Metal prices had nothing to do with the failure under Clifford. Gold, copper, zinc and lead were, as of 11th Nov, all above the revised budgeted figures. Like for Solid Energy NZ which went belly up, the company is saying he guided us through difficult times. Really?
The incentive shares he earned requires a motion to be put before the company (as it should for all companies) to link all performance incentives to overall share price, as opposed to having a single area of performance as the deciding factor. It's shameful that he gets any incentive shares.
Can we recover: First thing is to sort the funding for Federation and this can not be allowed to further dilute existing shares, so must be by some other means. Others have presented figures for this on this forum but remembering we had $46 million net cash, $13 million in unsold base metals, had around $20 million of undrawn loan facility we aren't far off the supposed $106 million required. The issue becomes if we take on more debt can we pay it off. Certainty around the funding, and no further need for a SPP would get an immediate response from the market in my opinion.
Secondly, half way through this quarter we must have an indication of our progress. Have we done better than the previous? Are we on track to achieve guidance? This latter question is important because we have had a a seemingly endless stream of downgrades that would shake the confidence of any investor. Several factors like now having the Kairos shaft working again will have a material impact on AISC and therefore profitability, so relaying progress to the market in my opinion will be a pre-requisite to regaining some confidence from the market.
This leads to my third point and that being improving the stream of flow of news to the market. This is something others have commented on particularly in regards the release of exploration results which seem to only come out around the time of the quarterlies, and as has been happening, the positive exploration results are snuffed out by bad quarterly results.
The fourth point would be to get out of Brisbane and head back to Orange or at least somewhere close to the action. This would save funds in leasing costs, get management closer to the projects and staff, and build better relationships within the workforce and inter-related companies.
And finally, the Board needs a lesson in what it means to be working for the shareholders. The Dragues purchase, the scrapping of the dividend, the assertion it will fund Federation from within, then the apparent leak that it can't, all point to a Board distancing itself from it's own investors.
These are big hurdles to over come. The problem is the Board put many of those hurdles in front of themselves which now leads to the question, do they have the expertise to overcome them. First thing to do is recognize their own failings and if they can't do that, we are in serious trouble.
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