Question to Executive DirectorShare price is low.Top 20 list...

Question to Executive Director
Share price is low.
Top 20 list indicates that perhaps some holders have sold out. The various Option
holders/sellers have long been and gone, so it seems improbable that they are the
cause.
Despite three quality announcements, we have seen continued selling. Now, it would
be fair to suggest that the recent issues over credit, plus general market conditions
would affect the share price. However, a 50% reduction, in spite of good news, is a
little hard to swallow. And, it is generally not the case with stocks that may be
considered 'peers' of ADY.
Question: Is someone lending shares to enable short selling?
This facility is not generally available via CFD, but some have noted that ANZ are
allowing shorts on ADY via a specific type of instrument which requires the
purchase/sale of other shares - ie., some sort of 'balanced' scenario.
If you have any thoughts that you are allowed to offer, I'm sure they would be much
appreciated.
Shareholder
ADMIRALTY RESOURCES - Answer from Phillip Thomas to Shareholders
I have checked the trades every day for the past two weeks to see if there is any
short selling, that is people who have a sold position and no matching bought
position. There are none that I can find. I think there is a bit of imagination going on
here regarding the ANZ short facility as I doubt whether ANZ would be bothered
lending ADY stock from other large holders (and I know them all) - try it yourself with
BHP for 100,000 shares from a stock lender and see how much it costs you and the
interest charges - better off to use CFDs, which do not cover Admiralty. Macquarie
will not margin lend against ADY. It is only UBS, ANZ, Merrill Lynch, Opes-Prime and
some of their wholesale stockbroker clients.
Even if they do short the stock, it only takes one institution to buy $20m worth of
stock as has happened before and they are dead in the market, with no liquidity via
futures, CFDs options, etc.
Admiralty is an announcement driven stock and the market is waiting for me to
announce the two 10 year sales contracts worth at 46 million tonnes total at $60 per
tonne - $2.7 billion and $40m finance.
However, we are not rushing as we have another strategy which might give us a
better outcome soon and so we are working on this - if the market thinks we are
worth AUD $270m today then so be it.
The market cap does not make sense as our partner Wyndham just sold a 70%
interest in two deposits with 11 drill holes, no JORC, one existing mine for $74 million
to JSW Steel (Jindal subsidiary). So 10% was worth $7.4million (US). They stumped
up $52m yet we only paid $26m for 60% they paid $52m for 70% and they are just
down the road.
In contrast, we have an existing mine, 90 million tonne JORC, shipped 210,000
tonnes, two keen bidders (and about 100 more for the ore), three port strategies (he
has one which we have tied up for 2/3rds of the month for the next 10 years) so the
asset alone has to be worth US$200m+ (we paid $13mUS for the previous 10%)
which is 20 cents a share. Even if you assume the life of the mine is 46m tonnes and
it is s worth $750m net profit at a discount rate of 12% over ten years, it makes the
share price 75 cents x p/e 8 = $6.00. You might work it out another way but this is a
rule of thumb.
The reason why the share price is not six dollars is because we have a few tasks to
complete which we are working on:
- Sales contracts
- JORC
- Ports
- Expanded production to 4 million tonnes which is our environmental permit
amount at Japonesa Mine
but over time the price will gravitate upwards because the market won't allow the
arbitrage.
Then add the lithium business, the lead-zinc at Bulman upside and so on.
Share volumes have been low - so there is little momentum. Now that I am back from
leave more information will be disseminated.
Kind regards
Phil Thomas
Phillip Thomas
Managing Director - Rincon Lithium Limited
Executive Director - Admiralty Resources NL
Director - Cia Minera Santa Barbara