In fact it is worth re posting KAT55's analysis of June 20th. It gives clear insights into what has been happening. Cash outflows another $7m this quarter!
Since the Mt Marion transaction where significant funds were received
Share buy- back – This is what companies do when they can’t find any growth opportunities to use their balance sheet for. I thought they had plenty? Cash balance down by $6.2M. This benefits those who are selling stock (see point 3)
Dividends paid– This is what companies do when they have mature assets that generate consistent cashflow and they have established a good balance sheet to fund future opportunities. Cash balance down by $27.5m. Dividends to Directors nearly $4m . It’s headlined as a growth company after all -they are not RIO or BHP!
Directors sales of shares $8.4m
My comments are these
Why would you compromise what was once a healthy balance sheet with cash of $75m (most growth companies would kill for this cash balance) by removing $33m if you believed your own growth story and needed at some point to provide a significant equity portion of project funding for their grab bag of huge capex projects? Barrambi, LiOH . Neither stack up in my view or will likely get off the ground. If by some chance either get off the ground they will have to raise significant amounts of money by issuing new shares- further dilution and to who?
Mt Marion was their only decent potential cash generator and asset, they now have only a 13.7% stake which they also tried to sell (more special dividends?).
Directors have consistently sold stock with the last tranche of $4.2m being done at 35c -hardly a vote of confidence and, after having received significant dividends that should have remained on the balance sheet to fund growth.
I can’ t help thinking that this is all about redistribution of wealth. I will leave it to you to decide who the major beneficiaries are. Clearly there is little belief being demonstrated in the boards own growth story! Finally thanks to Grandpa1’s post we find out ( but not from the company) that they have lost a discovery action to provide documents around the Ganfeng transaction at Mt Marion . It’s worth carefully reading the courts comments here. I wonder if the buyers of the $4.2m worth of stock @35c knew about this action? Currently down nearly 20% https://ecourts.justice.wa.gov.au/e...s&id=67f05305-0255-481e-9a8a-a60f97987ff8
As I understand it the potential claim, should it get to court, is 2% of offtake going to Ganfeng – potentially a big number per annum + equity fee of 5% of the amount paid to them by Ganfeng for their shares in RIM. If it gets to court and is successful I wonder how the revenue from Mt Marion might be impacted?.Don’t forget some of the current directors oversaw the Meekatharra gold project ” adventure” in the not too distant past which vaporised $75M. Best to take some money off the table this time!
Leave it you to discuss.
NMT Price at posting:
29.8¢ Sentiment: Sell Disclosure: Not Held
