Metal Tiger Plc (LON:MTR), has today announced that Kingsgate Consolidated Limited (Kingsgate) has confirmed Kingsgate shareholders will be given an opportunity to elect a new board at a meeting in Sydney on 9 January 2018.
The meeting will enable Kingsgate shareholders to support five new directors who have a clear vision for the company after years of poor performance and a massive destruction of shareholder value.
Metal Tiger, Kingsgate’s largest shareholder with a 6.7 per cent interest, requested the Kingsgate shareholder meeting to remove all but one member of the board, and proposed that five new directors be appointed, including three directors of Metal Tiger. If you would like to contact Metal Tiger to discuss this further, please click here.
Metal Tiger encourages its fellow Kingsgate shareholders to vote in favour of all resolutions, which will result in a new, highly capable Kingsgate board that is committed and capable of restoring shareholder value, unlike the existing Kingsgate board.
Kingsgate has also issued an Explanatory Memorandum, which Metal Tiger Chief Executive Officer Michael McNeilly described as a defensive and misleading document that reinforces the fact that Kingsgate’s future rests on the outcome of costly, high risk legal proceedings. Metal Tiger will provide a detailed response to the Explanatory Memorandum shortly.
“We encourage shareholders to vote in favour of all resolutions to appoint a new board at Kingsgate,” Mr McNeilly said. “We believe the proposed directors have the experience, expertise and relationships that can lead to the reopening of the Chatree Gold Mine, Kingsgate’s only operating asset, and restore value.”
Metal Tiger acknowledges Kingsgate successfully mined the higher-grade gold at Chatree to increase revenue and repay debt after its metallurgical licence was renewed for only six months. However, it is regrettable the situation in Thailand deteriorated to that point. No doubt many Kingsgate shareholders have long been hopeful of a resolution in Thailand.
Deep understanding of Thailand and issues surrounding Chatree
Metal Tiger has a deep understanding of the issues surrounding Chatree, contrary to what the Kingsgate Board has implied. Metal Tiger has carefully assessed the asset and stakeholders, and has developed a strong understanding of the mine’s history and potential issues.
Metal Tiger made its sizeable investment in Kingsgate on the basis that there is tremendous value at Chatree, including significant exploration upside. Metal Tiger has carefully considered the new Minerals Act, the draft Mineral Royalty Act, the draft Mineral Management Master Plan, the new Gold Policy and its impacts, licence status (the limitations created by the pending renewal of ML 25528/14714 at Pit-A), litigation status – both locally and in Bangkok – community issues, environmental concerns, appropriate Thai ownership concerns, and many other factors. Metal Tiger spoke with Kingsgate Executive Chairman Ross Smyth-Kirk before Kingsgate launched arbitration proceedings against the Kingdom of Thailand to obtain his views on the company’s prospects and took these into consideration before taking action against the Kingsgate Board.
Metal Tiger completed detailed technical and commercial due diligence on Chatree for an extended period of time, including in-country activities, and based on conservative assumptions the findings confirmed the reopening of Chatree to be a compelling proposition.
The simple fact is the reopening of Chatree, despite the cost and challenges involved, is a more valuable proposition to Kingsgate than the pursuit of expensive, potentially lengthy arbitration proceedings where success is uncertain.
Going down the path of arbitration is an understandable last resort if relationships are irreparably damaged and negotiations are unable to proceed. However, while the current Kingsgate management and ownership structure remains in place, Metal Tiger does not believe this tactic will deliver a result that satisfies both the Thailand Government and Kingsgate.
Kingsgate funding concerns
Based on Metal Tiger’s research and analysis of similar claims, Kingsgate is going to need substantially more capital to finance its current strategy unless the Company is successful in obtaining a settlement from Zurich. However, Kingsgate has previously acknowledged there is no guaranteed outcome and that they are “hoping” for a result in June/July of next year.
Quite simply, Kingsgate is rapidly burning through cash and has no clear long-term funding strategy in place to pursue its litigation strategy should things not work out as hoped or expected, which they rarely do.
Worryingly, Kingsgate has not made shareholders aware of the amount they believe is owed to them as possible compensation should an award be made in arbitration. Numerous media reports have suggested large sums but neither Kingsgate nor the Thailand Government have publicly confirmed these figures.
Support a new Kingsgate Board
“We believe Chatree can be restarted, subject to a new line of approach with the Thailand Government and subject to appropriate restructuring, and we are aware of interest from investors in Europe, North America, Asia and the Middle East to help finance the restart,” Mr McNeilly said. “But it is our view that such a strategy can only be implemented under a new Board given the bridges that have been burned by Kingsgate’s incumbent directors. This is not about Metal Tiger gaining control of Kingsgate, this about change for the benefit of all shareholders.”
Metal Tiger plc encourages Kingsgate shareholders to support all resolutions and install a Board that can reopen Chatree and restore much-needed value at Kingsgate.
