There were some unhappy shareholders at this week’s annual general meeting of Flinders Mines Ltd (ASX: FMS) which is controlled by the New Zealand rich family company Todd Corporation.
The Todd family company is behind BBI Group’s plans to develop an $A6 billion iron ore port and rail project in the Pilbara based on Flinders’ Pilbara Iron Ore Project (PIOP).
The West Australian newspaper’s chief resource writer Stuart McKinnon reported that BBI is the logical partner for Flinders’ stranded 1.4 billion tonnes iron ore resource but some shareholders remain suspicious of Todd’s position as a majority shareholder in both companies.
Shareholder Mark Moore said he had flown from Arizona to be at this week’s meeting and that Flinders were the only shares he owned He claimed the board was passing up opportunities to promote the company and suppressing good news.
Margo Gould accused the board of “sitting on our share price” by failing to repeat potentially price-sensitive information such as a September meeting of BBI with Baotou Steel in China at which the Pilbara project was reported as being the source of BBI’s ore.
Other shareholders complained the company had not revealed that BBI had signed financing and supply agreements with other Chinese parties. However, executive director David McAdam said BBI had an aspiration to use the company’s ore but no deals had been done and no contracts had been signed.
Company chairman Neil Warburton said the company had a policy to report only facts and did not seek to be either optimistic or pessimistic in its announcements.
“We have a low-grade, isolated ore deposit,” he told shareholders.
Warburton said a structural change in China meant ore below 60% was suffering big discounts.
“We’re trying to upgrade the resource through our asset maturation phase to something with a six (60%-plus) in front of it,” he said.
“We’ve got to somehow get it to a grade at which we can sell it and make a profit on it.”
Stuart McKinnon reported that shareholders were also miffed that Flinders did not make more of BBI’s plans for a railway line south from Balla Balla to within 40 kilometres of PIOP.
But Mr Warburton warned BBI’s plans might never eventuate and that funding continued to be Flinders’ biggest obstacle in realising its dreams of becoming a miner.
He reminded shareholders that Flinders’ penny stock share price had risen 400% over the past two years under the current board.
Meanwhile, back in July the Sydney Morning Herald reported on disenchanted shareholders on the eastern seaboard who had formed a group called FMS United to air any grievances then about what they saw as an option agreement for Todd.
Reporter Tess Ingram said it was claimed a private company is offering to pay Flinders $A10 M for the option to acquire PIOP. Todd could pay an additional $A55 M, plus ongoing royalties, if it chooses to exercise the option.
Ingram said Todd wants to establish a foothold in the Pilbara through development of PIOP and its neighbouring Balla Balla joint venture project with fellow junior iron ore hopeful Rutila Resources, for which it recently lobbed a A30 cents per-share takeover offer.
FMS United claims to represent about 16% of the non-Todd votes, which spokesman Matthew Hester said could “counterbalance the block of any substantial shareholder.”
Tess Ingram reported that Flinders, which has a market capitalisation of about $A44 M, had told shareholders it had studied multiple development options for the project, including a recently scrapped alliance agreement with Todd and Rutila, but “no better option has been identified or been offered to develop or sell PIOP in the near term.”
She reported it was understood Todd was reluctant to make a firm offer for PIOP because of the large amount of upfront capital required to progress both it and the Rutila deal simultaneously.
Sources: thewest.com.au; smh.com.au