Wednesday, February 27, 2008

Lots of Laughs with Marathon

It is probably just as well that Adelaide is hosting a comedy festival at the moment, because the Marathon boys are making us laugh again.

In inverse proportion to the decline in value of ABC Learning shares, Marathon’s have surged 47 per cent since Monday, briefly touching $2 today, and currently at around $1.97.

Logic says this shouldn’t be happening.

The company had been given the appearance of a good old-fashioned dressing down by State Premier Mike “the miner” Rann, having its exploratory drilling operations at Arkaroola suspended indefinitely for behaving like “a cowboy” (Rann’s description) by dumping 22,800 plastic bags of radioactive soil and domestic waste in two shallow pits within the wildlife sanctuary.

But Rann was actually belting them over the head with a feather duster: they had already announced the suspension of their exploratory drilling, they still had their exploration license, and they were free to go ahead with the preparation of Environmental Impact Statements as a precursor to applying for a license to mine.

All the same, the market should have retained its scepticism about their ability to eventually mine in the sanctuary, and should have been somewhat cautious following Rann’s “punitive” measures.

On the contrary, Marathon Shares remained reasonably steady at around $1.20 - $1.30 for several weeks (market confidence) and then took off to the high $1.90s this week (market optimism).

Why? We would hate to suggest any insider trading, after all, that doesn’t happen on the ASX, does it?

But that’s what the kiddies in the chat rooms were suggesting. On Tuesday 26, bottle2 in the HotCopper forum observed “This stock leaks like a sieve before announcements. Always has done.”

And right on cue, the next day, Marathon released a media statement confirming that it “has been involved in negotiations with a third party considering a possible placement of approximately 13%” of Marathon’s issued capital, “and other commercial arrangements”.

LOL indeed!

(What they didn't say was that on Tuesday the Australian Stock Exchange had demanded to know whether the company was "aware of any information concerning it that has not been announced which, if known, coud be an explanation for recent trading in the securities of the Company", and had asked for an immediate announcement if that was the case.)

Then they put the clampers on, stating that “In view of the current market conditions including the issues surrounding Mt Gee (Arkaroola), the directors of MTN believe that any further disclosure of the particulars would be premature and potentially misleading.”

“Misleading”? Marathon? LOL+LOL+….

What are they doing….dropping the Mt Gee word as a feint to the left to conceal activity elsewhere?

Or does this signal the further expansion of Chinese investment, perhaps a major tunnelling firm with world’s-best-practice credentials to strengthen their application for a license to mine underground at Arkaroola?

Well, here’s a warning boys: Don’t Under Mine Our Environment!


Those of us who have to fight bloody hard to get a wage rise of even a few percentage points out of our employers shoulld consider how hard it is being a company director.

You can’t be trusted to do the right thing by your shareholders, so you have to bribe yourself to do it!

In 2006, the directors and executives of Marathon were give options to obtain up to 2 million shares in the company as part of their remuneration package; in 2007 it was an extra 1.5 million each.

This is from last year’s Annual Report:

Options issued as part of remuneration for the year
ended 30 June 2007

Options are issued to directors and executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to the majority of directors and executives of Marathon Resources Limited and its subsidiary to increase goal congruence between executives, directors and shareholders.

All options were granted for nil consideration.

Ah, that old problem of how to increase goal congruence! Lucky
for these boys that giving themsleves millions more shares is not based on performance criteria!

Sure is tough at the top when you can raid company finances using "goal congruence" as an excuse!


Xanthopus said...

As covered in yesterday's Australian - "ADELAIDE-based uranium hopeful Marathon Resources has again found itself at the centre of controversy after revealing that it thought confidential negotiations regarding a possible multimillion-dollar investment in the company may have been leaked to the market."

And then there's the part where they're being sued by the former CEO for wrongful dismissal!

Entertainment indeed! Who needs a Garden of Unearthly Delights?

Mike said...

Just noted this comment in the HotCopper chat room:

"other related commercial arrangements".

>>maybe MTN are going into the waste disposal business! ;-)


Mike said...

And lost of speculation around the place about whether or not sacked CEO Stuart Hall, now suing Marathon as noted by Nigel, above, was the source of the leak about the buried waste.
"Vengeance is mine," sayeth the CEO??
I could write a book....

Xanthopus said...

I note that as of Feb 4th 2008 Mr. Hall is the new CEO of Crosslands Resources Ltd. - a shiny new iron ore mining operation that is based in Jack Hills, WA, is jointly owned by Murchison Metals and Mitsubishi(! mmm...), and is worth a cool $3 billion.

I reckon that our Mr. Hall, being a smart customer, isn't likely to be risking such lucrative employment offers by ratting on a past employer, no matter how unhappy he might be with them. I'd personally be looking for a whistle-blower rather closer to the actual operations in Arkaroola, if I was looking at all.

Personally I was relieved when Stuart Hall moved on - because he was canny! But I still can't see how this project could ever make it over the line, if public opinion and any of the laws that apply to the area actually mean anything, no matter who's in charge...

On the topic of waste disposal - here's a thought. The Class A Environmental Zone provisions of the Plan for Land Not Within a Council Area [Flinders] (under the Development Act 1993) clearly identifies the following as a non-complying development - "Landfill that constitutes solid waste disposal required to be licensed as a waste depot under the Environment Protection Act 1993"

Perhaps we should have been harassing Holloway in another of his ministerial capacities!

Xanthopus said...

And perhaps we shouldn't be too sure that the suspension hasn't genuinely set the company back.

I suspect the 'we'd finished drilling anyway' stuff, which appeared - as you've noted, and by amazing coincidence - hours before the official suspension was publicised, was probably rather more face-saving than frank!

Remember the 50 new drill holes?

Holloway in Parliament 13-02-2008: "it is interesting that, when Marathon made a statement to the Stock Exchange on 31 January this year, at the time I think the company was talking about a program of 50 drilling holes up to June 2008. My advice is that the company has drilled 23 holes, and it will remain at that number. So, to try to suggest that somehow or other this government is permitting those activities to continue is completely incorrect"

The alternately diverse and cavernous geology of Mount Gee is a bit of a drillers' nightmare, I understand, so I reckon they probably weren't looking to dig the other 27 holes out of casual curiosity!