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As a couple of posters have pointed out, the M & D C case was...

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chrisCarter

935 Posts.

57

25/05/15

10:32

Post #: 15343202
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Originally posted by eshmun ↑

CC,

Your last question is the only relevant and crucial question in my opinion. Your other questions seem irrelevant to me and are only suggesting that Quasar tried pulling the wool over the eyes of the AGS Board. If anything the trial so far has shown the AGS Board was not naïve or easily fooled, but actually just the opposite, intent on conjuring up its own predatory strategy. One strategy involved the Board approving a plan to bring a misleading and deceptive conduct claim so as to win back a 100% share of the project from the people who had worked with them as partners to build the project at a cost of $42million. Not only did they commence a claim in the Federal Court that proved to be deficient, but they also actively solicited and found a buyer for a major share of the project who was waiting in the wings to steal the project from Quasar in case the action in the court was by some miracle ever successful. And if you believe Damos notes the best answer that SJ could give to why this strategy was undertaken was "'yes, but because we were wronged'".

Well I don't know who was trying to wrong who? The Board launched that failed action in the Federal court with ITOCHU waiting in the wings in case of a win. This in my opinion was an extremely low form of corporate tactic aimed to try and deprive Quasar of their lawful rights to the project and one which I'm sure Quasar would not have been happy about or be forgetting quickly.

So why did SJ think the company was so wronged? Because they were denied by the joint venture committee a request to make taped recordings at the committee meetings? Because they were denied records of the JV? Could it not be that these are just the facts of life in most joint ventures in which a party holds a minority 25% interest with no power to stop the passage of decisions of the joint venture committee. Could it not be that if AGS had have just gone along with and accepted the decisions made by the JV committee, instead of launching four legal actions the company and the shareholders of the company would be a lot better off. Could it not be that if the Board had have been compliant with the major JV partner they would have saved the company a lot of money and probably would have been a little closer to being able to fund their share of the JV and a little closer to the sale of their uranium, as the joint venture wouldn't have been derailed by legal action after legal action and just possibly Quasar would have been more inclined to allow AGS an extension under the agreement to raise their share of funding if it was even needed (after considering the savings AGS would have made if they had not have started the legal actions).

IMO there are only two questions and dates that are important in this matter. When did the Board of AGS change their mind and go from agreeing with the stockpile plan to not agreeing with it and when did they first demand that Quasar sell their uranium? And when was the last date by which AGS needed to commit to funding to maintain their 25% share in the JV?

AGS stated in the rights issue share offer document to shareholders that:

"On 27 October 2014 ACE directed Quasar to sell its share of the product (127,500 lbs) shipped to Canada. This direction was confirmed on two further occasions but Quasar refused to comply with it and, as a result, on 12 November ACE terminated Quasar's appointment as sales and marketing agent and issued proceedings in the Supreme Court of South Australia seeking a declaration that the termination is valid and orders for delivery up of ACE's share of product from Four Mile. ACE has sought an expedited hearing."

And the company announced on the 20th November 2014 that;

"The Board of Directors of Alliance Resources Limited ("Alliance") has, reluctantly, resolved that its wholly owned subsidiary Alliance Craton Explorer Pty Ltd ("ACE") should elect not to contribute to the Four Mile Uranium Project 2015 Program and Budget for the period 1 December 2014 to 31 December 2015 (2015 Program and Budget). This decision has been forced upon it due to Quasar Resources Pty Ltd's ("Quasar") refusal to sell ACE's share of product from Four Mile (thereby depriving ACE of funds that it would have used to defray those expenses)."
Now I'm not sure if the 20th November 2014 was the deadline for AGS to commit to the funding under the JV to maintain its 25% interest in the JV, but it was at least the last date. This means the company had left itself only 24 days between asking Quasar to sell the uranium and the date by which they were required to commit the funds.
Two questions here.
1) Given the potential long term loses in revenue to the company due to diluting from 25% to 15% under the joint venture does anyone think the Board allowed anywhere near enough time to source the required funding? 24 days (18 working days) doesn't seem to me to be a big enough buffer of time given the importance of this funding. Now if you were asked by your fiancée to arrange the flowers for your wedding, how long before the wedding date would you wait before starting to go and make arrangements with florists? 1 day? 1 week? 3 weeks? Well personally I'd probably do it 3 weeks before, just in case something went wrong as I'd hate to see my wedding reception ruined. You'd think that keeping a 10% interest in a valuable uranium mine might rank a little higher on the importance scale, than arranging flowers for a wedding. Maybe the Board should have made its protestations and demands for the sale of the uranium a little earlier. After all they are supposed to be running a mining company not a wedding planning business.
2) Given the 18 working days notice AGS gave Quasar to sell the stockpiled uranium, how feasible was it for Quasar to do so under the arrangements they already had in place? This is the only question in my mind that might give AGS shareholders some hope in any damages claim. The rest of the questions in the cross examinations don't seem to be very relevant to me other than to throw muck around.
The two considerations above IMO are the make or break issues here.
Eshmun

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As a couple of posters have pointed out, the M & D C case was quite complicated. What you cited was just evidence of the breakdown in the JV relationship absolutely NOT what drove the case.

Read this if you're genuinely interested: http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2012/2012fca0290

As a general principle, I believe everyone has a right to pursue their legal rights if they believe they have been wronged & not have it held against them many years later.

Eshmun said: "When did the Board of AGS change their mind and go from agreeing with the stockpile plan to not agreeing with it"

Hang on, you're jumping to conclusions, AGS (probably) didn't even know about the stockpile plan until very late, let alone agree with it. That's the whole point of the questions I posed. If they had, do you seriously believe they would have left it so late to pursue financing options?

Here's a question for you, my understanding is you entered with the shortfall allocation meaning you're ahead, so why aren't you dumping and moving on?

AGS Price at posting: 9.2¢ Sentiment: None Disclosure: Held
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