Got a bit carried away after the first two days of the cricket. We are lucky that they decided to bat first up.
So got to the AGM, unfortunately Missed GJ's presentation that was on the big screen, I take it beamed live from Africa. Got Fridays meeting time mixed up with the starting time of the meeting on the 14th.
So to business. The meeting was chaired by Fiona Harris, with Barry Eldridge, Robin Marshall, Robin Langley and Brian Conrick at the long desk.
All four resolutions were carried, with little descent.
Robin Longley, (Geologist and mining engineer) who's the GM of Geology and Exploration then gave the next presentation. He went on a bit about how he signs off on the disclaimer, and that he takes it very seriously, I felt a bit like he was trying to underline what an expert he was.
He went on to say that they had now defined 775 Million Tonnes of ittabirite.
Now here's the killer. I've been following Sundance since 2008. I got involved because the Aeromags suggested that we were only just scratching the surface of what was there, I thought back then that we had about 10 Billion Tonnes, well Robin Longley, for the first time officially to my knowledge, said that the directors believed that there was between
9 to 13 BILLION TONNES OF ITTABIRITE
Accordingly stage two had immense scope in duration, or in other words this mine is going to produce for decades longer than originally anticipated. Makes 45 cents a share look like even more of a bargain doesn't it? Or back of the envelope calculations, Roughly 3 Billion shares, assume 10 Billion tonnes, about
13.5 cents per tonne! I'd based all my calculations in 2008 (post GFC) on about a dollar a tonne.............What would I know!
Now there were no other presentations to talk about, but question time was entertaining.
The first question was
"Why haven't directors brought any shares in the company? Well I thought that the answer was obvious, why would a director put their own money in when the remuneration committee keeps granting them shares/options, for initiating things, rather than the successful completion of negotiations, or based on share price milestones?? My feelings were that clearly the remuneration committee were guaranteeing the directors millions of dollars in payments, regardless of the price that Hanlong eventually take the company over for. Fiona Harris answered. Basically the directors always believed that a deal was imminent. (Hanlong were obviously very good at pulling the wool over the directors eyes if that is the case) And all those other parties that we have heard were running a fine tooth comb over the data room must have been making some very promising overtures, even though they knew that Hanlong held a blocking stake, and that this precluded other Chinese entities from bidding! Now we all know that a director can't trade shares when they are in possession of knowledge that is not commonly known to the market. Fiona went on to say that she is a director of many other companies (obviously then she is picking up many other directors fees) Keeping in Mind that Fiona is on the remuneration committee, that in the 2012 report Fiona was paid $105,000.00 and 221,803 shares (or options, just from Sundance) Why would she pay and buy her own shares?? In fairness Fiona and Barry Eldridge (who is also on the remuneration committee) agreed that they also have mortgages and children in private schools. Just like a lot of other people who have put there own hard earned cash into the company I thought.
Also Fiona went on to state an argument that Non-executive directors shouldn't own shares in a company, due to conflicting interests. Not a argument that I support, and in all honesty, it appeared to be an argument that she was stating, but didn't believe in herself.
Next question
Will the next reserves/resource update be before the next scheme meeting?
Now I know I found this hard to believe, but they don't know!!!! They know it is going to be a spectacular update, but the directors do not know if it will be released before the vote!!! (the question was answered by Robin Langley) This also leads to the 3b released early last week, but I'll get to that later.
The next question was
Are Hanlong and the Board of Sundance IN Bed? William in the same question went on to say that the game was over for the past 18 months, that the employees of the company that WE own, have been working exclusively for Hanlong for that period (obviously at our expense).
Fiona responded to the question, buy saying that the board had been trying to get another offer, only a slightly more verbose.
Another shareholder then asked
How stable was the Congo Government? I could see how he got confused with the two Congo's. Robyn Longley politely answered that their current president had been put back in power, to add stability, after a long stint as president in the 1990's. That mining investment was increasing considerably, and that mining companies didn't invest a lot when they were worried about sovereign risk.
Now the 3b. Scott asked
Given the 3b lodged earlier in the week, and no accompanying resource upgrade, has the agreement from 2008 been altered? For those of you unaware the agreement was announced in 2008 and in part relates to the purchase of Nabeeba. The following is an extract of the announcement:
Tranche 1 – the issue of 5 million Sundance ordinary shares to Cominvest as follows:
(i) 1,000,000 Sundance ordinary shares upon receipt of any necessary shareholder approval,
upon receipt of any Government approvals as required under Congo and Cameroon law and
completion of legal due diligence;
(ii) 4,000,000 Sundance ordinary shares upon completion of an airborne aeromagnetic survey
and exploration report and completion of a number of administrative tasks;
Tranche 2 – the issue of 14 million ordinary Sundance shares to Cominvest on the definition of 200 million
tonnes of hematite reserves (as defined by the JORC Code) grading +60% Fe;
Tranche 3 – the issue of a further 14 million ordinary Sundance shares to Cominvest on the definition of 400
million tonnes of hematite reserves (as defined by the JORC Code) grading +60% Fe.
Now Fiona answered the question. Apparently the agreement had been changed! As a shareholder it would have been nice to know this, maybe it could have been released to the market with the 3b? I know it's not required by law, just corporate good manners I would have thought. Fiona gave the reason for the change as being " to provide more certainty" and guarantee a payout to Cominvest. Would this imply the agreement was dead if Hanlong took over, or maybe Hanlong may re-neg? either way not flattering that they felt the necessity to change the agreement, BEFORE THEY RELEASE THE UPDATE, POSSIBLY BEFORE THE VOTE!!!
Now the next question was interesting
Is the Nabeeba permit to mine required by Hanlong for the scheme of arrangement to go ahead? The short answer is YES!!!! Hanlong can still pull out without penalty if the Congo Mining permit is not granted before the 18/12/2013. Call me cynical, but I'm not expecting a cheque in the 8th of January next year. It is not impossible that George and Guillio may not be able to bed down the Congo agreements in the next couple of weeks, although I have a huge amount of respect for George, as he was one of the other reasons I decided to invest back in 2008 (I was with a little company called Portman in 1996). If anyone can bring it home in the next two weeks it's George.
The final question was:
Is the ratification of the Mbalam Convention by the Cameroonian Government required by Hanlong for the takeover to proceed? Once again Fiona answered the question. Basically all the people involved in the Cameroon Government to date are the people who make the decisions. The fact that the convention has been signed, basically meant that it was a fait accompli that the ratification would go ahead. She also mentioned that Hanlong were prepared to take the risk.
So there you have it, I didn't stick around to talk to anyone as I had to go to the cricket.
So this is not financial advice, this is just the way that I see it:
Hanlong have totally outfoxed the board at every turn. The board have used Hanlong to get the licenses and the agreements in place. Now I want to say here that I am a "Mum & Dad" investor, but even so the difference in the bid prices will cost me tens of thousands of dollars.
Sundance has the Mbalam convention signed.
Sundance is expecting between
9 to 13 BILLION TONNES of ittabirite To me this, and the forthcoming upgrade, renders the independent experts report redundant.
The mine life will be
Decades Longer than originally forecast.
The Geology is basically the same as Vales Brazillian mines, these have been going for 4 or 5 decades to date.
Chinese companies are precluded from agreeing to off take agreements for Mbalam whilst the takeover is progressing.
Hanlongs "employees" have been charged with insider trading, not just on Sundance shares.
Hanlong have reneged on other takeovers.
A Hanlongs employee is so dishonorable that he has left his wife in Australia, and refuses to come back to face charges of insider trading, even though his supposed heart condition allowed him to fly back to China in the first place.
Last AGM Paul DeNardi stated that the board had already noticed a change in the register towards hedge funds waiting on the 57 cent offer from Hanlong.
I'm going to put my money where my mouth is. I'm going to ask the board to work harder, they've done most of the hard work, we have something now, so get back out there and get some off take agreements in place and lets not give away this resource for what is such a meager offer. The only way that can happen is if enough people vote no to the Hanlong agreement at the next meeting.
If you are not happy with the way this scheme of arrangement has been conducted to date, then get to the meeting on the 14/12/2012 at 10am and let your feelings be known to the board.
I'm going to ask my board to work harder for me, get rid of Hanlong, they've done their job now, we now have something of worth, so i'll be voting NO!
Ciao Jewels