Metallica Minerals Ltd: Australian Bauxite Developing Company

About Metallica Minerals Ltd

Metallica Minerals Ltd is an Australian based company listed under Australian stock exchange deals in bauxite developing. A business asset of this company is located in Queensland’s Cape York Peninsula. This venture has extended its operation from mineral exploration to its development and production which is also a core part of a business cycle. The aim of this group is to create a successful venture which has two features such as sustainable and profitable bauxite producer of 5-7 Mtpa of bauxite for next 5 years.

Achieving this aim, the company applied its efforts from the last 2 years on one of their project names as Urquhart bauxite project. This project belongs to the joint venture of Cape York bauxite and heavy minerals sands in Queensland. 50% ownership is held with the Metallica Minerals Ltd in this joint venture among two operators. This joint venture is essential to achieve all the desired aims and the objectives which are impossible to accomplish for a single entity in a limited duration.

Different projects of Metallica minerals Ltd are URQUHART BAUXITE in weipa and URQUAHART POINT, CAPE FLATTERY SILICA SAND PPROJECT located in cook town and cairns. ESMERALDA GRAPHITE PROJECT located in Karumba and Croydon. SCONI PROJECT in nicket refinery and Townsville. Above mention, map highlights all the current projects of the company in around Australia. This shows the market capture of an entity in increasing its monopoly in the market to gain higher returns. The company emphasizes on generating both monetary as well as non-monetary.

Various products in which the Metallica minerals Ltd deals in include bauxite as the primary unit of the business along with graphite, silica, sand mines, nickel, and cobalt. All these things are the products offer by this company are enough to generate higher income for an entity in a particular financial year. Market segmentation of this company depends on the desired location of their projects which covers significant market niche. These niches are located in or around Australia in converting potential customers and business users into regular and loyal consumers. Products and services offered by this entity are only for the business customers who further utilize these products in making best out of the raw materials.

For exploring minerals, the company requires permission and licenses and permits to utilize the natural resources. These licenses show the transparency in the business practices of the business in producing the better output by following all the rules and policies prescribed by the government.

Projects of Metallica Minerals Ltd

The higher market volatility of this company shows its positive or favorable performance in producing higher returns in a short span of time. Investors are interested in knowing the financial structure of an entity along with its stock returns before investing in any product. Higher market volatility is required to increase their returns in a specific time period as no investors want to invest in a product with little or no volatility. Volatility is measured by a standard deviation that projects higher return over a particular period.

Substantial interest terminology is specially mentioned in the corporation’s act 2001 according to Australian stock exchange council. The aim of this council is to prioritize companies who have a relative interest in the company. To avoid the biases in the company among other employees of the business, this guide comes into existence. This guide is helpful for both the investors as well as legal advisors in applying the principle of relative interest in securities (Gomez, Padmanabhan, Kamaruddin, Bhalla and Fisal, 2018). Two threshold limits are set in this guide in whom the substantial interest of the company is judged in two percentage limit of higher than % and higher than 20% to determine the status of the company as the family or non-family members working in a similar entity. The relative interest in the company is ascertained by knowing the influence of a person over other in terms of the securities used in the company. Relative interest can occur in which situations such as in case of acquisition o the business by their relative whose voting rights in the new firm is more than 20%. It can occur due to takeovers of the company, security options, warrants, escrow arrangements and substantial holding notices.

Substantial interest in the company is defined under section 608 and 609, under which the relative interest of one person in the company other individual is judged by applying various tests and rules.

General public ownership plays a dominating role in Metallica Minerals Ltd as they have 59.04% share in the company (Lepetit, Meslier, Strobel and Wardhana, 2018). All the companies policies and various business decisions is taken by the general public as they are the true owners of the company due to a higher share of ownership held by them. On the other hand, private company ownership is higher than the threshold limit of 20% as they have 30.36% share in Metallica Minerals Ltd. Both these individual’s share in the company does not point out towards the substantial holding in the Metallica Minerals Ltd as this company is non-family members without any kind of relative interests. Business decisions are taken by the public in large which is non-biased decisions as all the shareholders have a different opinion in judging all the situations different with no influence of the top management of the company. By enjoying a higher share in the business concert, metallic minerals Ltd itself segmented their sole powers among the major shareholders in the company.

Products of Metallica Minerals Ltd

Internal members of the company named Metallica Minerals Ltd has 9.42% share in their own company which is higher than 5% substantial interest. According to the corporation’s act 2001, of Australian stock exchange council under section 608 and 609.  They have 9.42% of substantial interest in the company which is not enough to dominate all the shareholders of the company. They can only participate in the group discussion with just some votes as the final decision will be taken by the general public who have the higher number of shares in the company dominate among all the members.

Mr. Peter Turnbull is newly appointed the chairman of Metallica mineral Ltd in supervising the board meeting of the company. The major role played by a chairman of this company is to handle the domestic as well as global operations of the business entity. Earlier chairman of this company was Mr. Barry Casson who hold their position for a total period of 6 years. New chairman MR turn bull has law and business expertise with 30 years experience in this field along with sub-specializations in global energy, resources, and asset ownership sectors. He has corporate working experience of a Business regulator in Australia and Hong Kong.

Non Executive director

Mr. Steve Boulton handles the position of non-executive director of the company. He has 40 years of experience as a fund and asset investment manager. He earlier worked in both private and governmental organizations for over 15 years in getting knowledge in various fields such as Australia’s infrastructure, Australian Pacific airports, and national associations.

Mr. Wand Ruobing was worked as a chairman of Jilin Jien Nickel Industry Co. Ltd in Australian was the largest shareholder of this company. He is connected with his company since 1996 as he is the qualified internal auditor.

Chief executive officer of this company is Simon Slesarewich who holds this position on 13^th July 2015. He is a mining engineer by profession registered under Senior Site Executive in Queensland with 20 years experience in this stream. Prior experience of Simon in the miming field is required to handle all the business operations of the Metallica. He has a graduate diploma in Administration with dual specialization in finance and investment to boost the financial performance of the company by changing the investment structure to avail the benefit of the market volatility. 

Particulars	Formula	2014	2015	2016	2017
NPAT		17525154	7722353	-5747331	-2559121
Total assets	16930337	9395752	5275212	6087641
Return on assets	NPAT/Total assets	1.035133	0.821898	-1.0895	-0.42038
NPAT		17525154	7722353	-5747331	-2559121
Equity		30133461	30603461	32205513	35650900
Return on equity	NPAT/equity	0.581585	0.252336	-0.17846	-0.07178
Total liabilities	807972	500155	381639	261299
Total assets	16930337	9395752	5275212	6087641
Debt ratio	Total liabilities/Total assets	0.047723	0.053232	0.072346	0.042923
EBIT		17525154	7722353	-5747331	-2559121
Total assets	16930337	9395752	5275212	6087641
NPAT		17525154	7722353	-5747331	-2559121
Equity		30133461	30603461	32205513	35650900
Debt ratio	EBIT/Total asset*NPAT/EBIT*Total assets/Equity= NPAT/equity	0.581585	0.252336	-0.17846	-0.07178

Total assets to ordinary equity show the relationship between assets and equity in creating a financial structure of the company. This ratio shows the part of held by all the shareholders. An entity financed their company through equity in purchasing the business assets. In another way, it can be understood that an entity generates a return on all the assets held in a business for a particular span of time. The common element in both the ratio such as return on asset and return on equity is net profit after tax earned by an enterprise differs from one period to another. This variable helps in determining the strong component of total assets and the shareholder’s equity. Higher assets will decrease the return on assets and higher amount of equity will decrease the returns generated over a particular span of time.

Licenses and Permits for exploring minerals

Return on equity is less as compared to return on assets from 2014 to 2017 period due to increase in the amount of equity and decreasing amount of net profit after tax (Payne, Daghestani, Doss and Wong, 2018). NPAT is less as against the ordinary equity which denotes the issued share capital by an entity.

To Managing director Sub- Evaluation of share price movement This is to inform the top management about the market share price comparison of Metallica minerals Ltd with the all ords index for the two financial years 2014 and 2015. All ords index is represented by red lines and blue lines and area denote the share price movement of Metallica minerals Ltd company. The share price returns of All ords index and the Metallica are parallel to each other. In terms of the correlation between these two elements, there is no correlation between the share price returns of these two indexes as both these are showing the different direction. All ords index’s returns are increasing with increasing rate and on another hand, Metallica minerals Ltd shows fluctuating returns with both increasing and decreasing return. Market volatility is important for an entity to stay in the dynamic market in generating higher returns on their investment products. By showing the above chart, a Metallica minerals Ltd share price return is highly volatile as compared to the share price index of All Ords index. Volatility is measured in terms of all the fluctuations takes places in the monthly share price movement of the company in the last two years. It is concluded from this report that Metallica minerals ltd return is increasing monthly is due to the image of the business in the external entity. The firm is suggested to increase its market presence by increasing their market investment to get the desired return within a specific period of time. Financial Analyst

Metallica Minerals Ltd intentionally put their trading on the halt of their business securities till 6 September 2017. This period creates turbulence for all the shareholders who want to trade online by making changes in their investment portfolio using the website of the company.

The company has changed their Brisbane address just for the sake of their shareholders as this change will be helpful for their users to connect with the company. This particular address gives all the shareholder’s a chance to get inquiries for all their investment made in the company. 

Risk free rate- 6%

Market risk premium (rm-rf)- 4%

Beta- 0.06

CAPM= Rf+ beta (rm-rf)

= 6 %+0.06 (4%)

= 6%+0.0024

= 6.24%

Conservative strategy is an investment strategy which couples with lower risks which hardly fluctuates the overall securities. The Metallica minerals Ltd selected as an investment for the current investment is not the conservative investment strategy. Metallica Minerals Ltd is a highly volatile company which has higher risks of the investment securities whose interest on the same is not fixed as this fluctuates with the passage of time. 

Particulars	Amount	Weights	Cost	WACC
Equity	30133461	0.991	0.0624	0.0618384
Debt	261299	0.009	0.03	0.00027
Total	30394760	1.00		6.21084%

Higher weighted average cost of capital denotes the higher risks occur in the business in dealing with future investment projects. An entity determines WACC to keep track all their estimate expected costs in financing the upcoming projects.

The debt ratio of Metallica Minerals Ltd for the past two years 2016-2017 is not stable as the ratio gets decreases from one period to another. The decreasing ratio shows a large number of total assets as compared to the total amount of liabilities incurred by the company for the past two years.

The company has done nothing to amend their gearing ratio as they have increasing liabilities from one period to another which in turn, increases the debt burden for the company. The borrowings of the company have increased from one period to another which shows the debt burden of the company which requires time to compensate the same.

Current dividend policy of the company Metallica Minerals Ltd is hybrid dividend policy (McClure, Lanis, Wells and Govendir, 2018). This policy of dividend has the characteristics of both the dividend policies such as residual and stable dividend policy.

Metallica Minerals Ltd has hybrid dividend policy as the debt to equity ratio of the company has only long-term liability as compared to the short-term goal. Using long-term goal, the interest rate gets fluctuated with the passage of time.

It is recommended to the Metallica Minerals Ltd to stabilize their debt ratio by increasing debt in comparison with the amount of equity to create a balance in the financial structure of the company. 

References

Gomez, E. T., Padmanabhan, T., Kamaruddin, N., Bhalla, S. and Fisal, F., 2018. GLICs and Corporate Ownership. In Minister of Finance Incorporated (pp. 95-148). Palgrave Macmillan, Singapore.

Lepetit, L., Meslier, C., Strobel, F. and Wardhana, L., 2018. Bank dividends, agency costs and shareholder and creditor rights. International Review of Financial Analysis.

McClure, R., Lanis, R., Wells, P. and Govendir, B., 2018. The impact of dividend imputation on corporate tax avoidance: The case of shareholder value. Journal of Corporate Finance. 48. pp.492-514.

Payne, B. C., Daghestani, A., Doss, S. and Wong, R., 2018. A FINANCIAL PROFILE OF THOSE FIRMS WITH THE LOWEST COST OF EQUITY FUNDS, AND A CANONICAL RANKING OF THE RISK–RETURN FACTORS. Southeast Asia Review of Economics and Business. 1(1).