Attention: Board of Directors Robert Pett, Andrew Spinks and John Conidi
Ecograf Limited 18 Richardson Street West Perth, WA, 6005
Gents
As a holder of Ecograf Ltd, I wish to bring to the Boards attention my ongoing concerns with the management and progress of our company under your tutelage.
I have keenly followed Ecograf via the company's market announcement, since 2012 KNL day's to present EGR and I continue to hold because of the huge potential of Ecograf's graphite products as either promised or alluded to and more so given the vibrant and rapidly expanding global market in which Ecograf operates.
However, I see Ecograf's market leading potential slipping and the company's Market Cap lagging year after year due to the Board's failings; namely:
- Ongoing failure in bringing fully funded projects through to production and market.
- Inadequate levels of disclosure to the market on all projects, making decisions on whether to invest in the company extremely difficult if not impossible (both for potential holders and existing holders seeking to hold/expand my holdings) of which I've reduced to poor communications and fears of loosing on my investment.
- An almost relentless blind drive by the BOD to add new "shiny object' projects, which whilst likely added with the intention of "building a vertically integrate battery anode materials business", have resulted in a multitude of poorly understood (unknown financial benefits, costs, project plans, timeframes, "customers") projects with little or no perceived value to the company.
- A failure to fix the 'leaks in the ship' that have enabled shorters to correctly predict and advance pivot against every missed deadline including most recently the failure to progress Epanko mine as forecast by the end of last quarter and, more concerningly, the reversal on commencing the development of the worlds 1st ex-China Spherical Graphite Plant, both of which might otherwise have seen significant increases in the company's share price.
Indeed so confident were the shorters they significantly increased their positions leading into what should have been 2 company making announcements.
- The crass decision by the BOD to uber-reward themselves with significant incentives with low or qualitative performance targets, the gall of this Board.
- Dropping down to a 3 person Board where both Board member Conidi and Pett seemingly play no active or public role in progressing or promoting the company whilst concurrently enriching themselves with huge incentive rewards.
- Failing to meet ASX disclosure obligations in respect to the late cancellation of Kwinana Stage-
1. when clearly the BOD knew full well in advance of the cancellation and failure to take up the expiring lease option whilst making insipid announcement on development approvals only days before the cancellation of stage 1, which is completely unacceptable and should forfeit and bonus what so ever.These matters are made more egregious given that the company for some 2 years, has had some 50m "plus", at its disposal, raised specifically at the time to bring already long in-development projects to commencement.
Competitive companies in Australia, once laps behind Ecograf and with significantly less potential, are now smashing Ecograf in the all important Board function of "adding Shareholder Value"; not least because their BOD's have not tried to be all things to all people but rather focussed on core projects, commenced these and have consequently bought handsome rewards to their shareholders; not simply enriched themselves.
Ecograf commenced its journey over 10 years ago as KNL, focussing on bringing the Epanko graphite mine to commencement, before additionally focussing on bringing the Kwinana Spherical Graphite Plant to commencement. Both of these projects remain poorly understood with unknown financials and commencement dates, if any.
What's more recently the BOD has pursued a strategy of relentlessly adding more projects to the mix, all equally poorly understood and some seemingly forgotten as soon as they have been announced to market with no further updates at all. Total projects now include (as a non-exhaustive list):
Epanko Graphite Mine Epanko Graphite Mine Expansion Tanzanian Downstream processing Merelani-Arusha Graphite mine Innogy Demerger of Nickel tenements in Tanzania FYI partnership SungEel partnership POSCO Partnership EcoCHEM hdFines GreenReCARB hdBAM SuperBAM Modular Pilot recycling plant Patents Spherical Graphite Plant Kwinana and associated leaseSpherical Graphite Plant Sweden and associated leaseSpherical Graphite Plant USASpherical Graphite Plant GermanySpherical Graphite Plant AsiaPilot plant GermanyEcograf LondonEcograf MauritiusPartners (various)
More projects than staff.
The BOD has not provided detailed or even broad up to date financials/costs/markets/timeframes etc for any of these multitude of projects and indeed the two original core projects are also no longer understood.
The depth of confusion and angst related to Ecograf can easily be seen in the broader sharemarket forums both in Australia and Germany. A cursory glance at Hotcopper will attest to the failures of the Board to deliver concise, clear market guidance. Conjecture, angst and outright animosity at the vastly inadequate market communication are clear to see.
It is also of significance that the likes of Allianze, Paradice and Jefferies have all chosen to lighten their holdings since Ecograf's capital raise some 2 years ago. Strange in light of Ecograf having such 'rich' projects and 50m (eroding) in the bank specifically to commence projects. Why is this the case?It is unfathomable and unacceptable that after 10 years and numerous calls from Members to the Board seeking clarification and improvements in communication, that such serious issues should remain today.
It does not auger well for the future of Ecograf if things remain unchanged.I therefore call on the Chairman to take immediate action as follows:
1. Seek John Conidi to step down from the Board of Ecograf effective immediately and his replacement nominee sought from within existing Ecograf Senior Management ranks.
2. Withdrawal of Resolutions 3 - 6 inclusive, prior to the AGM as a show of understanding the depth of register angst.
3. Chairman considers stepping down at 2022 AGM or provides a reasonable timeframe for same.
4. Addition of 2 new independent Directors to the BOD ...taking the Board to 5.
5. Completely revamping of the companies market communications protocols commencing with a full open briefing to the market on the status, financial imperative and timeframes for each proposed ongoing project.
6. Carry the 2022 AGM and future quarterlies, online and interactive including the addition of extended Q&A to enable broader participation from members across Australia and Internationally.I additionally call on the support of our esteemed Institutional Investor Members to support my calls for change through either voting against all Resolutions at the 2022 AGM or abstaining from voting at the Ecograf 2022 AGM.
Your support will help enable better Shareholder value outcomes for all holders.
In my distain for this Board's poor decision making I have voted against all Recommendations.
ThankyouRespectfully
EGR Price at posting:
34.5¢ Sentiment: None Disclosure: Held
(20min delay)
