tsang breaks his silence

Tsang breaks his silence - he thinks the Sumitomo deal undervalues the magnetite component of the project.

http://au.news.yahoo.com/thewest/opinion/post/-/blog/13429127/sumitomo-sets-off-mindax-board-row/

Mindax’s biggest shareholder, Chinese-born and educated Australian citizen Andrew Tsang, has broken his silence on why he wants to sack the Yilgarn iron ore junior’s managing director Greg Bromley.

Tsang, who controls 22.8 per cent of Mindax, says the company effectively gave away its potentially big magnetite deposit through a proposed farm-in deal with Japanese trading giant Sumitomo.

And, Tsang claims, the time has come for Mindax’s focus to shift from exploration to mine development. “This will require a change in culture and, I believe, to drive this change, a new management,” Tsang said in a letter to Mindax shareholders.

Tsang said he did not want to “engage in a public debate with existing management”, although it’s too late for that.

This is a typical battle between the biggest shareholder and the long-serving managing director.

In little over a week — on April 27 — Mindax shareholders will meet to vote on motions put by Tsang and boardroom ally Benjamin Chow for Bromley and non-executive director Ken Pettit to be sacked.

Bromley’s camp has wasted little time requisitioning its own meeting, which is likely to be held around May 12, to force the removal of Tsang and Chow. Presumably Bromley’s camp will seek Bromley’s reinstatement, should he be removed on April 27.

Momentum Minerals, a company headed by Mindax’s PR adviser David Utting, has requisitioned the pro-Bromley meeting amid claims Momentum has the support of Michael Chaney and Janet Holmes a Court. The blue-chip support is interesting for a company of Mindax’s $34 million value.

The battle for control of Mindax comes as the Yilgarn region’s iron ore hopefuls try to breathe life into their mine developments.

For all the rhetoric and revelations of massive exploration targets, little concrete evidence has emerged that any of the players, such as Cashmere Iron, Jupiter Mines, Golden West Resources and Radar Iron, are any closer to getting into production.

This against a backdrop of a nervous sharemarket and question marks over how long the China-fuelled iron ore price rally will continue at a time when mining giants Rio Tinto, BHP Billiton and Fortescue Metals Group are spending about $40 billion doubling and trebling their respective production capacity.

Investors in the junior end of the market are understandably jittery and share prices, generally, are weak. Mindax’s shares are hovering near two-year lows.

Mindax’s Sumitomo deal was heralded as a game changer by providing a clear path for Mindax to get the direct shipping ore component of its flagship Mt Forrest asset into production.

Like all farm-in deals with a bigger player with deep pockets, the trade-off is equity in the asset.

Under the proposed deal, Sumitomo was to earn a 70 per cent stake in Mt Forrest, comprising both the DSO and magnetite resources.

Tsang is not impressed.

He claims parties other than Sumitomo are interested in Mt Forrest, and in the event of victory he has vowed to reopen the farm-in process to include the proposed Japanese partner as well as other players.