thoughts on agm and egm.

Today, I travelled from Sydney to Brisbane to attend the CAP AGM / EGM. Below are my thoughts on both meetings:

*The tensions between the CAP board and Silvergate were evident. Despite the history that exists with Silvergate (ASI) and BMG, one has to accept that Silvergate is the largest shareholder in CAP and hence, a certain level of respect should be shown towards Silvergate. Some of the attitudes displayed from shareholders attending the meeting were disrespectful towards Silvergate (IMO).

* From Silvergate, Edward McCormack, Wilson Cheung and Linda Lau attended the meeting. I am of the view that Silvergate deserve a seat on the CAP board. My logic is that if a shareholder with approx. 14% of the issue capital (Conglin Yue) can have a seat on the board, why shouldn’t a shareholder with basically 20% of the issued capital not have a seat on the board? I was impressed that they all showed up at the meeting and their attendance added to my view that ultimately, they are very interested in Hawsons. I do not believe that Silvergate deserve two seats on the CAP board based on its current ownership level.

* CAP currently has a board of 5 and is reluctant to increase the size of the board. If you look at CAP as a Company with a market cap of $23 million, then a board of 7 would seem excessive. If you look at CAP as a company who is trying to develop and get a project with a NPV of $3.2 BILLION into production, then I do not see a board of 7 as being too large. I think it is important that the board members bring expertise to the company and once the buyer of the BMG stake in Hawsons is identified, I see the benefit in having a Silvergate representative with strong and proven connections to Chinese steel mills on the board of CAP.

* The passion that Silvergate and the CAP board (especially Nick) showed towards CAP and specifically Hawsons, cemented my belief that Hawsons is a special project which will reward CAP shareholders in the long term. I was hoping that Bin Cai (Conglin Yue’s man) would be at the meeting but he was not.

* The vote that resulted in Mr Cheung and Ms Lau NOT being elected to the CAP Board and Dr Williams and Mr Cholakos remaining as Directors was close. Hence, logic would state that Conglin Yue must have voted with Silvergate. Ms Lau explained that there was no connection between Conglin Yue and Silvergate and no agreement between them to vote as one existed. This was stated before the votes were cast and the proxies displayed for all to see.

* I see no benefit of having CAPs largest shareholder and the CAP board not being on the same page. Now that we have all gone through the EGM and everyone has had their chance to have their say, I hope that CAP can move forward and get down to business again…… getting Hawsons into production.

*IMO, The pressure is now on the CAP board. Silvergate called the EGM to have 2 of their nominees elected to the board. They did this because they felt this would enable CAP to get Hawsons moving quickly and to the benefit of all shareholders (including Silvergate since they own 20%of the company). The election of these two individuals was knocked back by CAP shareholders, who supported the existing board. The existing board deserves credit for work completed to date but IMO, if they don’t get Hawsons moving and sign a legitimate and committed joint venture partner soon, Silvergate will have the biggest and a very valid “I told you so”.

When questioned regarding the probability that ore from Hawsons would end up in China,hence why should we not have another Director with extensive Chinese contacts join the board, Nick stated that CAP is speaking with numerous companies all over the world. Apparently the Europeans like our ore as they use arc furnaces instead of blast furnaces in their steel production. I don’t know why they prefer our ore, I will have to do some research but that is what was stated at the meeting.

After the AGM & EGM had finished, all meeting attendees got together for a beer and a chat. To their credit, Silvergate came down and spoke with other shareholders and some CAP staff at the bar.

The next few months will be very interesting indeed and I hope that a workable, meaningful and productive compromise can be reached between the current CAP board and Silvergate.

Thank you to Nick, Chris, Edward, Wilson & Linda, for answering all my questions at the meeting.

Whilst I have some concerns over the short term movement in the CAP share price, I left the meeting comfortable with my holding in CAP.