The company which New Zealand’s Todd family took control of last year is now set to delist from the Australian Securities Exchange (ASX).
Flinders Mines Ltd (ASX: FMS) announced last week that its full board supported delisting the company and the proposal would be put to shareholders in January. Should delisting proceed it was expected Flinders may remain on the ASX up to early March, 2019.
Flinders would undertake an on-market buy-back to “provide liquidity for shareholders who did not wish to retain their shares following the delisting.” This would also take un dealing with unmarketable parcels.
TIO NZ, the subsidiary linked to the Todd family, has said it would support the delisting and does not intend participating in the buy-back of shares.
Flinders’ main asset is the Pilbara Iron Ore Project (PIOP) in the Pilbara hinterland which was languishing last year along with other iron ore prospects in Western Australia’s Pilbara region with the then low iron ore price and poor prospect for deposits now held by the established iron ore miners and their established infrastructure.
The Todd family vehicle made an unwelcome bid for control of Flinders, then based in Adelaide and a share price not much better than tuppence, and after TIO NZ gained a control block the share price improved markedly and a new board was established in Perth.
However, at this year’s annual meeting there was disquiet among minority shareholders about progress, despite directors indicating a lot more detailed work was required on PIOP for what would be a multi-billion dollar development.
The board cited a series of reasons for delisting:
- A lack of capital support from public markets. In the past two years Flinders undertook three rights issues, taken up by TIO NZ and this provided funding of $A16.4 million. TIO also provided an $A2 M loan facility in July, 2016 and $A5 M in November, 2017 – both repaid through the rights issue.
- Low levels of trading liquidity. In the past 12 months only 2.16% of current shares on issue were traded.
- Concentrated shareholding. TIO NZ has 55.6% of shares and related parties hold another 22.6%. The board believes the current and likely future level of concentrating of shareholdings were insufficient for an orderly and liquid market.
- The cost and administration for remaining listed on the ASX outweighed the benefit.
- Delisting would unlock access to additional funding. The board believes there could be greater funding in an unlisted environment from groups such as private equity and Asian and Middle Eastern investors.
- To progress PIOP the cost of a bankable feasibility study would be between $A40 M to $A50 M, and one of the objectives would be to improve the marketable grade to 60% Fe.