Ann: Central Signs Drilling Contract with Ensign, page-99

Ok, I’ll bite Liladime.

First you say “Powertool Mac tried to take us over cheaply with the support of our Board” which suggests you believed at the time the company was worth more than $87m, keeping in mind at that time it had no money in the bank. Fair call, I agree with that.

Before we get into the Macquarie relationship let’s look at some facts; Macquarie joined our register in FY13 with 50m shares, which shortly thereafter became 10m shares following the 5:1 consolidation. They retained only this quantity from then and right through the SoA process. The Rights Issue created ~63% more shares, so for Macquarie to simply retain their % holding they would have to have 16.3m shares. They currently have 19.6m which would suggest they remain more committed than they historically have. So they’re not running for the hills by any means. It does appear though that some investors who bought into the Rights Issue through Macquarie are selling down.

So since the Rights Issue the company now has $25m for a drilling campaign. This appears you’re biggest issue, in that you feel the company is wasting money on a poorly considered drilling program. That’s fair enough, and in about 2 months we should all be able to put that argument to bed; either you will be right, or the Company will be right, and it’s good everyone has their cards on the table for we shareholders to judge this (although I suspect Liladime you may disappear from HC forever if you are proven wrong, let’s see on that one I guess).

Now you are currently advising all us punters to sell at current prices, let’s say 9 cents. If we all take your advice most would clearly lose money, but in your opinion its get out now before you lose all. Let’s assume you have our best interests at heart, and we follow your advice, and all head for the door this month, selling for anywhere between 9c and 3c by the end of the month as the SP dives per your forecast. Not sure who will buy all our shares in this period, presumably you?

So now it’s 1^st March and you have your 19.9% that you spent a bit over $4m on, and HC is a bit lonely now as we’ve all gone. I assume the next step is for you to take over the board through a S249D process which takes about 2 months to get the vote going on? So now it’s 1^st May, the day before the General Meeting, and all the drill results have come in. Exactly as you predicted it’s all dusters, and now the company has spent all it’s $25m. With the right bravadoand a gun new board, you win the vote, RC is turfed out, and you sweep to power.

Just out of curiosity, since none of us will still be around, what’s the next planned step? The SP has now probably fallen to 2c (or less) and the Company has no money… what’s next? Not sure Macquarie or Troy Harry would be too happy at this point either, and probably not keen at another capital raising for your new drilling program.