RE:AGM123c wrote: Sorry for the delay in posting. I needed to cool off before coming back to this.
DISCLAIMER: ALL OF THE FOLLOWING ARE MY OPINIONS AND IMPRESSIONS AND ARE NOT TO BE TAKEN AS FACT OR USED AS ADVICE. MY BACKGROUND IS NOT IN INVESTING, BUSINESS OR MINING ALTHOUGH I LIKE TO THINK OF MYSELF AS WELL INFORMED AND SELF EDUCATED.
The AGM was a waste of time.
They used a PowerPoint that said a Pre-feasability report was due in the third quarter of 2014, although the third quarter was over and there was no report.
There were not many shareholders there questioning management.
Neither Yan Kim Po nor Linda Lam Kwan was present.
Betts, the lead independent director, ran the meeting and answered most of the questions, usually with a dismissive, "Without Great Harvest we wouldn't have a company to have an AGM". In my opinion he did not reflect a concern for the suppressed share price that affects the minority shareholders much more than it does GH. He owns or controls no shares himself. (In fact a supressed share price may well be to GH's advantage.) I felt his answers indicated that his opinion is that what is good for GH is good for all shareholders.
When asked about the delays in obtaining a Feasibility Report and switching from a Definitive Feasability Report (DFS) to a "Pre"-feasability report the answers were superficial in my opinion. It remains a mystery to me how enough work to report that a DFS would be completed within 1 - 2 quarters turns into several years. The answer provided was that these things are "unpredictable". This begs the obvious questions of "Why did you predict them then ?", and "Were those predictions reasonable ?" If a case can be made that the repeated claims that the feasability reports were going to be available at specific times when those assertions were not based on reasonable information, I would think that the board & executives might be liable, particularly after repeated delays.
No clear answers to the following questions:
1. Will you post Yan Kim Po & Linda Lam Kwan's C.V.'s to validate the experience they claim to have in the industry and is posted on ADEX's web site ? ( They pointed out that Yan Kim Po is Chairman of the Hong Kong Energy and Minerals United Associations. When I pointed out that that is an industry Association, not a business the discussion ended shortly after.)
2. Can you verify that Great Harvest has the capabilities of fulfilling their obligations under the agreement ? Bett's & one of the other directors, I think it was Joseph Yin Kit Lau but it may have been Joe Tai, simply gave reassurances without substance or an indication that due diligence was being performed on this question is being reviewed on an ongoing basis. When I questioned GH's liquidity they questioned where I was getting my information and implied I had been getting it from unreliable sources. This discussion ended shortly after I reported that I had read the information that morning in GH's annual report. (GH have lost almost $ 27 Million from 2012 - 2014 see their annual reports https://www.greatharvestmg.com/en/business.php )
Betts also asserted that the salaries are justified because they allow the company to continue to exist and the right's offering is justified because it will allow financing of future development. If the Board and Executives were not paying themselves what seems to be unreasonable amounts without having observable progress, perhaps those funds would have been used to get a feasability report produced. Given that the company had a viable plan when GH bought in and made it’s financing agreement, it seems reasonable to attribute the change in the development plan and the ensuing delays to their control of the company and reasonable that they should finance the costs specific to modifying the development plan.
The Board & Management seem to disregard that the share price is depressed and that the quality of the information being provided to shareholders and the market may well be contributing to that. Of course if Great Harvest is planning to develop this, share price may not matter to them. The suppressed share price and the rights offering may be their path to taking it private. They would be getting the company very cheaply if they did that and it would raise the question of Shareholder Oppression. (See "Oppression Remedy" https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs02883.html ) Even if they were to sell their controlling interest, they may be able to sell it for what they have invested, but it appears they have no interest in supporting the share price for other shareholders.
The fact that the ADEX website continues to state that the company is:
"Low-risk investment. Adex has a simple and elegant strategy to develop the Mount Pleasant Mine. We hope to first bring the Fire Tower Zone into possible production, focussing on the increasingly strong tungsten and molybdenum markets. The Fire Tower Zone offers less risk because the geology, mining and metallurgy are all well understood as it was previously mined by Billiton exploration Canada back in the mid-80s. This is a fiscally conservative, staged approach that supports the company's desire to bring the Mount Pleasant Mine into production quickly and efficiently as possible." Given the company's steady share price decline and the refusal to give shareholder's more detailed information and explanation of it's performance this is seriously misleading information in my opinion. Shares purchased @ .46 in 2007 trading for .01 is not my idea of low risk.
NEXT STEPS:
1. Letter to the Auditor asking that they audit the Great Harvest deal and verify both the claimed qualifications of the Directors / Executives and the liquidity of Great Harvest and it's ability to complete the obligations under the agreement. The agreement is a significant asset of the company and it's enforcement would be critical to future development. Pages 21 & 22 of the annual report address Credit Risk & Liquidity Risk. The possibility of Great Harvest defaulting on their agreement would seem to be a Credit Risk which should be specifically assessed and would lead to a Liquidity Risk beyond our current liquidity problems. The possibility that Great Harvest may not be able to fulfill it's obligations under the agreement remains unaddressed and I believe that the enforceability of the contract ought to be assessed as part of the annual audit. Since Great Harvest controls the company, it may be blocking or confounding the feasibility study to prevent putting itself in the position of defaulting. Finally, an opinion from the auditors on whether shareholders are getting appropriate value for our investment in executive and directors salaries relative to similar companies. This should assess both qualifications and performance.
2. Letter to the OSC (Ontario Security Commission) questioning the appropriateness of the rights offering given that the controlling shareholder may have suppressed the value of the shares to allow itself to increase it's control of the company and perhaps take it private at low cost without respect for other shareholders rights. The possibility of shareholder oppression should be raised.
3. Who's interested in a class action "Shareholder Oppression" suit ? I've lost a bundle on this but I'm not in a position to "Go it alone" on a law suit unless I can find a lawyer who will do it on a contingency basis. The Director of Corporations Canada might intervene if a convincing case could be made. (See "Oppression Remedy" https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs02883.html )
Thanks for the detailed reply. Things are certainly bleak. I find it very disrespectful that top management couldn't make it to the once a year meeting. It certainly sends a loud message to me.
Such massive potential............
Marc