Oby Rare Earths Pty LtdHas anyone raed through the Management Circular for the Special Meeting scheduled for December 20th?
I ahve questions.
I undertand the mechanics of the proposed transaction to created a stand alone entity unconnected to Verde, and the objective of removing any "distractions" for the management andemployees of the legacy Verde greensand business. As the owner of 400,000 NPK I will now still own 400,000 NPK shares and now I have 400,000 OBY shares (out of a float of 52 million shares) - a private unlisted shell company created on October 31, 2024 that does not trade on a public exchange.
What assets will NPK transfer to the newly created OBY? The circular indicates the distribution of 52 million OBY shares returns $350,000 of paid up capital. Let's assume OBY's opening journal entry is Debit Cash $350,000 Credit Shareholder Equity (paid up capital) $350,000. That simple transaction would give you a a book value per share of $0.00673, and NPK's book value would have fallen by the same amount per share.
Perhaps instead of cash, NPK transferred the rights it currenty holds for the mineral rights of certain claims that contain the 3 previously drilled areas that have been the subject of the new assays for rare earth elements. Using some acceptable valuation methodology, NPK determined that the transferred "rights" had a $350,000 value. So we now have a shell Company with the rights to exploit existing mineral claims (presumably none of these include Glauconite Greensanf deposits located on the claims - which remain with NPK), but with no money to develop the opportunity.
Who is on the Board of OBY?
Who is OBY's CEO? Its CFO? WHo does it employ?
Based on the Management Circular, it will be noe of the existing NPK Board, nor its CEO or CFO, and none of NPKs employees who must not be "distracted" from turning NPK around and maximizing the return from the capital deployed in the two glauconite Mills.
Who is going to lead the OBY oportunity?
What is the strategy OBY will execute?
Who is going to finance the costs of developing the project?
Who is going to develop and implement the plan?
Is the next step already underway - maybe issuing 52 million OBY shares to a new investor (giving a 50% interest) for some nominal sum or promise to undertake certain work.
Did NPK retain a Net Smelter Royalty (like 3%) on all future OBY sales - that's the norm when you spin out a potential significant asset from an existing exploration and development operation.
I would prefer to see more details of this proposed transaction before being asked to vote in favour of a purely mechanical transaction of distributing a non-public stand alone entity.
What do others think?