Caledon Resources Plc (LON:CDN) is a company with a bad track record for overpromising & underdelivering on production from its Cook coking coal mine in Queensland, Australia. This may, however, have created a fascinating investment opportunity. Caledon’s current market cap in no way reflects the company’s realistic potential, based on its existing and currently profitable Cook mine and its planned and larger Minyango mine. Whilst there will undoubtedly be some dilution for shareholders before that potential is fully realised, the current shareprice is, in my opinion, overstating the risk and underestimating the potential reward for investors. In 5 years time, Caledon could be a mid-tier coking coal producer with a valuation expressed in £bn’s rather than the £10m’s.
In this article I will document the AGM held on 30th June. In a second article, I intend to set out my investment thesis, and discuss how it interrelates with that for Polo Resources Ltd (LON:POL) (which currently owns over 25% of Caledon’s stock and was in takeover talks with Caledon which had to be aborted due to market volatility).
Caledon delivered a presentation at the AGM which I refer to below [1] .
My comments/thoughts are shown italicised in the text. I have included a glossary to explain some of the technical coal mining terms/concepts at the end of the article.
Disclosure: I currently hold investments in Caledon & Polo that are meaningful relative to my portfolio.
Meeting Environment & Formal Business
Mark Trevan (MD) chaired the meeting and was accompanied by Peter Seear (operations), Manesh Kotecha (CFO) and Jeremy Gorman (secretary). The meeting was relatively sparsely attended, with just a couple of other PIs and some advisors.
The formal business was dealt with in the usual fashion with just one question from me concerning Resolution 7 [2] [3] . The resolution disapplies pre-emption rights over ~25% of the shares currently in issue. The AGM Circular states:
Resolution 7 (which will be proposed as a special resolution) will empower the directors to allot ordinary shares in the capital of the Company for cash on a non-pre-emptive basis:
- in connection with a rights issue or other pro-rata offer to existing shareholders.
- (otherwise than in connection with a rights issue or other pro-rata offer) up to a maximum nominal value of £271,915, representing 54,383,000 ordinary shares of…
