Rocket Science
There seems to be incredulity from directors (Coffin & Morin), as to why the share price is falling.
However, they have, indirectly, provided the reason by their responses to questions. The responses seem to suggest that they are confused and have a lack of grip on why markets punish companies with board that either genuinely do not the reason, or alternatively, obfuscate when responding to shareholders.
In my view, there are two key issues, which are causing nervousness in the market:-
- Where is the $15.4m cash deficit between the directors capex of $35.4m, for the Bachelor feasibility study and the $20m capital input from the Sandstorm funding?
- What contingent liability does Metanor have for 2009 accident claims.
The first point was highlighted by Tristram Coffin in his reply on the Agora board. However, he seems to be aware of the negative market reaction to the uncertain source of the balance of the Bachelor capex, but what does he do to calm these fears – nothing. The board seems to be transfixed in the glare of the headlights on them and recognise the problem they have, but they are unable to offer a solution.
It has been suggested in previous postings, that everything must be OK, since Sandstorm did their due diligence before investing………. When Metanor were asked to clarify this to Sandstorm, perhaps Metanor said that they are confident in raising more equity at
.50, which was still above market price and this could be attractive to institutions, as mine development proceeded. Sandstorm would likely be happy with this, as the SP of this fund raising does not concern them – they only want the funds to be raised. Turning to Metanor, since the did not tie up all the financing simultaneously, they are now at the mercy of the market. If Metanor has to raise $15.4m at
.10 a share, then so be it, as far as Sandstorm is concerned – all they want is their 20% of gold from the completed producing mine. It is today’s Metanor shareholders who will pay the price.
OK, we know director Coffin is confused, so now lets see if Ghislain Morin can help. In the Wildman post, Mr Morin is attributed as saying ……
Absolutely stunned by the share price……… I asked why it was this low and he said that he had no idea………… He does not see any headwinds.
One of the things this bullboard has speculated on is the delivery of the gold per the recent agreement. I asked are you going to deliver that gold and he answered "well, of course we are" and laughed at the preposterous nature of the question.
If Mr Morin was so sure that they could get he mine in production and deliver gold, why did he not say that all the funding is pre arranged? If this were to have been pre arranged, then the board would most certainly have announced it?
The directors have acted against good business practice of equalising capital commitments with secured funding. Until they can bridge that gap, no other news will staunch the SP nervousness.
On the subject of litigation, since the amount of the claim is in the public domain on SEDAR, why did neither of the two directors mention this, as to do otherwise, is indicative of their inability to put a cap on unnecessary negative interpretations.
In summary, it may be helpful for anyone succeeding in connecting to directors, to ask one question WHAT IS THE $15.4M UNKNOWN SOURCE FINANCING OF BACHELOR CAPEX.
Source - Agora board:-
in response to Re: can we keep the faith by fireguy
posted on Feb 07, 11 03:56PM Use the IP Check tool[?]
Just got off the phone with Mr. Tristram Coffin who sits on the board. He says the market unfortunately is looking at the recent needed financing to get Bachelor Lake to full production by the end of 2011 as a negative. But he assures me nothing else has changed in there current plans and progress to cause the recent SP to drop.
Reply - Raffles
The following Litigation disclosure was recorded as a directors warranty in connection with outstanding litigation. This was set out in the appendices of the Sandstorm agreement, filed on the public domain SEDAR site. The expiry date for decision could be delayed, according to SEDAR. This could have been a contributory cause of a shareholder exodus. Since this is a current issue, Mr Coffin should have known about the imminent conclusion of this claim.... ? and the potential for uncertainty. On the positive side, the disclosure does seem to ring fence the extent of litigations claims in relation to the 2009 accident.
It should not surprise a director that the market is confused, when directors sign a commitment to make a mine operation, at a cost of $35.4m, and according to their own feasibility study, but they sign a contract to receive only $20m (with no explanation of the deficit financing), when the contract included a GUARANTEE to repay $20m in six years. The directors have not explained that why they are certain to receive an additional $15.4m and at what cost, in order to achieve production. This sourcing of funding is a basic financing issue and the failure to inform the market may give the impression that the directors are running the company "on a wing and a prayer". Perhaps a more direct question to Mr Coffin is called for, which he seems to have sidestepped?
Source : SEDAR
SANDSTORM AGREEMENT
SCHEDULE "D" DISCLOSED LITIGATION
QUEBEC SUPERIOR COURT FILE 615-17-000467-109
PARTIES :-
ENTREPRENUUR MINIER MONTALI INC V RESSOURCES METANOR INC
CLAIM - £2,130,767.12 DAMAGES
FILED IN COURT 22 OCTOBER 2010
EXPIRY DATE TO ENSCRIBE THE CASE - 31 JANUARY 2011