Minemakers (MAK) – August 21, 2015 shareholders meeting

Home » Minemakers (MAK) – August 21, 2015 shareholders meeting

Disclaimer: These are excerpts from student assignments conducted as part of a Corporate Finance class. The opinions represented do not necessarily agree with mine. I do not vouch for the quality of the recommendations or the accuracy of the numbers. Follow the recommendations on your own risk.

Click here for the proposals: http://www.minemakers.com.au/downloads/1454152.pdf

My @LSEPKUSummerSch #CorpFin #students made voting recommendations again: first #AGM was today, #Minemakers #MAK #Baobab triangular #merger

#students recommend voting for #Minemakers #MAK #Baobab #merger: #synergies outweigh #risks and loss of #control rights #CorpFin

#students particularly concerned about potential changes in #Senegal #mining license system #Minemakers #MAK #Baobab #merger #CorpFin

#students think price is right but recommend mix of cash and stock to not give up majority of control rights #Minemakers #MAK #Baobab #merger

#students point out low #leverage, cash and debt issuance can be used for projects using #IHP #technology #Minemakers #MAK #Baobab #merger

#Minemakers #MAK #Baobab #merger proposal passed as expected at #shareholdermeeting, consistent with #Student recommendations

Resolution – Approval of the issue of the Consideration to Baobab Partners
To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following:

Proposal Excerpt of Student Recommendations
For Against
“That, pursuant to and in accordance with item 7 of section 611 of the Corporations Act, Listing Rule 7.1, and for all other purposes, Shareholders approve the issue to Baobab Partners of:

(a) the Consideration Shares and the acquisition by Baobab Partners of a relevant interest in the Consideration Shares;

(b) the Consideration Options and the issue of, and the acquisition by Baobab Partners of a relevant interest in, up to 80,000,000 Shares upon the exercise of the Consideration Options;

(c) 40,000,000 Class A Contingent Share Rights and the issue of, and the acquisition by Baobab Partners of a relevant interest in, up to 40,000,000 Shares upon the satisfaction of the Class A Milestones; and

(d) 40,000,000 Class B Contingent Share Rights and the issue of, and the acquisition by Baobab Partners of a relevant interest in, up to 40,000,000 Shares upon the satisfaction of the Class B Milestone, In accordance with the terms and conditions of the Merger Implementation Agreement and otherwise on the terms and conditions set out in the Explanatory Memorandum
  • By acquiring BMCC, Minemakers will be able to leverage its existing expertise and experience in the phosphate industry on this project and establish its reputation for future opportunities· The project will generate early cash flows for Minemakers, greatly improving its current financial position and allows further projects to be financed, e.g., the Wonarah Project· The IHP technology license will allow Minemakers to access the Pacific and Atlantic Basins for production d marketing of super phosphoric acid
  • Given that the company is low in assets and currently its share price is high, it can exploit the current financial status to acquire through shares
  •  Loss of control rights to Baobab partners· Exposure to unfamiliar business risk related to investment in Senegal, an unfamiliar legal system (French law) and environmental and operational risk
  • If the mine permit system in Senegal changes, properties could be expropriated without adequate compensation

Result: Approved

http://www.minemakers.com.au/downloads/150821ResultsoftheGeneralMeeting.pdf

Further recommendations (citing assignments)

  • Finance the acquisition through
    1. 50% cash instead of 100% stock to keep more dispersed ownership structure and increase leverage
  • Implement second class of shares contingent on project milestones to finance acquisition
  • Raise debt to finance future projects
    1. Repurchase shares, financed by debt raised through bank loans
    2. Invest into mine that create synergies with the IHP technology
    3. Change top management and their compensation
  • Remove CEO responsible for poor performance
  • Use share appreciation rights for executive compensation