Sunday, July 05, 2009

Marathon - really, really, really wrong in every direction

Two items of interest caught the blogger’s eye today.

Firstly, the trial is continuing in Queensland of former state Labor government minister Gordon Nuttall who has pleaded not guilty to 36 counts of receiving secret commissions from Mr Ken Talbot, then CEO of Macarthur Coal and mining executive and former senior public servant Harold Shand.

Talbot is alleged to have “loaned” some $300,000 to the Labor politician. There was apparently no requirement for repayment.

Nuttall is alleged to have received the first of 36 payments just one day before the Queensland Treasury signed off on a $28.7 million “assistance package” allowing Macarthur Coal to develop a road and rail corridor to enable the expansion of its Coppabella coal mine.

Talbot Holdings is the largest single shareholder in Marathon Resources.

Talbot has a very “hands on” approach to management of Marathon. Sacked former Marathon CEO Stuart Hall has alleged that Talbot had demanded Hall be sacked and replaced by a “Talbot man”, Denis Wood, or Talbot would withdraw his financial support for a rights issue of shares in the company.

Blackmail as well as bribery?

Hall had also alleged that Talbot and his company were unhappy about his opposition to the promotion (by Wood in his capacity as a Marathon director) of Leightons Contractors to manage the pre-feasibility study for Mount Gee without the contract being put to tender in circumstances where opposition by Hall was in the best interests of the company.

As events unfold in the Queensland courts this week, further light may be cast on the personality and methods of Ken Talbot, such that if an Independent Commission Against Corruption was ever established in South Australia, Marathon might be high on its agenda of companies to be investigated.

The second item was the release on the company website of a letter to Marathon shareholders from its new (“clean and green”) CEO Shad Lynley.

Lynely makes direct reference to their exploration finding that they have not yet established the limits of the deposit in three directions - it might be bigger in any one of those directions, or in any combination of them. This is simply a way of asserting that if you think what we've found so far is big, then understand this - there might be more in any of three directions. It might be really, really, really big (three “reallys”, one for each dimension).

But Lynley’s message is not just for shareholders. It is really for members of the SA Labor government, and is intended to talk up the need for more exploration in advance of a government review of the decision to suspend their exploration license pending the clean-up operations of their unlawful waste disposal within the Arkaroola Wilderness Sanctuary.

That is what they are doing, and in so saying, they are hinting that if they don't get their license continued, then they'll be cut short in their prime of exploration, before they've had the chance to work out just how big it really, really, really is (three “reallys”, one for each dimension). And, who knows, it might be so big that they'd have other options for its development away from pristine eco-tourism areas, and if not, well maybe the question will not have to be answered until after the next state election(March 2010) while they look around in any of three directions.

The government would have to be pretty mean to deny them that, the chance to find out how really, really, really big it is, and to find a spot (not necessarily geographical, could be figurative) away from public gaze to work on it.

And shareholders will be wise to stump up some more cash for exploration, considering how big it is already, and how it might be really, really, really big, bigger than a rock wallaby or a wren. No, they haven't even found the limits in three directions, or perhaps in any direction for that matter.

Declaring that “the margins of the Mt Gee deposit are open in three directions” allows Lynley to avoid the hard asks - which are – “Where do they intend to mine?” (Answer, don't have to answer that just - don't know - still trying to find out how big this is) and “When will you mine?” – (Answer, same as before , plus saves us the trouble of asking the government in the lead up to the election, and we are still courting Spriggs. And we don't have the cash to mine anyway, and aren't game to ask, for the cash or permission, so better if we can drag things out some more, in three directions).

And when the state government doesn't just ban the mining – it will be “Because we don't know how really, really, really big (three “reallys”, one for each dimension) this mine’s contribution could be to the future of our state - we’d better let them keep finding out.”

Fair few directions possible when you think in three dimensions.

Let alone the fourth - do they have the cash? Or the fifth - do they have the permission? Or the sixth - can they get the permission, and the cash? Or the seventh - should they?

When you look at it like that they are really one-dimensional - buying time to avoid the seventh dimension.


Lynley has already blotted his copybook with the ASX, having to re-issue his letter to shareholders after omitting to point out the actual composition of the "current combined and indicated resource estimate of the Mt Gee deposit".

The new letter to shareholders admits that only 4m tonnes of U308 ore carry the "Indicated" status, while a massive 47m tonnes is still only "Inferred", ie yet to be verified.

And given that this is all very, very. very low grade, it hardly deserves the claim that it is the "fifth largest undeveloped uranium deposit in Australia".

While Lynley eats a public humble pie following the previous day's braggodocio, company secretary Sam Appleyard has revealed that Lynley's salary as CEO is a mere $100,000. Daily paper the Advertiser says this is one third less than the salary paid to his predecessor.

Also noted is former Labor Senator Chris Schacht's decision to sell off 12% of his investment in the company.

The good ship Marathon has not yet sunk, but it's listing badly.

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