I have been reading with interest the many many comments on this forum and have wanted to share my thoughts for some time as to why I am a supporter of the company and the board.
Although I am not involved in the management of the company, I have been closely watching the development of this project for over twelve years and so can share some observations that perhaps not many readers to this forum would have been privy to.
The first point I want to make is that I hold a decent number of shares in FBR and have totally accepted that as a speculative share, I could lose my investment whether by the project failure, capital dilution etc. In addition, I am concerned about the number of senior appointments that have impacted on cash burn.
Having said that, readers may or may not be aware that prior to FBR, the Hadrian project was originally funded by a small number of seed investors in 2006 together with various Federal Government incentives. During this time the capital funds were carefully managed to ensure it was all spent on the project.
When the money ran out, it was Mark Pivac who believed in his project so much that he continued to work on the project using his own personal funds and time. Mike Pivac joined Mark and together they continued to push the project along until the opportunity arose to vend the project into DMY Capital Ltd or what we call FBR Ltd today.
If it wasn’t for the efforts of Mark and Mike, including their moral commitment to the original seed investors, all of the original participants would have lost their investment.
I have no doubt that if these two gentlemen were as unscrupulous as suggested by some contributors to this forum, they would have had no problem with doing a deal leaving out the original seed investors.
This impressed me greatly as it is a testament to the moral fibre of the Pivac’s and why this board has my continued trust.
I have no doubt there will be a number of readers who are going to throw in issues about shareholdings, performance shares and remuneration.
I make the following points about the Pivac shareholdings and in particular performance share issues.
Irrespective of whether readers agree with the manner in which the performance shares were issued, I believe it is a moot point whilst these two Gentlemen continue to hold these shares.
Let me be more specific, apart from some shares sold by Mark in July 2017 (~$274k) being part of his original shareholding, neither Mark nor Mike have sold their shares in the company. I don’t know what Mark did with the funds, but I wouldn’t be surprised if he used part or all of it to retire some debt (eg. when he ran the project using his own funds prior to vending into FBR).
Proceeding on the basis they continue to hold (ie. not sell) their shares I say it’s a moot point for the following reasons:
· If the company goes under, the shares are worthless or as a mentor once explained to me 100% of f@#$all isstill f@#$all;
· If company is able to demonstrate the outdoor build etc etc leading to a resurgence of the price, no one should have anything to complain about; or
· If the company plods along such that an additional CR would be required at lower prices, the overall impact of the performance shares diluting existing shares pales into insignificance.
IMO if I was going to rip off a company, I would pay myself a salary much higher than the $350k these gents are getting which I think, with their responsibilities (and work undertaken) is at or below market.
To those readers who are angry because they decided to sell their shares at a loss, I can only gather you have come to a conclusion that the company has already failed. I have access to exactly the same information as you and based on that information I am still confident with my investment. So much so that with the recent drop in the share price, I thought this was a great opportunity to purchase additional parcels at 8.2c and then 6.8c.
To those that have sold out, you may well prove to be correct, but I am still comfortable with the company and decisions of the board to date (even though I’m still nervous about cash burn).
I have also read with interest the criticism of a number of contributors who were quite scathing of the lack announcements by the Board following the recent price plunge.
I don’t believe there has been any intention by the board to delay announcements etc but it is clear the recent blogs have stopped the trend.
I’m not sure about other people, but I didn’t learn anything significantly new from the blogs and can only assume it simply gave the market some comfort that all is ok.
So at the moment, I am hoping the outdoor build meets /exceeds investor expectations to allow the company to obtain a capital injection (by whichever means) at a higher buy in price than what would be necessary if they run out of cash and need to scramble for more funds.
Using the June accounts and December Corporate presentation as a guide, the company appears to have a cash burn of about $5 - $7m per quarter. Proceeding on the basis of $21m in the bank at 30/09, I would estimate the current funds to be in the vicinity of $12m - $14m.
I am hoping the outdoor build is successful by the end of Feb (March at latest) to allow the company time to attract additional capital funds whilst still holding necessary cash funds.
This is essentially why I’m still in and believe in the company.
