The Company had a perfect opportunity to explain the "knee jerk reaction" sale of those Leo Lithium shares at the AGM when the first question asked from the floor .........
1: Why was the decision made to sell the Leo Lithium Shares at a $7.1m loss?~ Fraser didn't confirm the $7.1m loss but said it was stated in the question, the decision wasn't taken lightly, they were trying to assess what the financial position the Company was in and if they had enough funds moving forward, it wasn't a large holding and they weren't escrow shares and it was only a small part of the holding.Someone (I think
@dazaliam) asked if questions presented were sent prior to the meeting or just at the meeting.
I wasn;'t clear when I originally answered that, the list of questions were placed on the table of the Directors prior to the meeting.
The strategy to not give them the questions in advance (basically so we wouldn't get fabricated answers) and to ask on the day proved to be telling. Particularly as to how Fraser answered and conducted himself, if you spend your life telling the truth then answers to ad hoc questions come naturally versus the bumbling and feeble excuses for answers he provided.
An example being that he fluffed an answer that didn't actually explain why they did sell those shares, other than:
quote: "(sic..... they were trying to assess what the financial position of the Company was in and if they had enough funds moving forward .....(sic)"
~ as previously posted, I would expect that directors would assess the situation and then take the necessary actions versus taking an action (selling LLL shares) and then assess!
Timeline of critical events:
27 June the Company enters into a trading halt
~ the halt was requested pending an announcement in regards to an update to
operational performance and production guidance.
29 June the Company requests a voluntary suspension for the reasons as per the trading halt.
4 July operational Update, key bullet points relative to the "sale of LLL shares" being:
> upgrade to Morila Resource and Reserve estimate anticipated during the September quarter
> updated resource and reserve estimate will feed into a new mine plan, production and
cost outlook and
forward capital requirements.
*** The Leo Lithium shares were sold the day after the update announcement, but as per the highlighted text in red above, the didn't know or wouldn't know what those capital requirements were going to be until after the resource update and/or the new mine plan with revised AISC.
~ bear in mind that the Company had cash/cash equivalents of A$35,623,000 at 30 June.
In My Opinion:Selling the Leo Lithium shares was an irresponsible action based on the Company's own announcements (including the 3 aware letters) that indicated performance of the operating mine and contractors, the contractors poor equipment and the reliability of said equipment was predominately the cause of the missed guidance figures.
~ In all the time I have been invested in the stock market, I have yet to come across a Company that has ended up in the quagmire that Firefinch Limited has found itself in based on missing guidance figures. The markets do react negatively to Companies missing guidance by a decline in share price, but not in prolonged suspension and ultimately a "for sale" sign being posted for its remaining assets.
The scramble for cash does give some credence to points (5) & (6) of post:
https://hotcopper.com.au/threads/i-have-heard.7398688/?post_id=67946785~
Morila had incurred unauthorised debt that was discovered by Plant when doing an audit, thats why the Company had to sell the LLL shares.
** which was further supported by the revelation from the AGM when the board disclosed that:
Mali directors operate under Mali law, and the General Manager can commit the Company to things outside the directions of the board.
https://hotcopper.com.au/threads/ann-results-of-agm.7409275/page-8?post_id=68174315
cheers
