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Cheryl Edwards will replace Shannon Coates as a non-executive director of Flinders Mines. Photo: Attila Csaszar

Shareholders welcome Flinders changes

Flinders Mines shareholders have backed the company's new board of directors and the prospects of a strategic review into infrastructure options for its flagship asset, the Pilbara Iron Ore Project.

Shares in Flinders rose to their highest level since December following the company's annoucement of the moves on June 17, hitting a 2019 high of 6.9 cents.

The company's stock had fallen to 5 cents by June 26, however, at that price it is still trading higher than at any previous point in 2019.

The announcement comes less than three weeks after a report by Business News highlighted the extensive links between the Flinders and BBI Group board and executives, and a substantial increase in directors’ fees between the December and March quarter.

Todd Corporation is majority shareholder of Flinders and BBI Group.

Former state attorney general Cheryl Edwardes will now be appointed to the Flinders board as a non-executive director, replacing Shannon Coates.

Mrs Edwardes currently serves on the board of Vimy Resources and AusCann Group Holdings, and is the commissioner of the WA Football Commission.

Meanwhile, Ms Coates is the director of Evolution Corporate Services, which employs Flinders company secretary Sarah Wilson as a corporate adviser.

As part of the Flinders’ reshuffle, managing director David McAdam will step down from the board in the near future but will continue in an executive leadership role, Flinders said.

Flinders also said it has engaged with minority shareholders regarding the potential appointment of one or more additional independent directors to the board.

On June 17, Flinders also announced it established an infrastructure committee for its Pilbara iron ore project (PIOP), comprising members who are independent of the company’s largest shareholder.

“The infrastructure committee will engage an independent consultant to undertake a review of all potential infrastructure options for the PIOP,” it said.

Flinders also announced it recognised that the BBI Group’s Balla Balla Infrastructure project represented a potential infrastructure pathway for its PIOP, seeking a proposal from BBI Group and undertaking preliminary discussions with it concerning potential future arrangements to progress the PIOP and unlock value for Flinders’ shareholders.

“As part of the path forward, the board intends to build on its shareholder engagement and will ensure shareholders remain fully informed as the strategic plan is executed,” Flinders said.

However, it appears Flinders has not extended that olive branch to all shareholders.

On June 26, it took Report Card Pty Ltd, the owner of stock forum HotCopper, to the Supreme Court of Western Australia to provide details of 23 users which it alleged made malicious or false statements in relation to the board and company on the forum.

Margo Gould, a Flinders shareholder who had been one of the most prominent voices against the board’s conduct, believes the recent investigation by Business News, political support from One Nation, and the strength of minority shareholders protests, led to the Flinders board wanting to improve its relationship with minority shareholders.

Ms Gould said the heightened public interest in Flinders’ management, the high iron ore price, and the requirement for BBI Group and Flinders to secure a binding agreement by the end of September 2020 (for BBI Group to maintain its WA railway agreement), has converged favourably for minority shareholders.

“It has forced the company’s hand,” she said.

“I think the Flinders board and Todd Corporation realise that the best way forward is if we are all on the same page, and this is the best news in several years for minority shareholders who remain cautiously optimistic about the strategic changes.”

Shareholder Jason Tither echoed Ms Gould’s sentiment of cautious optimism.

“It is showing a willingness to go forward together, and the pragmatism to realise that if we’re all on the journey together we’ll get there so much more quickly,” he said.

The top 20 shareholder whose correspondence to the regulators Business News revealed last month said the announcement was a step in the right direction, but the board still needed to be held to account for its previous actions over the past year.

“I believe that the current board, including those now resigning, should be held accountable for the hundreds of thousands, or millions, of dollars spent by Flinders in the last nine months to 12 months on consultants that recommended the delisting proposals that were found by the Takeovers Panel to be unacceptable circumstances,” the shareholder said.

“The Flinders board has a lot of work to do to re-establish minority shareholder trust.”

Flinders Mines did not respond to Business News’s request for comment.

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Share Price

Closing price for the last 90 trading days
Source: Morningstar

Top 10 Shareholders

Source: Morningstar

Total Shareholder Return as at 28/06/19

1 year TSR5 year TSR
440thCardinal Resources-21%75%
451stFlinders Mines-22%26%
499thOro Verde-31%-21%
731 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Revenue

275th↑Flinders Mines$49k
310th-Corizon$14k
311th↓Oro Verde$14k
313th↓Odin Energy$13k
314th↑Cardinal Resources$12k
488 listed resources companies ranked by revenue.
Source: Morningstar

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