directors resignations explained

I don?t think I have ever read a more extraordinary chairman?s letter that accompanied the annual report than this one. This now fills in the gaps of why the directors and CFO of the company are retiring. There is no doubt now that there is deep division within the company and that the source of that division is not the ex- director?s and shareholder actions, but Tay himself.
First of all I would like to thank Richard Oh for some of his frank assessments. It is quite obvious that this annual report was released without the knowledge of Tay and that he is expecting repercussions from its release. Let?s remember that Oh was Tay?s closest ally during the events that led to the March 2011 EGM and that Oh was the only dissenting director when the board removed Tay?s executive powers.
The circumstances that have led to this early AGM and shareholder vote are summed up in the following extract from the chairman?s report.
?In addition to the above shareholders requisition sought by Mr Koncepolski, there has been another requisition from shareholders who are supporters of Mr Tay and are seeking my removal as a director of the Company. The underlying reason for this action is for not supporting the reinstatement of Mr Tay as an executive director, which neither Mr Revell nor I support.?
So why haven?t Oh and Revell supported the re-instatement of Tay?s executive powers and why is the CFO also retiring?
The answer lies in another extract from the chairman?s letter
?One of the first tasks was to install fiscal control and accountability, which was badly missing from the Company. I invited Mr van Uffelen to accept a position as the CFO and Company Secretary to assist me in this undertaking. We immediately set about reducing unnecessary costs, dealing with unpaid creditors and installing financial controls. This task at times proved to be challenging due to the absence of written terms of engagement with a number of suppliers and consultants.
Financial discipline and control over cash flow is the life blood of any business. Responsibility for this discipline rests with the executive director(s) and the management of a company. In the case of the Company, this rested with Mr Tay until his executive powers were removed and Mr Anderson as the company secretary. The only other executive director, Mr Malcolm Carson, was the technical director and responsible for technical matters of the Company including approving all technical expenditures but not financial authority as he was not a cheque signatory of the Company?s bank accounts until Mr Tay?s removal of all his executive authority.?
The lack of financial discipline is also evident in relation to the company?s tenement portfolio. The 2010 annual report identified that a minimum of $2.4 million was required to maintain tenement commitments over the following 12 month period. The company should have had cashflow projections then that showed that they had insufficient money to meet these commitments and they should have embarked on a capital raising to ensure retention well in advance. Instead they have done a last minute deal that provides for a number of these tenements to be transferred to a third party with Dynasty maintaining a minority free carried interest. .
Another extract from the chairman?s letter
?This achievement is crucial and timely as the majority of these tenements are at risk of being forfeited by the Department of Mines and Petroleum as minimum expenditure commitments had not been met, for two years in many cases.?
Instead of praising Tay for doing a last minute deal that reduces Dynasty?s potential he should be admonished for lack of financial planning that has led to this happening.
The Chairman?s letter and financial reports also contain other interesting comments and disclosures which I will comment on in separate posting as they will most likely be the subject of mod intervention.
With all current directors not supporting Tay and a number of past directors previously also not supporting him it is quite evident that his position is untenable and he should do the honourable thing and resign but I doubt that is going to happen any time soon so the saga will continue unless shareholders exercise their rights and vote against those director nominations that are aligned to Tay.