Firstly, @Ece411 , one of the better-penned letters I've read. Fair, to the point and completely within shareholder rights without being emotionally-charged or insulting. Thanks for the lesson, mate.
It's been an interesting 48-hours for me. Before the offer from Hanking, I was confident I'd gotten a handle on the disservice emotion can do to your investment decisions. Clearly not. I've been frustrated and furious.
I've spent said 48-hours consulting with fellow shareholders, peers much more experienced than I am with this sort of offer, and with management and/or company representatives.
Below is an abbreviated timeline of activity and raises by the company since 2012. The idea was to gain insight into major holders, at what price, and overall sentiment given company’s ability to deliver on milestones. It is not investment advice. It is the combination of my research, aforementioned discussions and my opinion only, based on facts as per my intention for originally opening this thread.
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PGO: A BRIEF HISTORY
November 2012: It is announced that Hydrotech (HTI) is to acquire Mt Bundy gold project, “a million-ounce gold resource with near-term production opportunity.”
March 2013: Hydrotech (HTI) to be renamed Primary Gold (PGO) following acquisition of Mt Bundy Gold project
HTI (who originally acquired Mt Bundy) underwent a consolidation of 200/1. Consideration for acquisition of Primary Minerals and the Mt Bundy Project was for $9.4m + $3.35m in bonds – independent valuation at the time of mid-point $17m (excl plant and infrastructure). Post consolidation, the prospectus placed shares at $0.20. Read more on the original deal that effectively created Primary Gold here.
Link to Top 20 Shareholders after the deal.
Link to Top 20 Option Holders after the deal.
August 2013: Company releases feasibility study for Tom’s Gully, highlights include ambitiously making mention of assessing finance options to be in production by September Quarter 2014. More details below:
December 2013: Primary goes into voluntary suspension before announcing a Renounceable Rights Issue. PGO to raise up to $2.4mil via a 2 for 3 renounceable rights issue at $0.05 per share with a 1 for 2 free attaching option.
In March 2014, Hanking Australia Pty Ltd becomes a substantial holder taking 24,000,000 shares (for $1.2mil) – 19.5% of the company and voting power. Their CEO Dr Mark Yumin Qiu joins the board as a non-exec director. He’s a highly credentialed and experienced geologist. From what I can find, PGO's share price hovered around $0.031 and $0.054 between January to March 2014.
October 2014, Annual Report is released. Highlights include upgrading resource estimates at Mount Bundy by 40% since acquisition. More details below:
Top 20 Shareholders as at September 11, 2014
March 2015: PGO raises $1.4mil via share placement and a 1 for 1 renounceable rights issue both. 130,276,014 shares issued at $0.01 per share and 5,000,000 shares issued for nil consideration to underwriters (Patersons).
May 2015: Primary completes $212,ooo share placement, issuing 20,069,003 ordinary shares at an average of $0.0106 per share. The additional capital “enables the Company to progress its plan to recommence gold production at its wholly-owned Toms Gully mine in the NT. The company is close to completing the final step in the authorisation process at TG with an Environmental Impact Assessment expected to be completed in the second half of 2015.”
September 2015: Annual Report issued, highlights include increasing resources for the company to 1.43mil ounces of gold and progressing authorisation process for Tom's Gully. Full report available here.
Highlights below:
Top 20 Shareholders as at September 15, 2015
December 2015: Tom’s Gully Project Update is issued. The company addresses Authorisation and regulation process, particularly NT Environmental Protection Authority and Primary's Environmental Impact Study. See thumbnail below for details:
March 2016: Primary undertakes share placement for 45,887,867 ordinary shares at an issue price of 1.5 cents each to new and existing shareholders (via Patersons), raising $668,318.
Garry Mills, Evan Cranston and Tony Patrizi appointed to Primary Board.
April, 2016: Primary receives commitments for a share placement to raise $4mil via a placement of 100 million ordinary shares at an issue price of $0.04/share. Capital to be used to “Progress Mount Bundy Gold Project”. Raising was completed in June 2016.
August 2016: Ausdrill backs Primary via Drilling for Equity Program. Under the MOU, Ausdrill will receive payment for up to $3mil of drilling services via the issue of ordinary PGO shares. The payment mechanism comprises a share valuation of 90% of the 30-day VWAP against the value of each invoice.
A coupla weeks later Primary acquires Coolgardie Project. Acquisition terms are: Primary will pay Macphersons $5m in cash via instalments over 12-months and 40-million ordinary PGO shares which are subject to escrow periods over 12-months.
November 2016: Annual Report released – more of the same as the company expands resources at Mt Bundy and attempts to navigate authorisation and capital requirements. Full report here.
Top 20 Shareholders as at October 28, 2016
December 2016: Coolgardie acquisition completed. Macphersons (MRP) now a substantial shareholder.
January 2017: Primary announces new high-grade intersection at Coolgardie. A few weeks later Garry Mills is appointed Managing Director. Garry has been on the Primary Board since March 2016 and arrives with a strong mining engineering background, with over 30-years in operating gold mines. By many, myself included, this is seen as a major step toward actually going mining and pulling gold outta the ground from both Coolgardie and Mount Bundy.
February 2017: Primary announce that it has received firm commitments to raise $8.5mil via a placement of 121,428,572 ordinary shares at an issue price of $0.07 each.
October 2017: Annual Report released. Worth a read here.
Top 20 Shareholders as at October 30, 2017
Share price and volume from 2013 until now (weekly chart to allow me to go back that far)
THE OFFER FROM HANKING
Hanking Australia Investment have a unique position given they are a majority shareholder with their CEO also being a non-exec board member of PGO.
When you revisit Primary's five-year history, with particular attention to raises and dilution, you start to understand Hanking's view. (I will attempt to capture total raises, average raise price and changes to share structure and number on issue later tonight.) On a high level, there has been a lot of dough raised and still nothing mined. This was the punt for me – I figured we had to be bloody close, and if we got there I was backing a serious re-rate for the PGO share price.
But for Hanking – a company that reportedly profited $168mil last year – Primary is yet to really deliver on their investment, with entry price around $0.04 for their initial 24mil shares, from what I can tell. There have been several raises since then of various forms and at prices from $0.01 to $0.07. As such it is difficult to know their average.
More recently, while Garry was ambitious he could get Coolgardie into production and cash, it's evident that he was running outta time and cash. A raise was/is inevitable. The market knew it and the share price has reflected it.
It is my conclusion that Hanking didn't like the terms of potential raises, and as such have put through an offer. Quite possible they haven't liked the direction of the company for some time, believing they could do a better job, and have pushed the share price down. I can only speculate there.
In speaking with a Darren Martin of Longreach Capital yesterday, the board has to consider the offer and put it to shareholders.
Asked about the pricing of the offer and management's recommendation to accept, he referenced the shares issued at $0.01 and $0.015 back in 2015. But if you look at the chart posted earlier, those holders had the opportunity to exit all the way up to $0.17 in August 2016. That's over 1000% for these supposed holders, who I should add are the minority compared to the rest of the register.
I don't believe this deal is too favourable for anyone. And it is likely any potential raises weren't either. Possibly why this offer has been recommended.
A lot more to come to light in coming weeks/months.
Really a decision of whether to hang in there or not now.
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Alby
