musings

Morning all,

Good to have the symbol back and I am still long AIM (almost 4 years now). However at the expense of being labelled ‘negative’ I think that there are a few things which are worth noting on this company.

1) The assumption that the company has reached ‘cash backing’ – agree that this assumption is correct in the event that the 80 Million was simply sitting in the bank and not already largely committed to pay for those long lead time items of machinery and plant. One cannot state that the company is at cash backing when in actual fact around 35 – 40 Million of this cash will exit the doors once these PPE items are invoiced and paid. I know that the items of machinery are worth far more now than what MF paid for them however in the event that the company was wound up these items would be sold quickly and I suspect you may find that salvage value would be a lot less than ‘prevailing market price’. I know …. This is a negative view however I think that to state the company is at around cash backing is actually incorrect.
2) The management shuffling appears to be less of a magnanimous action by MF and simply a diversion technique of sorts in response to NS pressure. How is this so you might ask? Well there are a couple of things that bring this to mind:

(a) When I was at the last AGM there was a fairly heated exchange between VB and the NS representative (actually the NS was one cool customer whilst VB looked like a cornered rat). In the heat of the moment VB stated something to the effect that NS had effectively stated that they would get rid of VB as the chairman of the company and kick him off the board (if there is anyone else in this forum that was there can I ask whether you remember the content of this little outburst?). Anyway, I look at the relegation of VB to the post of non-executive director as being an attempt to half-placate NS.
(b) More interestingly I look at the ‘ascension’ of MF to the post of non-executive chairman and I sense this is a two edged manoeuvre to firstly satisfy NS’s demands for a change in management (now MF has little if any involvement in the operational management of AIM and effectively becomes a figurehead). Secondly (and I must preface this with the disclaimer that this is VERY speculative at best) perhaps stepping into a non-executive role is a pre-emptive move by MF. How so? Well assume for a second that NS do get the books to the company open, and assume that the executive members of the board in their capacity of AIM employees have exhibited either gross negligence or wilful misappropriation of company funds. Such findings would be effective grounds for termination under most employee contracts. By shuffling MF into a non-executive role with the company he no longer is an employee of AIM but rather is contracted to AIM as a board member. Therefore the only way he could be removed is by vote at AGM and EGM (which both of which are likely to be a fair way off). I don’t know about this second possible motivation however given the performance rights debacle I wouldn’t be surprised if this movement has simply been an a$$ covering exercise.

Having said all this though, having MF in the position of chairman and well out of the way of the operation of the company this is the best possible outcome. I think everyone can more or less agree that the company needs strong leadership (which might I add I hope Billy the Kid is VERY temporary as he was less than impressive at the AGM) and that MF is not able to offer this. However by cleaning out the entire board we run the risk of lack of business continuity. Think about it for a second. New NS endorsed ladies and gents settle in their chairs. We would be sitting here expecting wonderful things to happen right away … the reality is, however, that the new management would spend at least 6 months trying to get their head around this company (it is not a conventional operation to say the least) and this would subsequently lead to further delays in Perkoa and associated projects. Not to mention jeopardising the relationships with the BF govt which from what I have heard are largely extensions of MF’s personal relationships. I think the way forward here is to keep MF as non-executive chairman and terminate VB and Billy the Kid immediately. Keep MF on board till Perkoa is producing cashflow and then terminate him and replace with someone else. Furthermore I would suggest that someone like that Scott Lowe should be leading the charge from an operational perspective (he seems to have some idea of what he is doing despite the complete box-cut-balls-up.

3) Interesting that the company hasn’t made any announcements about the commencement of drilling at Mumbwa. Usually they come out all guns blazing as soon as MF opens a fridge with announcements. I hope they have started … can anyone confirm that may have spoken with the company? Either way, Mumbwa is pie in the sky at the moment and whilst it will more than likely give the price a bit of a shove we have some MAJOR issues with the company in terms of pending court action and dubious management (not to mention the failure of the box cut). I attribute zero value to this project at the moment in light of the bucket load of issues.

4) Where are our Perkoa assay results? Waiting …. Waiting …. Waiting.

All in all this company will return to it’s pre-meltdown levels over the course of this year assuming that this court action doesn’t bleed the company dry and assuming that the management pull their collective fingers out. I get the impression that there is nothing going on behind the scenes at the moment (the quarterly report was evidence of this). I hope I am wrong. Will watch and hold though.

Hopefully won’t get the forum closed down with these comments ….

Please DYOR