July 30, 2022 | Posted by

Dear Shareholder

The circular put out by the Board of OUR company – Ironveld Plc is quite breathtaking in its assertions and infererences. Sadly, all shareholders will see that it is all too evident the levels to which Mr Clarke (& seemingly the balance of the Board) for signing off on this will stoop in order to attempt to hold onto their jobs. This response will address each of the asserted points with the real version of events and ultimately it is down to shareholders at TWO GM’s to decide how to vote – for an unprecedented magnitude of dilution awarding the broker – Turner Pope Investments a minimum of 375m warrants at 0.3p and potentially twice the amount aswell as no doubt the usual placing fee of typically 5% – £225,000 – this amount incidentally more than the first year’s interest cost on our loan proposal based on the weighted average interest rate of 12% and anticipated draw periods proposed. Or to vote AGAINST the placing on the 1st August & IN FAVOUR of the removal of both Mr Clarke & Mr Eales who have unarguably failed shareholders. They have failed them simply on the basis that they have been unable to close a deal now with TWO parties in the last 24 months (IIG & Grosvenor) and have awarded themselves shares (in lieu of what we believe to be unjustifiable salaries) in the new placing and converted their loans at a massive discount to the announced 1 pence Grosvenor transaction that they continued (and still incredibly do) to relay to the market their confidence in. Ironically, their actions in the reduced conversions being the very avenue they accuse me/Align of trying to take Ironveld down. 

1 – Addressing the juxtaposition of the BoD’s statement that our, as proposed, 1 pence premium placing of £1m  equity & a debt package of £2m would have been more onerous to shareholders than the proposed placing.  This position is so stupefying that I am truly amazed at their comments here. Indeed, it seems all too apparent to me that they are setting shareholders up for failure ref execution at the smelter with this statement – “The Board feels that the traditional uncertainty inherent in smaller companies such as Ironveld means that overly complicated structures such as those proposed by Mr Jennings bring far more risk to all shareholders than the standard Placing, as already announced, and a potential for increasing concentration of control of the Company’s shares in the hands of lenders.” Our proposal was designed to PROTECT existing equity investors and give them a CHANCE to see equity value accretion from a much higher level than any discounted placing. IF the BoD failed in their execution then a lower priced raise down the line was a POSSIBILITY but the current placing now makes this excess dilution a 100% CERTAINTY and not a possibility simply by virtue of its price.

It gets worse, even in their own example, that where supplied with approx £3m base of capital from us – sufficient from their own forecasts to complete the initial smelter acquisition cost and refurb and move them to what they have stated to the market to be the point of cash flow positivity – almost all scenarios north of 0.2p in fact leave shareholders better off via our route until the debt was to be repaid (the debt was proposed specifically to be paid back in TWO years time however – precisely to ensure the cash flow was there, quite aside from the possibility of it being converted into equity – at 1p – should the initial attached warrants have been exercised). Our initial stock receipt relative to the proposed TPI placing positions was as follows:


100m                                                       350m                                         1.5bn                                            375m

Even in their own proposed WORST case scenario in the circular of a 0.3p placing likely within 12 months (POINT OF NOTE – The equity warrants were actually only repriceable in the first 12 months) shareholders were much better off under our plan. In fact, if the company had placed AFTER the 12 months from the subscription at 1p then the warrants would NOT have been repriced on the equity component, the ENLARGED share count AND ALSO ASSUMING A FURTHER £2m placing at the 0.3p level within the 12 months (& that would have raised them approx £5m (including the initial £3m) not £4.5m as per the current placing ) would be per below:


Circa 2.2bn                                         667m                                 Circa  3bn                       375m (Potentially 750m!)

The above calculation includes the comitted director conversions ref the loans supplied by Eales & Clarke and related parties – these would have been coverted at 1 pence in our proposal. As already relayed, the interest cost of less than £240k in the first 12 months (due to timing differences on the drawdown) and £240k in the 2nd year is not onerous set aginst a 5% placing fee (as supposed) to TPI on £4.5m. It can be thus seen that even under a disaster scenario where the stock had fallen back towards 0.3p and the smelter inception had not gone according to plan AND they had raised a further £2m that the TOTAL SHARE & WARRANT COUNT was still approaching 20% less under our proposal and in fact 25% less should TPI, incredibly, receive 750m warrants (25% of the company)! This spectacular “own goal” involving no doubt the finest corp finance brains in the City and the BoD in using this example should give shareholders very, very serious pause for thought. 

Of course, any future placing price IN EXCESS of this arbitrary placing price of 0.3p would have been exponentially less dilutive – conveniently this is not included in the circular. The position of the BoD in this regard is even more perplexing set against their renewed statements in their belief in Grosvenor actually finding some capital down the back of a veritable sofa and actually being able to honor their seeming signed commitments to the company – if they found the R50m let alone the promised £5m why on earth would a future placing be required?!

To put this point to bed, this line is also a supposition on Ironveld’s BoD part – “If the Company was unable to repay the GBP2.0 million debt plus interest in two years’ time it would be forced into swapping debt for equity”. In numerous companies where I and co investees have been invested, when the company was unable to pay the loans back in full we have worked WITH the company to either extend the debt in full or have partial redemption. Again, holding a large proportion of the equity float then what interest would I/Align have in decimating this unless the debt completely swamped the equity worth?

2 – Addressing the inferences that Align acts in a “predatory” way ref the “hook” of research & then supply of loans. This is denied in its entirety. In fact it is the polar opposite. During the last 6 years running Align I have seen how exactly how the typical bucket shop placing carried out by brokers is decimatory to existing shareholders. A cursory look at those companies where we have extended loans with co investees running into the millions of pounds are all where we have large equity positions – we have been trying to save existing equity value. Our debt & warrant structure was designed purposely to stave off the immediate requirement of a massively discounted placing and give the Board of a company the opportunity to execute on plans/strategy with a view to a raise at a higher level or the warrants attached to the debt being exercised. It is EQUITY FRIENDLY not opposory. The fact that Clarke & Eales seemingly do not grasp this should worry all shareholders in Ironveld. Our packages gives existing equity holders a “chance” (dependent on management execution capability) of equity price accretion as opposed to the 100% certainty of the decimation of a discounted placing.

3 – Putting to bed the inference that I/Align are somehow responsible for the much lower placing price through calling the GM to remove Eales & Clarke. They were both put on notice by me over 2 months before the end June RNS that given all the statements that they had made to the market ref their confidence in the Grosvenor deal closure together with direct statements to me (approaching TWENTY times from Eales in particular over the preceding 12 months) that should they attempt a discounted placing given my making offers to PRESERVE equity worth that I would call a GM to remove them. The reason the share price fell materially post the RNS relaying the GM call to the market is because they incredibly telegraphed to the whole world that they were looking for upto £5m of placing funds in that very RNS! There was zero need for this. Given the magnitude of Director loans and accrued salaries then it became, irony of ironies, in their interest to place as low as possible from a pure economic perspective let alone the benefit they would gain through the dilution to me/Align at the removal vote and unfortunately by extension to ALL other existing shareholders unable or unwilling to commit to the discounted placing.

4 – Addressing the inference that I had somehow misled the BoD with regards to the as proposed £1m placing breakdown. The true facts are that the FCA regulated broker who was to co-invest in this portion with me represented to me a minimum of £250k but that there was a high expectation of being able to raise more. This was confirmed directly to the company and Mr Clarke is well aware of my capital raising ability, my having been instrumental in the raising of over £1m for Kazera Global just over 2 months ago – this was also raised at a modest PREMIUM and tied up within days and to which, we point out, Mr Clarke did not commit 1 single solitary penny even though asked explicitly. They also know it is simpy inconceivable for me to make such a commitment without being able to follow through. Which brings us to the comment in the circular made ref the delayed loan receipt to Ironveld in the spring of 2020. I am sure that this period will be forever etched in almost all peoples memories when stock market’s halved, liquidity dried up to the point of non existence and humanity felt it was facing an existential crisis not seen for a hundred years as Covid entered stage left. Yes we had liquidity issues at the time as did many, many others and yes an agreement was entered into to defray some of the loan disbursements. These were ultimately honored.

5 – Addressing the barbed comment ref Align’s net assets – a cursory glance at our top holdings and the aggregate worth would make it abundantly clear aswell as most of our TR1 disclosures that Align does not reflect the entirety of the capital and assets at my disposal. Further, the BoD are well aware of the co lending entity in the as proposed transaction aswell as prior offers from them with Align and that they are a well funded and well known lending entity. Two can play the “barbed” game however and it seems that our “lowly” net assets are still £1.3m greater than Grosvenors from a cursory look at their public filings! 

5 – The accussations of “threats, bullying, coercion” are laugable in extremis. I was told personally by numerous co-parties connected to Mr Clarke of threats he was throwing around about me and if necessary will call for correspondence in this regard. I learnt 43 years ago that there is only one way to deal with bullies – that is to stand up to them (I would suggest googling “Giles Clarke Bully” to see what others have to say in this regard). If they believe that a shareholder making clear to them in no uncertain terms that the actions that they are taking (in particular waiting approx 12 months for Grosvenor to come up with the money!) are believed to be wrong is “bullying and threatening” then they must have led a very sheltered life. In fact, such is my view of Mr Clarke that I have purposely kept my contact with him to as minimum as possible. Ditto, if my calling a GM asking for what I percieve to be Directors that have failed shareholders to be removed to be the “bullying” then it seems that using my democratic shareholders rights are not to their liking. Diddums.

6 – This comment is defamatory and rights are reserved here – “Mr Jennings has a track record of offering loans to clients of Align Research and, if these proposals are rejected Mr Jennings attempts to remove key management which can cause significant disruption to a company’s operations and progress”. I have attempted to remove management in a few companies completely unconnected to any loan proposal – requisitions have been brought because they have presided over failure for shareholders and I have attempted to hold them accountable. This should be applauded and is simple capitalism.

7 – Finally, as to their veiled inference that I was looking for “price, sensitive” information. The company had me locked inside for many months during the last 12 and thus the sharing with me as (a) a potential capital provider, (b) a then proponent of the company through the research arm and (c) as of course the largest shareholder is and was perfectly normal. There is nothing untowards in receiving such information in any of those capacities. But whilst we are at it, we can confirm we have suggested to the company that they look closely at price action and sales leading upto the period before even I was wall crossed. It strikes us as odd that the stock price was falling sans news of the placing being released by the company on the 29th June…

The stark facts are that a simple look at the Ironveld and Kazera RNS disclosures over the last 6 years under Mr Clarke’s stewardship will reveal in excess of £15m being raised in the 2 companies and yet shareholder value destruction on a monumental scale. Do not take our word for it – simply pull up the two long dated charts. Indeed, until I got involved in Kazera Global (as Clarke brings this up ref the asset vend deal) in which I brought to the table capital (at a premium at the time!), SA operations and the now CEO Dennis Edmonds, Kazera’s pot was bare with net liabilities and a stock price that was hovering around 0.2p having been over 15p four years before – all under Clarke’s stewardship. Similarly with Ironveld – from approaching 20p in 2013 to a 0.3p raise today. If this is “success” we’d like to see failure… Whatever Mr Clarke’s earlier successes many years ago, sadly for his faith holders in recent years in the public markets this has most certainly not been their experience at Kazera & Ironveld. Between the 2 companies he has earnt over seven figures in salaries and benefits from a look at the aggregate R&A’s whilst shareholders holding stock over the last several years have lost 90% of their equity value. We leave to shareholders to decide if that is, excuse the pun “align”ment.

I am also sorry to say to shareholders that it was confirmed directly to me and in a call with Eales and James Pope of TPI that the reason the last capital raise was done at such a then discount (0.3p) was because Ironveld’s Board were asked to put hard cash in as opposed to just salary conversions and they declined. Sad fact (2) – I have also been made aware of a further offer of £1m to the Company that was at a significant premium to the current stock price (and that would have complemented our debt & warrant offer) and that this was turned down. Sad fact (3) – I made a last ditch offer to compromise in the days before they announced the placing to find a “third way” in all shareholders interests – you guessed it – zero comms from the Board. Draw your own conclusions in each of these regards…

The whole essence of their riposte in the circular has been designed to paint me as a predatory corporate raider using the debt avenue to gain control of assets. This is so preposterous it defies belief and the facts. As the largest shareholder, the provision of capital by me and co investors (for which I had to fight hard to get them to agree to those terms) was designed to PRESERVE equity value NOT DECIMATE it.

To conclude, Messrs Clarke & Eales are trying to force through eye watering dilution for shareholders on terms that are frankly incredible in regards to its cost and that sits at complete odds with the massively less dilutive proposal that was offered by us. This, set against continued comments of faith by them in Grosvenor finally delivering some funds does not add up. A vote in favour of this placing proposal is a vote for more of the same that has been experienced by Ironveld shareholders under Clarke’s stewardship this last several years and that has been characterised by massive dilution, an inability to close a transaction on Ironveld’s valuable assets, equity price erosion and yet continued remuneration for him and his fellow BoD members.

We intend to vote AGAINST this placing at the GM on the 1st August for all the reasons detailed here. And separately would recommend that shareholders who now see matters objectively and reflect on his stewardship over several years at Ironveld vote IN FAVOUR of the removal of Mr Clarke and Mr Eales on the 12th August.