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49.0¢ strategic minerals corporation nl

On infrastructure: a new mining lease was granted in January...

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7 Posts.

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30/09/20

15:36

Post #: 47744002
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Originally posted by goldnerd: ↑

Did anyone see the article in the AFR over the weekend. I thought the most interesting insights were from Chris Wallin himself. He made some comments which need to be explored further

"That's the reason why I've now gone over the 90 per cent; the other shareholders wouldn't put money in," said Mr Wallin, a former Queensland government geologist who has built wealth as coal mining entrepreneur.

Response: The reason Qgold is the major shareholder and none of the other shareholders are contributing is because Strategic's management team make no attempt to showcase this asset and attract other major shareholders. When was the last time Strategic did a roadshow or even answered phone calls from interested investors? The share register to put it simply is not open to new investors. With one major shareholder on the register and continued threats of taking the company private (that date back to 2014) why would anyone put significant capital into this company. This is the whole point. QGold don't really want anyone else to invest and Strategic's management team have done a fantastic job in facilitating this process.

"The situation is just that there's going to be lots of work in future, it's going to cost a lot of money, and no one's putting in under a public company. So why would I want to pay to keep this company listed on the stock market, when the other shareholders won't support it,"

Response: This makes some sense however if Strategic's management were to give shareholder's some assurance that the company is committed to developing this asset as a listed entity going forward and invite a new major shareholder or two onto the register, they would get that shareholder support. I repeat the register is deliberately closed and has been for 5-6 years. In addition, the minority shareholders I have spoken to are willing to support a compulsory acquisition but only at a fair and reasonable price.

"I don't know what the answer is going be in a couple of years time when all the feasibility studies on it have been done, but there's no advantage to me to pay to keep strategic minerals listed when it's not getting the support of shareholders."

Response: I repeat the overwhelming issue here in my opinion is the direction this company has been run in. Chris Wallin's son in law is the executive chairman of Strategic Minerals so the communication lines with its major shareholder are presumably solid. What would have been of benefit to the company and facilitated more investor interest is a diversified share register and a firm commitment to the future development of this project as a listed entity. This would have all most certainly seen capital raised at much more attractive share prices and significantly less dilution (this is a big issue). On the one hand Chris Wallin complains of not having any shareholder support but on the other hand the company hasn't been run in a way that is conducive to getting that investor support. A communication breakdown between family members? Unlikely in my opinion.

Mr Wallin also disputed suggestions that the valuation needed to look at transactions in other parts of Australia, arguing that the because of the mine's remote location and the lack of gold mining expertise in Queensland, deals in Western Australia would not be comparable.

Response: Infrastructure is just one factor in determining the quality of a gold asset. A lack of infrastructure can be more than made up for in the quality of the deposit itself. Big Vein South in anyone's books (other than the independent experts it seems) is a quality asset. Why would a billionaire be interested in a mediocre project? Why waste your time? There is scale, there is grade and there is strong metallurgical recovery (my understanding is 95%+). At face value these are the key ingredients you need for a quality open pit mine at any gold price let alone A$2,650/oz. In the 2014 Target Statement there was no objection to using predominantly Western Australian projects to help value the ounces in the ground. What changed after 2014? Answer: The resource more than doubled in size as did the gold price. This makes it increasingly challenging to deliver an IER that on the one hand honours Strategic's depressed share price but on the other accounts for the significant improvement in both project quality and gold market strength. Hence the continuous breach of the Valmin code. Lastly, I am not even going to dignify Queensland's lack of gold mining expertise with a response but I will say the comment implies Chris Wallin must have some confidence in this asset's future mining credentials (as any reasonable person would). The man's net worth implies he has impeccable taste in Queensland mining projects.

Expand

On infrastructure: a new mining lease was granted in January this year, which is contiguous to the existing ML containing the main resource/reserves, and obviously intended to be used for the placement of mining infrastructure, for example, waste dumps, processing plant, tailings storage facilities etc.

That would indicate that at least a scoping level study has been completed which would have been used to justify the application for the ML (MLA).

That information would be interesting for other shareholders to consider prior to accepting what appears to be a very low-ball offer.

Mr Wallin is arguably the most astute mining entrepreneur in Queenland and probably not on occasion the wealthiest individual in the State (including Mr Palmer) because he gives value away.

Big Vein South and its associated deposits are, as you stated earlier, the best gold reserves' "discovery" since Mt Carlton. In my view, they could even be better than Pajingo. Time will tell, but it would be fairer for other investor/shareholders whose equity may soon be compulsorily acquired, to have some of that opportunity realised in the QGOLD's offer where, currently, it is not.

SMC Price at posting: 50.0¢ Sentiment: Hold Disclosure: Held
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