@manny100They have (ambiguously) made undertakings to return the majority of cash back to shareholders in announcements, but;
My apologies for the repetitive nature of this post, it is to highlight from when the Company started making statements and how many times the Company have made the statement of returning the majority of cash back to shareholders, distributing the Leo Lithium shares and the remaining cash back.
You will note that it is mentioned not only in regulative reports but also Managing Director, Chairman and Shareholder updates.
Also note the subtle changes to wording as it has evolved!
I also apologise for the length of this post as well, its serves another purpose of putting the information in one place (rather than scattered over spreadsheets) that will or may be used at a later date.
Managing Directors Letter to Shareholders - 14th December 2022 ++ And it all started here .. .. .. .. ..
The Board has decided to commence a strategic review process that will invite suitable bidders to submit proposals to the Company that deliver compelling value and liquidity to FFX shareholders ("Process"). The Company has engaged Treadstone Resource Partners to assist with the process.
"If the Process does not result in a transaction that delivers attractive value and liquidity to FFX shareholders, the Company
intends to return a majority of its cash to shareholders as soon as possible post termination of the process. Following the return of the majority of current cash to shareholders FFX
will then distribute all LLL shares currently held to FFX shareholders when they are released from the escrow in June as per ASX requirements."
https://announcements.asx.com.au/asxpdf/20221214/pdf/45jsy9f1vw54bs.pdf
Cash / cash equivalentsA$54.5m -
30th September 2022 Quarterly Report ++ Corporate: Cash and cash equivalents available of A$54.5 million at 30 September 2022 (including A$8.2 million gold in transit)
++ Cash component
A$46.3 millionhttps://announcements.asx.com.au/asxpdf/20221027/pdf/45gw25d7686lr2.pdfQuarterly Activity Report for Period Ending 31 December 2022
"If the Process does not result in a transaction that delivers attractive value and liquidity to FFX shareholders, the Company
intends to return a majority of its cash to shareholders as soon as possible post termination of the process. Following the return of the majority of current cash to shareholders FFX
will then distribute all LLL shares currently held to FFX shareholders when they are released from the escrow in June as per ASX requirements."
Cash / cash equivalents at end of quarter
A$37.9 million, Interest received A$143,000, ** no corporate costs were reported ? ? ?https://announcements.asx.com.au/asxpdf/20230130/pdf/45l2p3cspwz44x.pdfShareholder Update - 23rd March 2023
"(sic) ... If it becomes apparent that there is no reasonable prospects of a successful transaction
within a suitable timeframe, then the Company will terminate the Process and
look to return a majority of the current cash to FFX shareholders as soon as possible thereafter." Following the return of the majority of current cash to shareholders FFX
will then distribute all Leo Lithium Limited ("Leo") shares currently held when they are released from the escrow in June 2024 as per ASX requirements."
https://announcements.asx.com.au/asxpdf/20230321/pdf/45mwqhb8pkxg9h.pdf++ Cash / cash equivalents at 20th March 2023
A$36.8 million & A$96 million (value of LLL Shares)
Quarterly Activity Report for period ending 31st March 2023
"If it becomes apparent that there is no reasonable prospects of a successful transaction
within a suitable timeframe, then the Company will terminate the Process and
look to return a majority of the current cash to FFX shareholders as soon as possible thereafter." Following the return of the majority of current cash to shareholders FFX
will then distribute all Leo Lithium Limited ("Leo") shares currently held when they are released from the escrow in June 2024 as per ASX requirements."
++ Cash / cash equivalents
A$36 million & A$105 million (value of LLL shares), Interest received
A$317,000, Corporate Costs
A$2.2 millionhttps://announcements.asx.com.au/asxpdf/20230428/pdf/45p5k3cp7wmsr0.pdf
Shareholder Update - 30th June 2023
The objective of the Board of Firefinch is to conclude these negotiations and announce a binding transaction during this coming quarter, Q3 2023.
In the event that the Process fails to deliver a binding agreement, then Firefinch will commence the process of returning cash and Leo Lithium Limited (Leo Lithium) shares held by the Company ("Assets") to shareholders. This willbe undertaken by a return of the majority of current cash to FFX shareholders as soon as possible thereafter. Following the return of a majority of the current cash to FFX shareholders, FFX will then distribute to its shareholders all Leo Lithium shares currently held by FFX after they are released from ASX imposed escrow in June 2024 with any remaining cash. As at 29th June 2023, Firefinch assets include approximately
A$34.5m in cash together with ~210.9m Leo Lithium shares. In aggregate the assets worth approximately A$245m based on Leo Lithium's closing price of A$1.00/share on the 29 June 2023, which equates to A$0.208 per Firefinch shares. Should a return of assets occur, the Company may be delisted from the ASX.
The Company has already commenced the steps required to undertake a return of assets so there is no unnecessary delay in delivering this in the event the Process does not deliver an outcome. Currently, these steps relate primarily to the process to obtain a class ruling from the Australian Tax Office as to the tax treatment on the return of assets. Any return of Assets will require shareholder approval.
https://announcements.asx.com.au/asxpdf/20230630/pdf/05r4hv6lwvy4q5.pdfQuarterly Activities Report for period ending 30th June 2023
The content is basically the same as the previous shareholder update, no changes to the wording of cash / LLL share / assets.
++ Cash / cash equivalents
A$34.64m & A$258m (value of LLL shares), Interest
A$351,000, Corporate Costs
A$1.75mShareholder Update - 29th September 2023 -
this is my favourite of all of them as it was first compiled without being under the guidance of a experienced executive after Lowe departed - note the wording!
As previously reported, we have been working with advisors Treadstone Resource Partners and Gilbert + Tobin to assess corporate transaction options that deliver value to Firefinch shareholders plus the option of liquidity for those who want it.
"I'd like to reiterate if there is no reasonable prospect of a successful corporate transaction,
the company will start taking appropriate steps to return its assets (cash and Leo Lithium shares) to shareholders. To that end, we continue to work in parallel with our advisors
to determine the best way to distribute the assets."
General and administrative costs have been cut to the bare minimum. The issues we are dealing with, however, require significant legal input which is crucial to protect Firefinch's interests, is this the same legal input source that advised on the ability to walkout unscathed?
The Board recognises the frustration of shareholders due to the
drawn-out nature of this process, but we remain committed to delivering an outcome that is in the best interests of all shareholders. We thank you for your understanding.
Quarterly Activities Report for period ending 30th September 2023
The Company has been in active discussions with participants on the Process for a potential transaction that delivers value and liquidity to FFX shareholders, and has continued to work with the assistance of Treadstone Resource Partners and FFX's legal advisors, Gilbert + Tobin, to assess the potential transactions. Participants have been continuing to finalise their due diligence on the Company.
If it becomes apparent that there are no reasonable prospects of a successful transaction
within a suitable timeframe, the Company will terminate the Process and
look to returning cash to FFX shareholders as soon as possible thereafter. The Company is in the process of obtaining a class ruling from the Australian Tax Office as to the tax treatment on the return of assets. Following the return of cash to shareholders FFX
will then distribute Leo Lithium shares held by FFX shareholders when they are released from escrow in June 2024 as per ASX requirement,
and subject to their tax treatment as determined in the Australian Taxation Office ruling.
++ Cash / cash equivalents
A$33.5m + A$106m (Leo Lithium share value), Interest
A$512,000, Corporate Costs
A$1.64mhttps://announcements.asx.com.au/asxpdf/20231031/pdf/05wsvvyb6kt962.pdfQuarterly Activity Report for period ending 31st December 2023
As the quarter progressed and given the position of the Government, the Company ceased negotiations with participants in the Process. The Company has now stopped all expenditure other than required to maintain the corporate entity, its operation and dealings associated with the Government.
The Company
continues with the process of obtaining a class ruling from the Australian Taxation Office as to the tax treatment on the return of assets to Firefinch shareholders.
Subject to the outcome of the class ruling, shareholder approval, and the Leo shareholding coming out of escrow in June 2024, the Company
may then be in a position to distribute the Leo shares.++ cash / cash equivalents
A$33.5m + A$106M (Leo Lithium share value), Interest
A$401,000, Corporate Costs
A$404,000https://announcements.asx.com.au/asxpdf/20240122/pdf/05zn14chcgv2gk.pdfIt has been
15 1/2 months since the Company decided to cease funding and walk away from Morila and despite informing shareholders across multiple announcements with disclaimers, including the verbal (taped) assurances (from the 2023 AGM) Firefinch Limited Board and Management have continually reiterated that it is not a party to any agreements between Morila SA and its vendors and suppliers, nor is there any agreement between Firefinch and Morila SA that would require Firefinch to either continue to fund Morila SA , or meet its debts, or other liabilities.
It is obvious that the Malian Government had other ideas as to potential liabilities?, and the Company received correspondence from Mali Government on the 18th July 2023 (bear in mind this was only disclosed on the 3rd August 2023 after social media outlets were reporting as such) which included Morila SA's financial liabilities, environmental impact of the Morila Gold Mine and tailings, to which the Company engaged legal counsel for good faith meetings, this has now gone on for
over 7 months now. I do note that the Company took the opportunity at these good faith meetings to clarify a number of legal matters.
~ I would of thought it to be prudent that the Company (through their legal advisors) would have clarified all legal matters before being able to confidently walk away?
It has been
14 months since the Company commenced the Process when they engaged Treadstone Resource Partners to source and invite suitable bidders to offer a proposal that would deliver (compelling - depending on what announcement you reference) value and liquidity for FFX shareholders.
~ IMO there is an element of uncertainty in regards to the Process, as in, negotiations have ceased to mean terminated or on hold?
+ what the Company have inferred over this 14 month period is; that if a binding agreement wasn't reached in a suitable timeframe it would be terminated, but this didn't occur which begs to understand what the Company deems as a suitable timeframe? given that in the September 2023 Quarterly Activity Report the Company acknowledged that this has been a
drawn-out process but yet it was allowed to continued into the following quarter, which is contrary to what they have been indicating?
** Definition of drawn-out (Cambridge Dictionary) -
adjective - lasting longer than is usual or necessary,
** Synonyms; extended, lengthy, long (time), prolonged, protracted.
What is concerning (at least for me) is the wording changes; from returning majority of cash, distributing Leo Lithium shares and remaining cash to now be subject to ATO class rulings and
the Company may then be in a position to distribute the Leo Shares!
++ Once the Firefinch held Leo Lithium shares come out of escrow, Leo Lithium lose the current ownership transfer approval process and will have no control over their destination, Firefinch Limited shareholders don't now or will have any control over their destination either, other than relying on the Company honouring its undertaking to distribute them back to us shareholders.
++ Another group of words that slipped past my numb mind at the time, but have a little more relevance now;
"We continue to progress the business strategy where the key objective is managing risks to protect shareholder value in what is a dynamic and rapidly changing environment."
~~ obviously they thought of putting this in a shareholder update after selling the Leo Lithium shares that reduced shareholders intrinsic value with a staggering A$7.1 million loss after 5 trading days !!!
After (yes after) the Leo Lithium In-specie shares were distributed to Firefinch shareholders, the ATO handed down the class ruling
~
Case study return of capital;* 19th June 2023 Far Limited (ASX:FAR) announced its intention to seek shareholder approval for an equal share capital reduction without cancellation of shares.
* 12th July 2023, announced notice of general Meeting indicating record date (24th Augusts) and payment date (28th August)
* On the 18th August 2023, FAR shareholders approved the return of capital of $0.40 per share.
* 13th October 2023, FAR Limited announced the ATO Class ruling.
++ Point being, an efficient Company can have this completed in 2 months 1 week, what
suitable timeframe will we add for the board of Firefinch Limited to replicate a FAR Limited type of return of capital?
++ what does still have me perplexed, is when the Process started, why wasn't the majority of cash returned then? the only plus being that the interest it is currently now earning pays the bills without reducing the total cash asset.
Lastly, on one hand the Company has "already commenced the steps required to return assets back to shareholders" (30th June 2023) to "the company will
start taking the appropriate steps to return assets" (29th September 2023)
cheers
