Page 5 - Bauxite Resources Annual Report 2014

4. Keep expenditure disciplined
and focussed with a view to
preserving its substantial cash
resources.
The Company has reduced its
non-core expenditure and has
undertaken a cost review of all
major expenditure and assets. It has
also through targeted exploration
minimised the cost per tonne of
resource discovered.
5. To be open to any mining
investment/acquisition
opportunities that may be
presented to the Company if (and
only if) they are assessed to have
substantial value enhancement
for shareholders.
The Company has assessed a
number of investment/acquisition
opportunities over the past year but
none were considered viable or in
the interests of our shareholders.
During last financial year the Company
purchased 1,800,000 shares under
the on-market share buy-back
program at an average price of 12.3
cents ($0.123) per share. The share
buy-back was suspended in late
September 2013 following being
notified of the IMF funded claim referred
to below. After lengthy consideration
and representations from a number
of shareholders, the Board resolved,
subject to shareholder approval, to make
a four cents ($0.04) per share capital
return to shareholders. This decision
was made after the Board satisfied
itself that the Company’s operating and
funding requirements for the next few
years were adequately funded and after
considering the Company’s potential
exposure under the IMF funded claim. At
the Company’s EGM held on 29 August
2014 to consider the return of capital,
the Company received more than 99%
support from those shareholders who
voted on the proposal.
The Company recently announced that
it has reached a conditional commercial
settlement of the claim being advanced
by IMF on behalf of a number of
claimants who acquired shares in
the Company in the October 2009
placement and subsequently on market.
If the claimants approve the settlement,
the Company will pay $5.25 million in
settlement of all of the claims, including
costs and interest. The remaining terms
of the settlement are confidential.
The Company has consistently denied
the claim, but defending a complex
class action claim in the Federal Court
funded by a well-resourced commercial
litigation funder, would inevitably have
taken up considerable Company
resources to manage and would have
been a substantial ongoing distraction to
the Board and Company management.
Legal fees alone to fight the claim to trial
were expected to be in the many millions
of dollars. Although the settlement sum
is not insubstantial, it was considered by
the Board to be in the best commercial
interests of the Company to remove the
negative overhang of this claim.
The Company’s strategy over the next
twelve months is to:
• Continue the Company’s
commercialisation strategy for the
Fortuna deposit with a targeted
development timeframe from now,
subject to economics, regulatory
approvals and final investment
decision, of three years.
• Resolve the proposed development
options under the Bauxite and
Alumina Joint Venture (“BAJV”)
with Yankuang Resources Pty Ltd
with a view of moving this world
scale bauxite project ahead in the
near term.
• Continue the evaluation and
development of the HD Mining Joint
Venture with the Shandong Bureau
No1. Institute for Prospecting of
Geology & Minerals (Shandong)
to move the Athena and Dionysus
deposits into pipeline bauxite
projects.
• Continue to work on ways to
monetise for shareholders the
substantial bauxite interests and
projects that the Company and its
JV partners have established.
• Remain focused on maximising
shareholder return and remain
open to other development and
joint venture opportunities on its
extensive bauxite interests.
I thank the Board, our Chief Executive
Officer, and all the executive team at
Bauxite Resources who have worked
diligently during the year to implement
the Company’s strategic direction. I also
thank Mr Chenghai (David) Yang and
Mr Qingwei Zhan, local based directors
representing our large shareholders
and joint venture partners Yankuang
Resources Pty Ltd and HD Mining
Pty Ltd, who retired during the year. I
welcome to the Board Mr Cunliang Lai
and his alternate director Mr Reinhold
Schmidt, representing Yankuang
Resources, and Mr Zhaozhong Wang,
representing HD Mining to the Board.
Finally, on behalf of the Board, I thank
you, our shareholders, for your ongoing
support.
Yours sincerely,
Robert Nash
Chairman
Annual Report 2014 Bauxite Resources | 3