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Examining the insider selling case, page-2

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285 Posts.

29

06/10/17

10:53

Post #: 27707067
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Originally posted by kojak78 ↑

As this is something that is brought up again and again I asked myself what the facts really do say.

Remember, back in December 2016 Troy announced John Jones selling 1m shares (via Warrigal) and only two days after that announced the pit wall collapse.

Timetable
1. Early November 2016: Grimwade gives verbal clearance to Jones to sell shares
2. 17-23 November 2016: John Jones sells 2m shares in a blackout period according to Troy's policy: within two weeks of the annual general meeting without having written clearance
3. The selling triggers a dispute, John Jones stops selling any Troy shares.
4. 07/12/16: After the blackout period (when no approval is needed) John Jones sells 150k shares
5. 08/12/16, 1am Perth time: Ken Nilsson (who got "fired" from active management on 05/09/16 with and was to be on-site less frequently until end of year) arrives at Karouni
6. 08/12/16: John Jones sells 850k shares
7. 13/12/16: Troy announces the change in interest to the market
8. 14/12/16: Troy makes a statement regarding the policy and the selling of the first 2m shares
9. 15/12/16: Troy announces the pit wall collapse

John Jones has clearly violated the blackout period when he sold the first 2m shares. He would have needed written approval, but only had verbal clearance. It is not nice, but such mistakes happen. Especially as the verbal clearance is meaningless. What is it for? Either you are in blackout period or not. You do need either written clearance or no clearance at all. To me it seems the verbal clearance by Grimwade just created a confusing situation and he is to blame as much as John Jones.
Also keep in mind he sold for 30.7c. After the annual meeting, when he could have sold out of the blackout period, the share price was hovering between 29c and 31c for 5 trading days.

Note that John Jones did not sell shares until that situation was cleared and Troy reinforced the policy.

Then we have the insider case: 07/12 + 08/12. As Ken Nilsson was not on-site before the 8th there is no way the 150k shares are insider selling.
The we have December 8th. Here we could make a case for insider selling. Ken Nilsson could have had informed John Jones.
What proof do we have against that being the case?
1. 850k shares + 150k shares from the 7th (where we can be sure no insider selling was involved) = 1m shares, very likely two parts of the same order
2. Only 850k shares sold, if insider selling as a reaction to the wall collapse he would have sold more
3. The same price received (27c) for the shares on December 7th and 8th, if insider selling he would have been glad to sell at a lower price (where he could have sold more volume)
4. He did not sell shares after December 8th. Troy announced the pit wall collapse only on December 15th. If insider selling he would have sold on more days.

It seems he had a very good reason to sell: Ken was "fired" from active management, Purvis executed the very large placement and got more institutional investors on board, the Purvis-team tried to be much more aggressive at the operational front. He also needed cash for his other ventures. All he did was trying to sell 3m shares as soon as possible and assuming the verbal clearance was enough. Whenever necessary he paused the selling. His sole mistake was to trust verbal clearance was enough.

As you can see the timing of news releases was very very unfortunate. For the casual observer it did look like insider selling. The institutional investors lost trust in management because there was an incident that looked like insider selling just after another event if similar nature followed by the wall collapse. And institutional investor had just put in a huge chunk of money.

The real mistakes that have been made:
1. Grimwade gave verbal clearance. That just created confusion as either written clearane is needed or none.
2. Purvis tried to wrestle operational control from Ken Nilsson in order to be much more aggressive and did a very dilutive capital raise.

The results are in:
1. Lost goodwill to participate in any new capital raise.
2. Nearly complete loss of trust of institutional investors.
3. Triggered the wall collapse with loss of production for 9 months.

Time to wake up, these guys have left. John Jones is not guilty of insider selling at all. Ken Nilsson got fired from active on-site management for minor issues that can and will happen (the mill issues and wet June quarter with fleet remobilization). "Issues" - when we compare to what followed after that... no issues at all. In contrast to the situation Purvis created with his General Manager - Operations, directly reporting to the MD.

We essentially have new management.

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And a case of delusional confidence

TRY Price at posting: 9.9¢ Sentiment: None Disclosure: Not Held
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