18/08/2017 - 14:42

Top End’s long road to Myanmar

18/08/2017 - 14:42

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Local exploration company Top End Minerals, with the backing of prominent prospector Mark Creasy, has received shareholder approval to raise funds for the purchase of a zinc project in Myanmar and repay its creditors, as it deals with a number of issues left unresolved by its previous board.

Top End’s long road to Myanmar
Mark Creasy provided funds to Top End to progress the company's acquisition plans. Photo: Attila Csaszar

Local exploration company Top End Minerals, with the backing of prominent prospector Mark Creasy, has received shareholder approval to raise funds for the purchase of a zinc project in Myanmar and repay its creditors, as it deals with a number of issues left unresolved by its previous board.

Top End, which recently shifted its headquarters from Melbourne to West Perth, has been eyeing two acquisitions in Myanmar – an 85 per cent stake in the Bawdwin zinc-lead-silver-copper mine and a 60 per cent stake in Cornerstone Resources, in order to gain an interest in the target’s Lashio refinery and Longh Keng mine.

The acquisitions would come at a promising time for Top End, with zinc prices yesterday rallying to a high not seen since 2007.

However, a look into Top End’s recent history reveals a rocky path.

Top End announced plans to acquire the Cornerstone stake in October last year at a price of $US43 million, and the Bawdwin project in May for about $US20 million.

Part of the Bawdwin agreement included payment of a $US1.5 million option fee as an up-front and non-refundable deposit, which was made available to the company by Mr Creasy’s Yandal Investments early last month, under a secured convertible loan facility.

Two weeks later, all of Top End’s board members, including brothers Mordechai and Joseph Gutnick, resigned.

The company then appointed John Lamb as chairman, and Jeffrey Moore and Rowan Caren as non-executive directors.

It should be noted that, in 1991, Joseph Gutnick and Mr Creasy entered The Guinness Book of Records when Mr Gutnick ’s company at the time, Great Central Mines, paid Mr Creasey a record $115 million for the Bronzewing gold project (now owned by Echo Resources).

Mr Gutnick declared himself bankrupt in July last year with debts of more than $275 million.

Following the appointment of the new board at Top End, it was revealed the company held just $17,955 in cash, despite having raised $2.7 million just seven months earlier.

It was then revealed that most of those funds had been either expended or advanced to Axis Consulting – a private company that listed former Top End directors David Tyrrwhitt as sole director and Peter Lee as icompany secretary.

The new Top End board found Axis had been paid a total of $5.09 million by mid-June, while the company’s creditors were owed about $250,000.

The new board proposed a $3 million capital raising, priced at 4 cents a share, to reback the creditors and use what was left over to fund due diligence of the Bawdwin acquisition, and contacted Axis to demand full repayment for the advances.

According to an ASX release, Top End has not received any payments.

Aside from this, the new board also claimed it had discovered that the previous board members had issued 100 million shares by way of a placement priced at 2.2 cents a share under shareholder approval, which was for the issue price to be at least 80 per cent of Top End’s market price at the time. That would have placed a minimum threshold of 2.7 cents a share.

The new board claimed when it found the shares weren’t issued within the scope of the shareholder approval, it brought the matter to the attention of the ASX.

The bourse immediately imposed a prohibition on the company, barring it from issuing any shares until October 2018, unless it obtained shareholder approval prior.

Subsequently, Top End called for a shareholder meeting to approve its proposed $3 million raising.

In the weeks leading up to today’s meeting, Top End brought in Perth-based RM Capital broker Robert Brierley to assist the company with its acquisition plans.

It also engaged CSA Global to undertake due diligence on Bawdwin, and hired Perth-based Triple C Consulting Stockbrokers to act as lead managers to its proposed placement.

At the meeting today, shareholders voted in favour of all resolutions, including the $3 million capital raising and a proposed name change to Myanmar Metals.

However, in his opening speech to shareholders, Mr Lamb conceded that the substantial acquisition cost of the 60 per cent stake in Cornerstone was unlikely to go ahead at this stage.

“The board likes the fact that this option would allow the company to become an immediate producer of zinc metal and continues to progress due diligence work on the option,” he said.

“The board notes that the acquisition cost is substantial and will require satisfactory evidence of a long-term feedstock to justify that cost.

“One of the major shareholders of Cornerstone has advised the company that it will not extend the option period to allow that long-term feedstock to be assessed.

“Unless that position changes before the option expires on August 23, it is unlikely that the company will exercise the option although we would remain receptive to dealing on this asset in the future.”

A scoping study on a potential open pit at Bawdwin is expected to be completed by November.

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