Let’s have a fresh look at the agenda for the AGM – as it seems there is a lot of emotion out there and this generally means it is worth reviewing in detail.
But before I do, I recommend that all those who have a concern simply contact RM (as I did) or the company to real information and not make decisions on Chinese Whispers…
Anyway, here is my view:
Share consolidation
I think we have a record number of shares on issue for an ASX company. So why wouldn’t the company consolidate and make the company more attractive for international and institutional investors (which in turn is great for us!). It also appears that now is quite an appropriate time to do so i.e. clean it up before the Appeal judgment. They were asked at the AGM and the company was ‘frank’ and said it was a likely event in the future.
How anyone thinks this is a negative transaction is beyond me. We still have the same % holding in the company it is just a change of number of shares but an equivalent increase in the share price. If there is some fluctuation in the short term then so be it but it cannot be anything significant at all. Those that suggest so are not thinking clearly.
Issue of options to Neil Gardyne Investments
These are the options that were cancelled from the RM related party transaction from participating in placements. I think this is really irrelevant for any real discussion (and definitely not to get upset about). Look back, the vast majority of Axiom’s placements are done at the current share at the time or at a premium. Just about every company on the ASX does their placements at a discount or deep discount. So I really don’t think there is anything to be concerned about here. I participated in many of the placements and would be pissed if the company then came back a year later and said “sorry, there is an oversight and we have to cancel all your options.” I for one am glad we raised the money back then even if a related party as I doubt we would be around now.
CEO Package
I’ve seen some posts here comparing his proposed package to other Aussie nickel miners which at first glance one would say this is a reasonable way to go about it. But if you look closer you will see these are not real comparisons. Do any of those other nickel explorers/miners have an ore body the size of the Isabel Nickel Deposit? NO. Do they operate in a third world country ? mostly NO. but if they do does their CEO have to reside their ? NO.
We are all upset about the share price performance but let’s get real here: We have a MASSIVE deposit. We want to protect it and develop it. What should we do? Is there an experienced mining executive that is prepared to relocate to Solomon Islands, take his/her family there too (doubt it with malaria, Dengue, Typhoid and hepatitis, all, rife) speaks the language fluently and is on a first name basis and friends with government and the community leaders?
Or let’s look at it this way i.e. Do you think Sumitomo, INCO, Kaiser, Clive Palmer or even the legendary Norm Seckol made any money out of the Isabel nickel deposits? NO. They are mostly considered some of the best in mining. Yet they spent much more than we have and achieved less. Interesting they also had their Top Dog/CEO operating, comfortably, from a city in Australia, Asia or Canada. All of these company’s/investors refused to spend all of their time with the community and live in Solomon Islands and therefore could not secure the project. They are paid much more than what we have had put to us for our CEO and yet they still were not prepared to live there!
Let’s look at another example: Saint Barbara paid $500m to buy the Gold Ridge mine. A producing mine providing 20% of the Solomon Islands’ GDP. Saint Barbara thought they could simply buy an asset in Solomon Islands, believing they are worth a lot to the Solomons economy and could run it from Melbourne. WRONG. Over the following two years, the landowners and government prevented the mine to operate freely and eventually Saint Barabra bailed because it all got too hard – this all without any competitor taking legal action, full and clear legal title over the mine etc etc. This is not to say they didn’t have key personnel in Solomons but these personnel simply could not ‘connect’ with the locals.
RM informed me that this year Westpac announced they are leaving the Solomons after 20years in the country and Cable & Wireless again after 20yrs has sold out of Solomon Telecom. The larger companies are all leaving Solomons because their global model does not work.
If you think we can just rely on a Court of Appeal judgment, think again! Have a look at all the major High Court/Court of Appeal civil litigation matters. The Solomon Islands does not have a track record of delivered on court orders. E.g. The Russel Islands Palm Oil Plantation – The largest palm oil plantation in the southern hemisphere lies dormant in Solomons even though we would all think the Solomons desperately would need its revenue. The owner won a $100m + claim against individuals and the government. The government still refused to acknowledge the High Court and Court of Appeal orders in the owners favour. Then the more the owner pushed the more it got worse. Then eventually the owner was deported (sounds familiar???....Saint Barbara!). The fact is that you must be accepted by the locals and that RM tells me is to genuinely respect their culture.
Operating in Solomons is unique and as such we need a unique solution. If you think we can someone else to deliver this mine then we should find them quickly.
I run and majority own a national business that is about to move into international markets. If I had a CEO to run it for me I would easily give him the same package (probably more equity). However I would have my kids live in Honiara with limited education services, poor hospitals and dengue and malaria outbreaks.
RM is off contract, has spent four years there, says he wants to ensure the next hearing happens along with judgment for long term shareholders (seemed quite sympathetic to SH’s, directly mentioning the length of the trial) but needs to consider other things if he is to commit for another four to five years. Let’s not let our immediate frustrations create a situation where we fall at the last hurdle (we would be playing into Sumitomo’s hands).
Other
As to dilution, poor share price etc. Let’s just remember since judgment (which was really mid of Oct when we had to deal with another SMM attempt at an injunction) we have commenced drilling, got stellar results, meet with key government leaders, prasied by the community in church services and the like, finally got an appeal date (not in the company’s control) and got Anitua as one of our largest shareholders (I didn’t see that deal coming but must say it looks very strategic). We have done alright……plus……….we have $5m in costs to be released to us…….AND….a damages claim which could be absolutely massive (and offset the dilution).
Stay focused everyone.
Expand
