consolidation & other issues, page-38

re: opinions, opinions, et al I would not touch MSC with a barge pole. Management finds new ways to fleece the new investors. The following is a long list of questions and answers from the man who should know. read these and make up your own mind. I have given up on this company (after major losses I might add). Excuse after Excuse - always the fault of someone else!!! They even wish the kiln was setup as two small kilns - maybe the big one costs an arm and a leg to run!!!


11/10/04
Questions:

Hope your trip to China has been a huge success and you have come back either with a tie-up with an existing Kaolin producer or with substantial orders for SRKP production.

How is the calcined Kaolin production run going ? We have not heard or seen any announcement on this aspect as yet. I tried to catch up with your production manager Ian but he was away at plant site (hope nothing has gone wrong !!!).

I have subscribed to the new options and am patiently waiting for my shares to start moving in positive territory soon.

Answers:

Our China kaolin strategy is progressing nicely and will be very valuable to us if plans can be successfully brought to fruition; no guarantees in the middle kingdom. The calcined production went well after some initial tuning teething problems. Kilns act this way until the energy quotient balances to the feed rate. The bigger the kiln the greater the challenge! What a pity AKL had not installed 2 small kilns, however we have it under control. I am pleased your have maintained your shareholding and hope this proves very profitable medium term.

17/09/04
Question:

Why is share price always going Down:

Answer:
It is clearly very aggravating that we still see our ex director dumping his client shares on the market. We thought this process would exhaust itself some weeks back, but it appears he has persuaded his last 2 large clients to sell as well which frankly surprises us as we thought they were more commercially aware and would at least check with company first before selling at a loss. Nevertheless we still feel the best course is for his clients to exit. Unfortunately being in London makes it difficult to rustle up counter buyers at this time. The shares are now at a silly price.
We are preparing a senior London industrial minerals analyst report on the company which will carry a lot of weight with institutions and he has been to site and is very positive on our prospects. We are hiring some top engineering people from the industry as well. It is frustrating indeed that the word within the industry is very positive on us when the Aussie market price gets hammered. We soldier on. By the way, I think you will not regret retaining your shares. If I was concerned I would have sold mine too. Unfortunately I dont have spare cash to buy in at bargain prices as I am taking up my options.

19/08/04

Question:

It looks like that market is taking no notice of your projections / research reports etc etc. and there is a real perception of credibility gap here. I have researched your ASX announcements going back to 2002 and not even once, the company has met its own projections. There is always some kind of delay or the other.

Given that you have employed some experienced personnel (presumably knowing quite a bit about kaolin), they must have some estimates about the time it will take to bring something into production. Take the bagging machine, for example, your ASX announcement mentioned that it will be operational by End July 2004 and as yet no word about what happened or is happening.

I understand that it takes quite an effort to bring a project of this size into production but that does not take away the management responsibility about giving credible estimates and dates.

I hope this is the last time and last hurdle for the project. Either the current management shapes up and gets its act together or otherwise someone else will do it (always happen when the company is most vulnerable).

Answer:

I certainly appreciate the tone of your email as I agree we have had too many delays. A number of these were certainly outside our control and I do not hold our people responsible and indeed they worked very hard to catch up. However we have had other delays which have frustrated the directors as we feel a better outcome should have been forthcoming notwithstanding we have a lean organization at this stage of our development and getting things done on remote sites is always difficult and is fraught with delays if not very well planned in advance. It only takes 1 missed barge run for essential deliveries to put us way off target. Having therefore decided to tighten up on the engineering management side we have, over the last few months, been headhunting for a kaolin experienced senior person to operate at site to ensure we hit targets instead of missing them. I am pleased with the quality of candidates we have identified and hopefully this very senior position can be filled net quarter.


29/07/04

Question:
What happened to China Construction Materials investment? There was no mention of it in your quarterly review. Are you still going ahead with this $2.5 M investment ?

Please be consistent in your ASX announcements. No wonder different people interpret your annoucements to mean that all is not well in your camp and start dumping shares at any price.


Answer:

In general, I quite agree with your comments, however we decided not to mention it in the quarterly as we are still in process of due diligence therefore it is in reality up in the air. We hit a few snags early in the piece which the local government have solved for us but we have further points which we need to clear before we undertake any risks including the discovery that the current owner is in default with taxes, not uncommon in China, so we move step by step. Until all significant hurdles are overcome we will not invest. In theory we could announce a deferral but it would probably cause more confusion and we prefer to make a definite announcement hopefully fairly soon verses a mixed message one now.


16/07/04

Question:
One thing that puzzles me very much is that

- The Australian sharemarket is hitting new highs every day
- MSC (as you say in your email) is on the cusp of great things. All outstanding issues have been resolved or are close to being resolved
- The new venture in China is about to be signed and will produce early cashflows

Then why on earth the shareprice of MSC is always heading South. IN last three months, it has lost approx 40% of its value.

Could you please shed some light on this issue. The explanation that one of ex director is selling does not seem very plausible all the time (who wants to throw away money anyway). My main worry is that MSC is showing the same symptons as per HIH before its eventual demise.


Answer:

We are also very concerned about the poor share price. Basically the sequence has been; about 30% of all share sales since February have been from our ex director clients at ABN AMRO, this can be checked by your broker. This is a very large slab of shares to be absorbed. These holdings are now virtually all zero bar a few clients who would not sell. With a weak share price the coy was a definite year end tax selling candidate. The bagging machine delay added to negative sentiment and I learn after my recovery from my emergency operation that a number of shareholders had rang the office in a panic and had sold their shares. I would have thought that any prospects of my immediate demise would have given the share price a good boost. Anyhow, in a more serious vein the coy is making steady progress with its jobs in hand and we shall do an update announcement shortly once a new contract has been signed and can be announced.
With respects to HIH, the MSC Balance sheet is stuffed full of hard good quality independently valued assets. All our "hollow logs" have been written off. Nor do we have any write offs looming as a result of moving to International accounting standards


08/04/04

Question:

a) Why shareholders are dumping shares in your company at any price contrary to your assertions that all is well?.

b) Why there has been no annoucement regarding bulk shipments commencing and cash flowing into company coffers?

c) Why are you giving details to ASX in dribs and drabs ? Dont you have an overall plan even for the next few months ?

Answer:


I have only returned from overseas this w/end. We have a very large shareholder that has been aggressively selling out to start a new business in Taiwan. Bad timing for us but I think they are about cleared out. ASX announcements are made as events occur. The barge delivery was delayed to avert a late cyclone but it arrived in good shape. I will catch up with ASX announcements this week. I can assure you the coy is in very good shape and sales plans are on track. I have been successful in getting 2 well regarded London brokers who are very keen to get to know the stock with a view to becoming active in our stock once the London analyst has prepared his report. I think this will very much help in gaining a proper market price on our stock. At least UK brokers are well aware of industrial minerals and kaolin in particular whereas Australian brokers usually have never heard of the mineral and in many instances have asked me how to spell it. To be fair I think Aussie brokers are quite expert in coal, iron ore and (sometimes) gold.


12/03/04

Question:

I have read your ASX lodged 'Letter to Shareholders' and am encouraged to read that Minerals Corp is making some progress in regards to Kaolin project. As you have stated that SRKP is your main priority, I am intrigued about your motives regarding starting a new quarry operation in China. My thinking is that the whole management time should be spent in getting SRKP to a cash flow +ve footing before undertaking any more capital soaking initiative. It has been quite a while waiting for the shareprice to go up (in fact it has drifted sideways and downwards) and am bit disheartned to know that you have managed to secure the sale of only 8000 tonnes as compared to your projection of 30,000 tonnes needed for the cash flow breakeven. Could you please throw some more light on the progress of sales.


Answer

I have read your ASX lodged 'Letter to Shareholders' and am encouraged to read that Minerals Corp is making some progress in regards to Kaolin project. As you have stated that SRKP is your main priority, I am intrigued about your motives regarding starting a new quarry operation in China. My thinking is that the whole management time should be spent in getting SRKP to a cash flow +ve footing before undertaking any more capital soaking initiative. It has been quite a while waiting for the shareprice to go up (in fact it has drifted sideways and downwards) and am bit disheartned to know that you have managed to secure the sale of only 8000 tonnes as compared to your projection of 30,000 tonnes needed for the cash flow breakeven. Could you please throw some more light on the progress of sales.