04-Dec-2020:  While Tribune Resources and their sister company Rand Mining (RND) - who are run by the same management team and controlled by their founder and major shareholder Anthony/Anton Billis, can look like a bargain on paper, they both do have significant risks. 

The main risk is that the management have traditionally looked after their own interests ahead of the interests of ordinary retail shareholders.  An example of this is how they lied for years about the true ownership structure of both companies, which was the subject of a Takeovers Panel (TOV) investigation which made a number of adverse findings resulting in Billis and his associates having to sell quite a lot of shares that they had lied about being the beneficial owners of.  That investigation is what prompted Billis to liquidate a significant percentage of the gold that they held in the Perth Mint (held at cost on their books) and pre-pay the capital gains tax (to the ATO) and immediately pay two very large fully-franked special dividends in September 2018 (one by TBR, and one by RND).  The point of that was to release a decent percentage of that hidden value and distribute it to shareholders - remembering that Billis owns one third of the shares on issue for TBR and TBR owns 44% of RND.  At the time the special dividends were paid, Anton Billis controlled over 50% of TBR.  Billis is also associated with Trans Global Capital - who own 16.11% of TBR and 13.13% of RND. 

The largest beneficiary of those moves (selling the gold and paying the large special dividends) was therefore Anton Billis himself.  Following those dividends being paid, the share prices of both companies reduced significantly, by more than the grossed-up value of the dividends actually.  TBR dropped to below $4.  That would have been a great point to buy them in hindsight because they recovered in 2019 to hit highs of over $8 (getting as high as $8.44).  They are now back at $6.22 (yesterday's close).

I note that TBR is tightly held and the share price does move a lot on speculation of further special dividends funded by further sales of their gold held in the Perth Mint.  It is pertinent however that MOST of their gold was sold in 2018, and while there is still some left, and it is STILL held on their books at cost (not at market value), the drivers that were behind the September 2018 gold sale and special dividend are just not there now.  The motivation back then was that there was a very real possibility that Billis was going to lose control of his two companies, TBR & RND, as a direct result of the TOV investigation and their ultimate findings and recommendations to the ASX and ASIC.  He had managed to build of a huge store of wealth in the form of physical gold held at the Perth Mint that was recorded on the books at cost, and he faced the possibility of losing control of what happened to that gold.  That is why most of the gold was very quickly sold and the special dividends were rushed through, and I mean RUSHED through.  They were paid within a couple of days of the ex-dividend dates.  It all happened VERY fast.  I know, because I bought shares in both companies as soon as those two div's were announced - to share in those dividends - and then sold out as soon as the 45 day rule was satisified (so I could keep the franking credits) so I was watching it all VERY closely.

I have posted straws here previously about all of this - and they can be found under "TBR" - Tribune Resources.  Also - under "RND" - Rand Mining.

There are other things that I could say about Anton Billis, however I will simply suggest you google his name and look at some of the media articles about him over the past decade or more.  He has a history of suing people who say things about him that he doesn't like.

I am NOT saying that people should NOT buy TBR or RND shares.  I am simply suggesting that there is more to this than meets the eye - initially at least - and you should know what you're getting into, and the risks.  I have held shares in both companies on various occasions, most recently in late 2018.

One of the main risks is that most of TBR's and RND's gold has been produced by the EKJV - the East Kundana Joint Venture, which now has NST as the operator and majority owner.  Even before NST became involved, TBR and RND have always been junior partners and have never been the operators of the JV, so TBR do not process gold themselves.  They own a percentage of a high-grade gold province and they are entitled to a percentage of the gold that area produces - and they have to pay the operator the cost of processing that ore - to turn it into gold.  In recent years that operator has been NST (Northern Star).  During the period in which Billis was having issues with the Takeovers Panel over failure to disclose the true ownership structure of both of his companies, NST offered to buy TBR's and RND's share of the EKJV at what was probably, in hindsight, a fairly low price.  Billis refused to sell, and shortly after that we saw the dispute over toll processing of EKJV ore flare up, a dispute which is still unresolved today. 

So, to summarise, TBR's main asset is a minority share in the EKJV and they are in an as-yet-unresolved dispute with the majority owner and operator of that JV.

To muddy the waters further, when the TOV (Takeovers Panel) forced Billis to sell-down a large chunk of his TBR shares in late 2018 - because he beneficially did previously control over 50% of the company and yet had consistently denied having a controlling stake - who should step up and buy most of those shares?  NST's main rival, Evolution Mining (EVN) did. 

So EVN now own 21.05% of TBR, and remember that TBR own 44% of RND.  So EVN now have an indirect stake in NST's EKJV through their ownership of TBR (and a beneficial interest in RND), which probably doesn't sit well with Bill Beament, the top man at NST.  NST and EVN were jostling for years to be Australia's second largest gold producer - behind Newcrest Mining (NCM) and both held that position at various times.  Jake Klein's Evolution Mining (EVN) was overtaken by NST when Northern Star bought the Pogo mine in Alaska, and NST's #2 position was entrenched even further when they bought half of KCGM (whose main asset is the Kalgoorlie Super Pit gold mine).  That #2 position will become virtually unassailable when they merge with Saracen (SAR) in Feb/March 2021.  NST will then become one of the 10 largest gold companies in the world.

All this is to say that there is probably no love lost between Anton Billis at TBR and Bill Beament at NST, and all of Billis' gold is coming from the EKJV which is majority owned and operated by NST.  And Billis' TBR is in a formal dispute with NST.  The implications of that should not be underestimated. 

NST has indicated in an annoucement earlier this year that the dispute with TBR and RND is not material to them.  That's how big they are, and how small TBR and RND are.  And despite Billis' penchant for taking people and companies to court, NST has VERY deep pockets, and anybody who has followed Bill Beament's career (as I have) would advise others not to underestimate him or his resolve.

There was also a few years ago an iron ore project option - in Liberia I think it was, that if exercised would have seen RND own most of TBR and existing TBR shareholders get significantly diluted.  It would also have increased the cross shareholding arrangements between RND and TBR and made the true ownership even harder to fathom - at that time.  I'm fairly sure that option has now lapsed, but it was highlighted at the time by a newspaper article that I read as a reason why the apparent value within TBR looked too good to be true because it actually was too good to be true - in light of the various significant risks that ordinary shareholders in TBR faced at the time.  While that particular risk may now be gone (as far as I know anyway), the other remaining risks are real, and significant.

If you have a flick through the annual reports and announcements of TBR and RND you will see that they provide the absolute minimum information and details required by law.  They are not shareholder friendly or shareholder focussed, except in terms of the majority shareholders.  There is very little in the way of engagement by the company with ordinary shareholders.  That does NOT make them uninvestable, but it should be noted.

So - I've held them before.  I probably wouldn't hold them again.  You can make money out of them if you buy and sell at opportune times.  However, know what you're getting into.  There are risks here.

http://www.australianmining.com.au/news/tribune-puts-faith-in-philippines-mining-industry/

[December 7th 2018]

I figured Anton had a plan...  Didn't know this was part of it though...

Saturday 17th November 2018:   Straw 1 (of 2).

Northern Star (NST), who own 51% of the EKJV (East Kundana Joint Venture, which TBR + RND own the other 49% of) have offered $150 million to Tribune (TBR) and Rand (RND) to buy their 49%.  The breakdown is $112.5m for TBR's 36.75% of the EKJV, and $37.5m for RND's 12.25% of the EKJV.  See here.

It seems like an opportunistic bid, and it is, but that's because the majority shareholders of RND and TBR could be in a world of trouble with the takeovers panel, who on Monday October 29 made the following orders:

Tribune Resources Limited – Orders

The Panel made a declaration of unacceptable circumstances on 14 September 2018 in relation to an application dated 20 August 2018 by R Hedley Pty Ltd in relation to the affairs of Tribune Resources Limited (see TP18/67).

The Panel has made final orders (Annexure A), the effect of which includes:

• vesting 12,025,519 Tribune shares held by Rand Mining Limited in ASIC to sell
• requiring the relevant parties (defined as Tribune, Mr Anthony Billis, Ms Phanatchakorn Wichaikul, Ms Buasong Wichaikul, Sierra Gold Ltd, Sierra Gold Pty Ltd, Trans Global Capital Ltd, Rand, Nimby WA Pty Ltd, Lake Grace Exploration Pty Ltd and Northwest Capital Pty Ltd) to provide corrective substantial holder disclosure in a form acceptable to ASIC
• prohibiting the relevant parties taking into account in determining whether they can rely on the 'creep' exception1 (i) the shares to be vested in ASIC and (ii) for a period of six months after the provision of corrective disclosure, any other shares in which they have a relevant interest or voting power, and
• an initial voting restriction until the date that is one month after the corrective disclosure is made and a further limited voting restriction to take into account the effect of ASIC not voting the vested shares. 

The full Takeovers Panel (TOV) announcement can be viewed here.

On October 31 TOV announced (see here) that they had received an application from RND seeking a review of the panel's final orders in relation to TBR and while they hadn't yet decided whether to hold a review or not, they had in the meantime made interim orders to stay all 4 of the final orders for up to 2 months - or until further orders are made - whichever comes first.  In other words, the largest shareholders of RND & TBR have been granted a stay of execution, but not a reprieve.  

Continued in a second straw...

Saturday 17th November 2018:  Straw 2 (of 2).

This is the second straw relating to the NST offer to acquire the 49% of the EKJV owned by TBR & RND for a total of $150m, as detailed in the first straw.

The Takeovers Panel (TOV) orders, which have been stayed for up to 2 months (from Oct 31) were made due to findings of unacceptable circumstances in relation to the major shareholders of Tribune (TBR), and 1 of those major shareholders is Rand (RND).  The chain of events can be followed by clicking here, then here, then here, and then here.  The latest TOV announcement regarding the interim "stay" orders can be viewed here.

During this time, Tribune and Rand (which are managed by the same people, and who appear to be owned by substantially the same people as well) have rapidly sold the vast majority of their large store of gold bullion that they had held in The Perth Mint (that bullion being one of their two largest assets, the other being their 49% share of the EKJV), then very quickly pre-paid tax on the capital gains from those gold sales - to generate franking credits, then paid all of that profit out as special fully franked (FF) dividends.  The dividends were so large they were equal to half of the entire market capitalisation of each company on the day before the div announcements were made, without taking the franking credits into account.  They then also moved the payment dates forward.  It all seemed very rushed.  

TBR paid a $3.50 FF special dividend and RND paid a $1.25 FF special dividend.

TBR closed at $4.63 yesterday.  RND closed at $2.15.

TBR & RND told us 1 month ago how much gold they have left at The Perth Mint - see here and here.  It's 11,413 ounces, worth just over A$19m at today's gold price, double their A$9.5m book value (which is based on cost price).

TBR & RND have a combined market cap of A$361 million now.  Apart from that $19m of gold bullion, their only major asset is their 49% of the EKJV.  In that light, NST's A$150m offer for that 49% does seem low.  However, due to the situation that the major shareholders of RND and TBR have gotten themselves into with the TOV, it might just get accepted.

I think ordinary retail shareholders in TBR & RND are going to get screwed from here.

Disclosure:  I bought $10K of both companies to secure the special dividends, then sold out completely after satisfying the 45 day rule, which was 2 days before the NST offer was announced.  They've both fallen further since.  Happy to be out!