We don’t need to tell you JRV is mismanaged. You can tell by the way the share price has fallen from
$1.52 to $0.05 over the last 8 years; by the way the value of your investment has collapsed; by the way management relentlessly diluted our shares so badly the ASX had to force a 100:1 reverse split; by the way they’re now back to diluting us again, which has resulted in more than four-‐fifths (4/5) of JRV’s shareholders now holding so-‐called “unmarketable parcels,” which are effectively worthless.
We don’t need to tell you that while the share price has collapsed, the 3-‐man Board continues to draw nice pay packages, receiving more than $525,000 in 2014 and $485,000 in 2015.
No, we are writing you today because JRV management’s latest shenanigans are simply intolerable.
Make no mistake: my company believes in JRV’s scandium project—so much so in fact that over the last 17 months we have tried to work with JRV management to fund putting it into production.
Over the last 5 years SDI has conducted a great deal of market research regarding scandium. We have talked with nearly two dozen scandium end-‐users to determine what they need to see before they would commit to the widespread use of scandium oxide, the marketable scandium product.
This research has resulted in advanced discussions with two companies regarding pre-‐paid off-‐take agreements to help reduce the cost of putting JRV’s project into production; and a third company is interested in providing a US $20 m development round funding facility.
SDI has offered to underwrite a rights issue within JRV to put the project into production.
We also offered to purchase the project for a fixed sum and a net smelter royalty superior to that JRV received from the sale of their Nyngan scandium project in 2012 and developing it independently.
JRV management has chosen not to release any of this information to the market.
But the actions of the Board regarding the recent rights issue have convinced us they must be removed because they clearly no longer act in their shareholders best interest.
On 23/6/2015, JRV sent us an unsolicited email offering SDI 5 m shares of JRV at 10¢ each as well as a seat on the Board. With the shares trading at 4.9¢and the 30-‐day moving average at 5.1¢, we offered to buy 10 m shares at 5¢, which would provide JRV with the $500,000 it was seeking.
Management stated the offer was non-‐negotiable, but turned around on 6/8/2015 and announced a non-‐renounceable 1 for 2 rights issue seeking to place as many as 32.8 m new JRV shares at 5¢ with existing shareholders to raise as much as $1.64 m to sustain operations. Shareholders taking up their full allotment would qualify to purchase unsold shares from the attendant Shortfall Offering.
SDI took up its full allotment. On 31/8/2015 JRV announced it had sold 8.8 m shares, raising
$440,179, resulting in a shortfall of 23.8 m shares, so on 2/10/2015 SDI applied to purchase 18 m shortfall shares, which would not be a controlling interest, and tried to transfer $900,000 to JRV.
JRV refused our funds and over the next month in numerous emails evaded placing the shares with us.
Then on 6/11/2015 JRV announced that it was buying a collection of exploration licenses from Explaurum Ltd (EXU) with 11.1 m of the Shortfall shares.
JRV lacks the funds to develop any of its existing projects. In this environment, why would management turn down $900,000 in cash in favor of taking on new liabilities?
The Offering Document stated funds raised were to sustain operations, not to make new acquisitions. JRV did not disclose that the MD of EXU, John J. Lawton, is JRV’s 14th largest shareholder. Further, EXU stated the sale of non-‐core assets would enable them to progress the drilling and metallurgical test work programs at its Tampia Hills gold project. With no ‘lock-‐up’ period on the JRV shares and less than $400,000 to fund operations, EXU is free to sell the 11.1 m JRV shares at any time—to put that number in perspective, 11.1 m shares is roughly the number of JRV shares traded in the first half of 2015.
Whether political or bad management, the purchase is not in the best interest of JRV shareholders because instead of raising money to sustain operations as stated in the Offering Document is spends JRV equity to assume additional liabilities.
My company, SDI, filed a complaint with ASIC on 9/11/2015. We are preparing to file with the ASX, and we are trying to bring the situation to the attention of the financial press.
We are also coordinating efforts to remove the Board of JRV.
What you can do to help us is to call or email me to discuss the matter and/or to pledge your support in principle to remove the Board of JRV. It will cost you nothing and takes little time.
If we garner sufficient support, we will demand an Extraordinary Shareholder Meeting, distribute a clear explanation of what we propose, and you would then be asked to vote electronically or by mail.
SDI can affect positive change at JRV, which will likely be reflected in its share price. Please support our efforts to turn the company around.
Kind regards,
Richard Karn
CEO, Scandium Developments International Pty Ltd
JRV Price at posting:
4.7¢ Sentiment: Buy Disclosure: Held
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