ShareSoc Sirius Shareholder Group (SSSG)

by Cliff Weight, ShareSoc Director for Policy and Campaigns

ShareSoc has agreed to help individual shareholders in Sirius Minerals. We are seeking shareholders to collectively work together to get the best outcome for all shareholders.

ShareSoc have launched the ShareSoc Sirius Shareholder Group to provide whatever support we can. This group is being run by Yashmin Ismail, Chris Spencer Phillips, Paul de Gruchy, Cliff Weight, Mark Jones and Ian Martignetti.

We are not opining at this stage on the merits of the proposed Anglo bid.

Our aims:

The initial objectives of that group are:

1. facilitating shareholder communication both between themselves and with relevant parties
2. helping shareholders to review and evaluate their current situation and (limited) options
3. making representations to involved parties, to relevant bodies and to the press where appropriate.

The Sirius Shareholder Group (SSG) can act as a focal point for individual shareholders.

It should be made absolutely clear that we are in fact finding mode at this stage, and that our involvement is about helping shareholders to evaluate and communicate. This initiative should sit alongside shareholders’ own representations to MPs etc.

Information and Updates

Sirius’ share price has collapsed from a high of 37p to a low of 3p.

Source: interactive investor

Anglo American have made an indicative offer on 8 Jan 2020 and a firm offer on 20 Jan 2020 of 5.5p which is recommended by the Board of Sirius. See http://otp.investis.com/clients/uk/sirius_minerals/rns/regulatory-story.aspx?cid=485&newsid=1359825

In April 2019 the company raised £327m in equity and announced at the same time a $500m bond (debt) raise. The equity raise was successfully completed and oversubscribed, but the bond raise was not. This led to a collapse in the share price.

Updates will be issued when we have new information to share.

In order to maximise the chances of a successful campaign, we have already requested a copy of the shareholder register, so we can communicate with other shareholders.

Background

Paul de Gruchy, a ShareSoc director, has written (before the firm offer was made) the following post which is on the ShareSoc Sirius Forum (available to full members of ShareSoc),

ShareSoc is keen to assist in any way it reasonably can in assisting shareholders of Sirius (SXX). It is, however, important that we manage expectations realistically. For this reason, I will try not to pull punches with this post. Many investors have lost money through their investment in SXX. Some investors will have lost money that they could not afford to lose and/or which they will not be able to replace. This is very sad to hear.

However, just because a large number of people have suffered a painful loss does not mean that they will be compensated. That is not how the stock market works. There are very few cases of investors receiving compensation for losses they have suffered on the stock market, and it is important not to raise expectations.

When it comes to investing, there is the past and the future. By which I mean, why people invested and whether they may have been misled in a way that gives grounds to claim compensation is one issue. What investors should do now is another issue. The 2 issues have nothing in common. It is important to bear that in mind: investors are currently standing at a crossroad. Their focus may be on what they went through to get to the crossroad, but that has no bearing on which path to take now.

ShareSoc will help to look at allegations in relation to why people bought shares, whether they were misled, and whether there is any possible recourse available. The company has issued prospectuses and marketing material and it is important that such documents comply with laws and regulation. We are not lawyers and we do not provide legal advice, but we can assist in helping investors to understand whether the company and its advisers met their legal and regulatory duties and if not, what steps can be taken.

For the purposes of the future, ignore the past. How you reached this point should have no bearing on the decision of what to do next. I have spoken to shareholders who paid 20 or 30p for the shares, and hope to get out at breakeven. I wish that were a realistic outcome. But before AAL made their offer of 5.5p, shares in SXX were changing hands at around 3.5p. That is the clearest indication of the worth of SXX in the event that it is not taken over.

The AAL offer is based upon their belief that they have the “financial, technical and marketing resources and capabilities to progress the Project”. A number of shareholders believe that AAL would be getting a great deal if they bought SXX for 5.5p a share. That is probably true: anybody seeking to takeover a large mining project would expect to make a big profit. AAL has experience in constructing multi-billion pound mining projects. Such projects are risky: costs often go over budget; there are huge logistical challenges; timescales get pushed out; tunnels collapse or are flooded; the price of the commodity can slump. As a result, there are not many people who are likely to be interested in taking on a project of this sort. 

It has been suggested that a further rights issue could bring the project to completion. That may be true, but it would require existing investors to invest much more, and be tied into the project for several years with no certainty of the outcome. In other words, the AAL offer gives certainty of 5.5p a share now. Unless another offer comes in, the alternative is to invest more money, hope that others do the same, take on all the risks, and hope that the share price rises in future. 

I cannot say clearly enough: do not assume that the offer on the table is the worst case scenario – in investing, the worst case scenario is losing everything.

Ultimately, shareholders have to form their own opinion on what decision they should make now. ShareSoc can assist by seeking to engage with the boards of SXX and AAL. An offer has been presented, but many investors feel that little effort has been taken to explore other alternatives. Having carried out many roadshows and marketing exercises, particularly around the site of the mine, it is incumbent upon the board of SXX to provide investors with answers. Having been very vocal about the project for years, now is not the time to fall silent. What other options were there? How deeply were they explored? Were other parties interested in bidding for the project? Investors need answers to these questions in order to decide what decision to make now.

We can also seek to explore with AAL their offer and whether there is any scope for private investors to retain an interest in this project. One of the striking facts of this case is that many shareholders were not seeking a profit so much as supporting a major local development. That aspect should be encouraged and not overlooked.

So, there is much that ShareSoc can do to assist. But please remember that we are a not for profit organisation run by volunteers. So do think about other options: approaching newspapers, your local MP etc. The more pressure that can be brought upon the board of SXX to explain their position, the more likely it is that shareholders will gain a fuller understanding of the options available.

More background is here:

https://www.bbc.co.uk/news/uk-england-york-north-yorkshire-51034291

https://www.gazettelive.co.uk/news/teesside-news/anger-sadness-among-small-time-16937212

Further information and how to join ShareSoc

Join the SSSG here: ShareSoc Sirius Shareholders’ Group (SSSG)

Further information can be found in the links below:

https://www.sharesoc.org/forums/forum/sharesoc-sirius-shareholders-group-forum/ . This is the official ShareSoc forum where all ShareSoc Full Members can exchange view and make comments.

Full membership of ShareSoc costs only £45 p.a. Click here to join

If you prefer not to pay a Full membership subscription you can join ShareSoc as an associate member. You will still be able to access much useful information, but you will find some of our more useful information is behind a paywall. Click here to join for free.

We strongly appeal to all investors to support this initiative. It would help if you could make a donation (e.g. £500, £100, £50 or whatever you can afford) to help fund our costs, but this is not a requirement to join. Click here to donate.