bad press

Options issue off the agenda at AMI
Email Print Normal font Large font Jamie Freed
July 12, 2006

AUSTRALIAN Mining Investments executive chairman Wayne McCrae won't be receiving this morning a controversial options package now with a value of $46.3 million.

In a rare move, the corporate regulator stepped in last night to cancel the most important resolutions to be put before an AMI shareholder meeting in Cloncurry, Queensland.

AMI shares were valued at just 31.5c when the company prepared the notice of meeting and it planned to issue 10 million options to directors - including 7 million to Mr McCrae - exercisable at 50c each.

But by last Wednesday the shares had risen to $10 each, before entering a trading halt at $7.11 - making the options package look extravagantly generous to some investors and to the Australian Securities and Investments Commission.

"ASIC is concerned that members were being asked to make a decision about the remuneration of directors on the basis of materially out of date information," said ASIC's executive director of compliance, Jennifer O'Donnell.

She told the Herald it was rare for the corporate regulator to seek a court injunction against resolutions proceeding, as it did in this case, but several shareholders had lodged complaints.

If the resolutions were put to a vote, shareholders would have had little time, if any, to digest the release of AMI's latest drilling results. Instead, they will only vote on whether to change the company's name to CuDeco Ltd. The options package vote will be delayed until August 25.

AMI shares were originally expected to resume trading once the results were released on Friday. But questions from external geologists assisting the Australian Stock Exchange have held up the announcement for days.

"We're in the process of going over the revised disclosure as it now stands," an ASX spokesman said last night. "The AMI securities, like all companies listed on the ASX, can only be returned to trading when the market is considered sufficiently informed."

ASIC is also monitoring AMI's disclosure and trading in the company's shares.

The rest of the mining industry is keen for AMI to release its results as soon as possible. Justin Walawski, the chief executive of the Association of Mining and Exploration companies, made it clear that AMI was not a member of his organisation of explorers.

But he said the saga could have broad ramifications for the industry.

"The profile that AMI's attracted from the investment community means that if those investors were to be affected in a negative sense by misinformation or a lack of information, that could have ramifications for investing in the junior exploration sector in Australia," Dr Walawski said. "Right now, that's the last thing [the sector] needs.

"On the upside, if the AMI find proves to be well-founded and justifiable, that's going to be a great fillip for the industry and will add to some of the buoyancy in the market."

But Dr Walawski said he could not recall a circumstance in which an AMEC member company's statements had had to be examined by external geologists before release to the market.

Another veteran industry executive said he would consider an ASX examination of his own company's releases to be "the worst insult".

According to the ASX listing rules, AMI is forced to pay the costs of the close examination of its drilling results before their release.

Mr McCrae refused to return phone calls from the Herald for the fifth business day in a row yesterday. He will hold a tour of Rocklands for investors after the shareholder meeting this morning.

Mining industry sources said the tour would reveal little more than drill holes. The Rocklands deposit is believed to contain large amounts of native copper, which assays at high grades but is very difficult to extract commercially. Native copper is understood to be hard to remove from surrounding rock.

http://www.smh.com.au/articles/2006/07/11/1152383744135.html