Let’s hope there is a good result for shareholders post this news around Glencore
Not withstand my ignorance and uninfluential position at the time - I tried back in Jan 2020 rightly or wrongly
Email I sent to Administrators in Jan 2020 (not an experts point of view, so may contain some errors, or misunderstanding, etc)
‘Dear voluntary administration team, (I also opposed the transfer of shares for nil consideration to the DA)I strongly oppose the section 444GA and the transfer of my A40 (ASX) shareholding (XXXshares) for NIL consideration
I note that a price per share held in any company cannot be valued at 'ZERO' (no quantity or number; naught; the figure 0)as the value of an asset(s) held by an entity is ever changing and the method of determining a company's value has to be done independently and objectively by a registered accounting practice determined by the courts or an arbitration tribunal and should take into consideration a 10-15 year market look ahead, future value (FV), product specification (A40 produces >SC6, low impurities and iron content), plant production capacity, tenement resource exploration progress and its potential to increase the Life of Mine (LOM), low strip ratio, and among other factors which I believe has not accurately been taken into consideration in the calculation of company value
To further demonstrate the future value of the market which I believe the below are some published graphs indicating market look ahead and it can be seen that this is an opportunistic and 'parasitic'acquisition (attempted takeover) to the detriment of current shareholders
After reading the experts report I have found some major concerns into the valuations of the company.
According to table 4.4 on Srk's valuation report it states that transaction 1 involving the sale of kidman resources 50% owned earl grey resource to Wesfarmers.
This information collected by the kidman resources Annual shareholders report.
the proved 54.4 Million tons
The probable 39.8 millions tons
Making a total maiden ore reserve of 94.2 Million tons at 1.5% contained lithium.
Therefore equals 1,413,000 tons of contained lithium
Divided by the transaction price $745.32 Million dollars gives a cost per ton price of $527 or near abouts to srk's $524 per ton.
Now my understanding is Wesfarmers have agreed to pay $524 per ton for 50% ownership of the earl grey resource.
Therefore the total value of the earl grey resource should be potential double that at $1048 per ton.
I believe this information has not been taken into account.
Allowing a price per ton ofalitaresources at $1048 or less 40% strategic investment premium for $628.8.
Prices are also expected to increase for both lithium hydroxide and carbonate between 2020 to 2025 as lithium demand is forecast to surpass supply
Given the groups model of 4.1Million tons maiden resource at 0.87% contained lithium equals 35,670 tons giving the company a value of $22.4 million dollars instead of the $11.2 Million dollars quoted by srk's independent report.
It appears that the latest drill program results have not been included in the expert's report which requires clarity from the courts
A section fromAlitaresources quarterly activities report announcement released on the 25th of July 2019 stated that,
"Exploration Drilling continued throughout the quarter with the completion of about 14,758m of RC drilling and 2,197m of diamond core drilling. About 75% of the completed drilling was for infill and sterilization purposes. The eastern and southern portions of the current inferred mineral resource have now been substantially infilled drilled. Limited step out extensional drilling has been successful in increasing the footprint of known pegmatites. About half of the extensional holes are pending assay and a detailed exploration update is expected to be completed by August 2019."
I therefore firmly believe that these results which have been completed but not included within the experts report are directly of significance to the company's value as the drill program consistent with mostly infill drilling.
Therefore would increase our maiden resource from 4.1 Million tons of the currently estimated 26 million tons.
I do believe that if these results are not included
It does not represent true company value therefore have unfairly prejudice the shareholders.
Another fundamental question that should be asked is...'why would an entity want to acquire a company that has zero future profit earning potential?
My answer: I believe its because they see 'short term pain' (debt burden, cost/per ton, liquid cashflow), but 'long term gain' (increase in LOM, increasing profits and revenue, increasing lithium battery demand, improving Loan to Value Ratio) and therefore I believe current shareholders are adversely affected and prejudiced in this transfer of shares at NIL consideration.
Apart from the error in the company valuation, I believe that inadequate opportunity was offered to shareholders for an appropriate strategy to be put in place, that was ensured by the 'board' to improve the debt burden and cashflow
I would like this information to be heard at the court hearing.
Kind regards,‘
