http://www.smh.com.au/business/paperlinx-cuts-sting-as-ing-applies-pre METALLICA Minerals clearly needs to get chairman David Barwick to get his managers the same brokerage rates on share sales that he seems to be getting.
Within the long and complex explanation for the company's (largely non-cash) $8.2 million loss for the December half was the revelation that selling 15.7 million of its shares in MetroCoal had cost it more than $200,000 in brokerage.
The total receipts for the share sales were $7.78 million, which means the brokerage rate was about 2.5 per cent - pretty generous in these times. Metallica also lost $1.5 million on the sales because they were priced below the carrying value of the shares.
Insider tried to reach managing director Andrew Gillies and chief financial officer John Haley to check whether that number was correct, but both were travelling.
What was even more intriguing was that the bulk of the shares sold, 9 million, were done in an off-market sale at 50¢ a share to China's Dadi Engineering Development, which had only recently taken up a $24 million placement in the coal group at 75¢ a share. Off-market sales ought not to attract much brokerage.
By contrast, when Barwick sold his 209,000 Metallica shares in February in a $67,000 deal, for the odd reasons of maintaining his independence as chairman and conforming to his family trust's rules, his brokerage costs were barely 1 per cent. And they say that it is cheaper to deal in bulk.
The sale to Dadi was also done on January 5, which is after balance date, but perhaps Metallica decided that it was tidier to do it all at once.
It also wrote down the value of its remaining 30.7 per cent stake in MetroCoal by $3.2 million, which should be helpful next time it sells some stock. The benefit for Metallica investors is that the adjustments to MetroCoal cut by $2.5 million the $16.5 million in deferred tax liabilities it was carrying on the stake.
The other contributors to Metallica's losses were also largely the result of shuffling shareholdings in associates. It took a $3.3 million hit as a loss on disposal of shares in Planet Metals, when the stock was actually removed from Metallica's hands via a capital raising that offered its investors one new share and two shares in Planet for every 10 Metallica shares already owned.
With all that re-arrangement of its equity investments, the accounts show that Metallica spent a mere $30,000 on exploration and evaluation, compared with almost $300,000 in the same period of 2010.ssure-20120312-1uwec.html
MTE Price at posting:
45.0¢ Sentiment: ST Buy Disclosure: Held
