Wednesday, August 3, 2011

The Opes Prime Collapse and Phillip Thomas

The Opes Prime collapse is back in the media. This was where a stock-broking firm was lending money to people for them to buy shares, but until the money was paid back, Opes Prime technically owned the shares. When there were some defaults, Opes Prime ran out of money, went bust and started selling all the shares that other people thought they owned. This caused a minor collapse on the ASX as a variety of companies took plunges.

I was an investor in one of these: Admiralty Resources. Phillip Thomas was the CEO at the time. He had a great story about how Admiralty was going to make a killing in lithium, with it's Rincon Salar project in South America. I really believed it. I did the numbers, and they worked. In the development time for the lithium project, ADY was meant to be making a living with iron mines, also in South America. The one fishy thing at this point was the existence of weird investments on their books, like some kind of medical device, and I think there was an anti-hangover medication.

So, I rode the share price from about 14c up to 50c or so, which was great. Lots of electronic money. Then, the price started to come down, and I couldn't understand why. Sure there were some delays on some of the projects, and world iron shipping prices had gone up heaps, which meant that ADY was actually losing money fulfilling their contracts, but there was so much positive sentiment about ADY on Hot Copper, and the numbers still added up, that I thought it was a god time to leverage myself and invest more.

Keep in mind that Phillip Thomas himself, and his son Aaron, who later appeared on MasterChef, posted religiously on these sites to explain any delay and to attack anyone who dared to criticise Phillip Thomas. There were posts by Phillip Thomas along the lines of "They have the contracts signed and are about to return them to us" when talking about big iron deals that were going to close. I didn't believe that the CEO of a company would just flat-out lie about that kind of thing. No big iron contract eventuated. Even after the annual report where the auditors expressed concern about ADY as a going concern, PT and his followers on Hot Copper and similar stock forums attacked anyone who suggested that this was anything more than a mere formality.

So I held on for a while, trying to stay afloat by trading the massive daily swings that were taking place. After all, ADY still had the Lithium lake, and the prototype, patent-pending process for extraction was going along smoothly. There was still talk of all the money that would come from that, which made me feel like I just needed to hang on until they started selling some of the refined brine. And then the bottom fell out. In order to remain solvent, ADY sold Rincon Salar! They sold the cash cow to keep the unprofitable iron ore mines running. To whom did they sell it? To a newly-formed company called Rincon Lithium Limited, which bought the lake and then disappeared.

There were lots of angry shareholders including myself at the AGM (I just kept a token amount at this point so I could turn up). I personally asked PT, who had the balls to show up as a consultant after stepping down as CEO just weeks before the AGM, several questions. One of the questions, on which I pressed him, was along the lines of "Will you guarantee that you won't take a job with whoever owns or runs the Rincon Salar?" He would not give a solid answer, which lead most people there to assume he was dodgy and planning to jump ship to go where the anonymous money was.

So, I lost around $20k that I had, and about $30k that I didn't. That's all paid off as of about... 3 weeks ago.

And now he's just been answering questions about the Opes Prime collapse in the Federal Court, because of all his shady, off-shore, tax-haven transactions surrounding Admiralty, and the fact that the guy running Opes Prime, Anthony Blumberg, had been on the board of directors of ADY as well.

I have an exam tomorrow... For Advanced Corporations law. I'm no lawyer yet, but it looks pretty open and closed that Phillip Thomas has breached a metric crap-load of directors' duties. In my book, he's a criminal who should join Blumberg in jail. But read through the massive history of the HotCopper ADY page, linked above, and decide for yourself.


  1. Nice one, echoes my experience entirely, but the numbers were a lot higher for us.

    One day I hope to be in a position to do something about it, ASIC needless to say did sweet FA, allowing PT to get away with it all, and a lot of money for his family.

    Not forgotten by a lot of people,

  2. I've still got many an email I received from the spiv himself... him even laughing openly about how the ski season was going to be great that winter whilst all the suckers burned...

    It seems the ADY story and any further accountability has died the usual Aus penny stock death...

    Take one look at Phil's LinkedIN and some of the current tenements... spiv deluxe!

    1. I looked him up. Here's his profile:
      Sounds like he's doing well for himself. But according to his profile, it sounds like he did well at admiralty. It's almost as if, when writing your own profile, you're able to whitewash all your failures.

    2. He didn't fail 'himself' he failed his shareholders by riding into the sunset with all their money to his next venture...