RE:Strategic ReviewPW... I am also wondering about the strategic review and what it will mean for the minority shareholders....and what will be a fair price for the minority shareholders if the decision is to take the company private....
We know that as part of the IPO only a small fraction of the shares were sold to the public (~20%). The money from the IPO has been used, among other things, to paid current upper management salaries that probably are not justified and to complete the majority of the studies required to take this project to a point where it can move forward into the development stage.
We have seem how management has been driving the share price down and passing the blame to the market (minority shareholders). While this has been done, management has openly said that the intention of the strategic review is to benefits the shareholders. I am not sure about their definition of shareholders.
Is management thinking about the minority shareholders, the ones that provided all the funding to this company, or about those that own the majority of the shares but did not provide any funding?
Consider the facts:
- As part of the IPO the company raised around 60million dollars from the sale of around 18 million shares
- Management has been promising the PFS for several years and every single time that the self imposed deadlines comes up they proclaim that there is another study that needs to be done. The most recent one promised to deliver it in April and we are still waiting.
- James makes a consistent 1million dollars a year.
- Management complains that the share price is too low but does nothing to show the market that they care about the minority shareholders and the share price:
- do not meet self-impossed deadlines,
- does buy any shares (share ownership should be proportional to the salary that they are extracting from the company),
- goes out of their way to continue to grant themselves options with an exercise price that is unreasonably low (according to their own words),
- tells the marked that it will buy back the company shares and does not do it (there were 2 annonced shares buy backs - the first one for 1 million shares which was completed and a second one for 1.5 million - only 305k shares were ever bought back)
After all this, starting a year ago, management starts telling the market that it will undertake an strategic review which could take a number of forms unless the shareprice goes up. If you consider all of the above facts do you think the price will go up? Did management realy expected the share price to go up or were they driving it down in order to take over the company?
Considering that the company has 25million in cash, what do you think is a fair price for the minority shareholders if management wants to take the company private?
Based on my other posting the current float (shares in the hand of the minority shareholders - I do not count those shares hold by insiders or bought back by the company) is of around 17million shares.
Also, CORES owns 10% of the project and does not matter what management does with the company they will continue to own that 10%.
Back to the question of fair price, I'll say that each of the shares owned by the minority shareholders is worth at least 1.47 (25/17). After all, this is part of the money that was taken from these shareholders.
Even 1.47 does not take into account all the intrinsic value built into this stock (all the studies, the agreement with CORES, removal of many of the initial risks, etc), or the other projects belonging to the company.
I am a shareholder and do not want the company to be taken private. I still think that this project is the best of class outside of China and has a lot of value.
Why get rid of the minority shareholders at this point?
All of the above might just be speculation on my part but without any further knowledge of the master plan I feel that something is wrong and management will screw the minority shareholders.
I wish management will be honest for once and be fair to the minority shareholders.
I am probably asking too much.
GLTA