PIL Pilbarara Mines look after Directors

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    PIL. Extract from 'The West Australian' on Saturday. Another case of Directors lining their own pockets first, to the tune of $2.2 million!

    DIRECTORS' entitlements have long been a pretty hot topic of debate among shareholders, particularly when ordinary punters reckon that the suits in charge appear to be skimming off the cream in free shares and options not otherwise available to the lay investor.ott,y Horgan bringshis own So it's probably not surprising to hear rumblings of discontent from shareholders in base metal explorer Pilbara Mines, which came to prominence last month on good drill results from its Teutonic Bore project near Leonora.

    Back in February, Pilbara announced a $1.2 million rights issue offering one new share plus free attaching option for every share held for a subscription price of 20¢ apiece, then a 2¢ premium to its market price.

    The stock subsequently soared as high as 55¢ late in the month on results from Teutonic Bore, at which point the issue was extended for another week to March 12.

    To cut a long story short, the issue closed with a shortfall of about 13 million shares.

    What has rubbed some punters up the wrong way is that Pilbara's directors subsequently decided that the shortfall should be divvied up between them.

    At yesterday's price of 28.5¢, those shares and options jointly had a face-value profit of 17¢ a share, or $2.2 million all-up.

    Why, we were asked, was the shortfall not offered to ordinary shareholders?

    Managing director John Davis refused to comment, other than to say shareholders would get a chance to vote on the plan at a meeting scheduled for next month.

    But sources at Pilbara told us that ordinary punters had actually been invited to subscribe for "as much as they liked" of any shortfall, in the original subscription forms sent out with the prospectus.

    Moreover, many had done just that.

    "Besides, when the prospectus went out the stock was worth less than 20¢. This is an exploration company after all, which means sometimes you just have to take a risk," the source said.

    Just goes to prove a fundamental of Business 101 - always read the fine print.
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