responsibility and the whole Board and management team should be cleaned out. But I don’t think this would be either possible or a good idea.
• It is not as though a vote FOR the resolution installs a known alternative person, as happens in a political election. It simply removes the GM, immediately following the meeting this month, without there being an immediate replacement. Presumably someone on the Board would have to be given executive powers while the board searches for a replacement, and this could drag on.
• The same board that has overseen our failures to get a deal would have to find a replacement for the ousted DH. It would not be up to Tilbrook – it would be up to the board of course. We don’t know who we would be getting as a replacement, and this vote we are being asked to make naturally gives neither Tilbrook nor us any influence over the selection process.
• Tilbrook is an unknown. Whilst we know of his criticism of DH per his statement issued upon the calling of this meeting, we do not know of his vision for the company. He did not spell out how he would change things. Not that he has to – he is simply saying, as far as I can work out, that as an investor he wants to see change because of poor past performance. That’s all fair and reasonable. He may or may not have any mining or managerial expertise, or contacts in the industry. We don’t know. Fair enough, he can put up a case to remove the GM, but it does usher in some uncertainty without any guarantees we will ultimately be better off by voting FOR.
• A vote FOR will immediately create a period of uncertainty, which could go on for months. For example:
o The post of GM is immediately vacant following the meeting, and we will have an acting GM person (probably someone from the board, but I don’t know) until a replacement is found. Result: A leadership vacuum at a critical stage for us.
o We lose the services of DH as a consultant to the company, and we also have no handover period in which the new GM can draw on DH’s experience. I don’t think that would be good for the company. Regardless of how you may view his performance in not getting a deal done, I don’t think you can criticise him for any lack of mining knowledge (general, and the minerals sands environment, and specific to Coburn) or commitment to the company. This would be very valuable for a new GM to draw upon.
o All this uncertainty, yet we don’t know who we get in place of DH; we don’t know anything about Mr. Tilbrook; and we have no guarantee or even any idea of whether or why things will be any better with another man in charge. Mr. Tilbrook and proponents of change may well reply to this along the lines of: ‘Anyone would be better than what we have had.’ Well, if that is what the FOR vote is saying, I don’t buy it. It is just an emotional opinion, with no logical reason why it should be so. It punishes DH, and some may argue this is reason enough to vote FOR, but I can’t see how it will necessarily lead to a better outcome for Gunson.
o For no identifiable gain, a FOR vote simply replaces DH with a period of uncertain leadership, a temporary GM while the board searches for another, and the loss of DH’s experience and commitment to the company. Maybe Mr. Tilbrook has some candidates ready to go, so the period of leadership uncertainty and vacuum may be short. But there is no guarantee that the board would choose a Tilbrook nominee. And in any case, why would a Tilbrook nominee be any better than other applicants for the job, or indeed any better than DH?
o And at the end of the day, DH is going anyway, just as soon as we get a new GM. What, then, is the point of ushering in all this leadership uncertainty?

I must say, that Donald Rumsfeld would have said all this better than I: ‘There are known unknowns and unknown unknowns out there.’ LOL.

If you think the above is a long-winded way of saying I am going to vote AGAINST the motion, then that is correct. Ha, but it is such a fickle situation with so many unknowns, that I will probably sway in the breeze for a while yet. I have already changed my mind from a previous Hot Copper post I made. But my opinion now is that it will take some pretty firm idea of how things will be better if we vote out DH, before I will vote FOR.

So, I join OMG in declaring my hand – AGAINST the resolution.