Carabella Res Ltd Nsw CBLLF

RE:Take a moment

[lumpy13]

SilverKnight:  Thanks for this, I'm sending a complaint letter today.  Hopefully, other shareholders will do the same.  Below, I note the reasons I'm against the transaction, which might help incentivate when they file a complain.

1.     This is not an arms length transaction.  It is a related party transaction as Pala Investments is the largest shareholder.  As currently structured the acquisition offer is not beneficial to minority shareholders and has a questionable valuation.
 
2.    Before the acquisition offer, Anthony Milewski, Chairman and CEO, was noted on KBLT’s website as also being an MD at Pala Investments.  Once the acquisition offer was made, this reference was scrubbed from the website. He is clearly conflicted.  First, for full transparency, he should disclose his full economic interests in Pala.   Second, he should forgo the change of control incentives – totaling almost $10m – as it is a related party acquisition, not a true change of control. If the acquisition does not proceed, Pala receives a $15m termination fee.  Again, Milewski should disclose his economic interest in Pala to reflect what would his pro rata share would be.

3.    There is no urgency for KBLT to sell its best assets at the bottom of the market.  KBLT has the liquidity to easily ride out the next few years.  
 
4.    The valuation of the assets makes no sense.  They impute Nickel 28's valuation  - Ramu and the remaining assets - as being almost 40% of the acquisition offer or C$2.17/share.  Currently, the market imputes Nickel 28’s value as C$0.31!   In contrast, the valuation of the Voisey Bay stream and the physical cobalt (whose price has risen over 30% since the offer) have extremely low valuations, especially compared to the price they paid for them.   They don't seem to apply similar metrics to the assets they are buying (cheaply!) and what is being transfered into Nickel 28.