research reports, page-4

FlyingDr,

Broker reports used to be on the Nexus website, but for obvious reasons they've been taken off.

I did, however, notice an error on the website. I might write to the company and have them correct the following...

Nexus has a clear strategy to deliver shareholder value through unlocking the value of its Crux asset, optimising value from its Longtom asset, strengthening its balance sheet and preparing for growth beyond 2014.

to...

Nexus has a clear strategy to destroy shareholder value through senior management cash salary and benefits stripping, incompetence, continuously revising commercialisation strategies on its Crux asset, after investing significant capital, to ensure that the promises of that pot of gold at the end of the rainbow is always within reach (with just one more capital raising), reduction of value from its Longtom asset by not introducing adequate preventative maintenance processes to mitigate outage risks on a highly volatile sub-sea infrastructure, and hand over the assets of the company at an alleged discount to book value and unreasonable value (if the error in the independent expert's valuation is confirmed) to a company run by its recused ex-Chairman at an very opportunistic moment, generously pay its Financial Controller who with so-called specialist debt and equity market expertise on its board, can weaken the balance sheet and totally mis-align its cash maturity profile to ensure shareholders that have contributed their hard earned money to date will never realise the returns of these world class assets beyond 2014.

The sad thing is everything I have written above is factual.

And like AG, I also spoke to MF with the intention of selling out our holding to protect what capital was left and was likewise told that the shares were significantly undervalued and also told that he (MF) was very confident that if we held onto our shares they would meet the financial objective I told him about. Stupidly we went and bought more!?!?!?!?!

As for suggestions that we should consider a scrip bid...

I don't want DV, LDM or any of the existing Board members involved in any company that I invest in. Clearly they have not been up to the task, so what makes anyone think they can do it from the position our company is now in!

We need a white knight (like AG, maybe? :-) to contribute some serious money to help us get over this. But not to the point where he or someone new throws good money after bad.

We need people with a demonstrated track record in the following three areas:

1. Operations for Longtom - good cashflow provider but it's a volatile asset and we can't have this asset experiencing an outage every 12 months! Either sell it down or work out how these outage events can be minimised. Dealing with these types of risks is not a novel concept - has it been that long since manufacturing disappeared?
2. Commercialisation - now this is where I thought RC was going to help us and he nearly did. God knows I've worked in many companies over the years where most managers are only good for what comes out of their mouths. You quickly notice those that roll up the sleeves, keep their mouths shut and let the results speak for themselves. Workers follow these people, not managers with fancy titles! And I've also found that in small caps, in the very early days the deals are not ideal and can end up being a legacy, but that's a reflection of the bargaining power you have at the time and reality is we have to live with it if we want to become a permanent mid-cap or have a chance for the high end. Look at AWE they did a great job to make the transition and they are still there and likewise many other broader resource companies. So it's not impossible.
3. Access to Debt and Capital Markets - this one is self explanatory.

This experience and capital loss has turned me off investing in the share market. It might have been Hotwolf that listed out a number of companies with similar results, but if regulators don't get serious about cleaning up the small cap end of the market, then investors are probably better off taking their money down to the casino. I'm seeing more and more posts complaining about illogical and silly decisions made by the stewards of these companies. Maybe it's always been there but now with technology it is more visible. Surely alarm bells are ringing at ASIC and within Govt. Something needs to be done.

Sad to say, I have to agree with my wise uncle when we debated owning shares versus buying property. He said he trusts no one to make his money work better than he can. I wish I had of listened to his 25 years ago! I would have been retired by now! He retired a very long time ago!

Anyway, that's my rant for today. Keep on fighting on our behalf Nexus Battle Team and great kudos to have AG mention you in his letter! You should be proud.

Regards,

Arobert