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Is Australian Mines Limited taking its shareholders for a ride?

The Australian Mines Limited (ASX: AUZ) share price is about as predictable as a ride on a drunken horse.

The company has touted big plans to cash in on cobalt and nickel, and promises shareholders the chance to profit from the push towards cleaner energy like lithium companies Galaxy Resources Limited (ASX: GXY), Orocobre Limited (ASX: ORE) and Pilbara Minerals Ltd (ASX: PLS) have done.

When I last wrote about Australian Mines its share price was trading at 11 cents and had gained more than 500% in a month.

It gained another 30% after that when it hit 14.5 cents last week and by then the company’s share price had increased by a staggering 1,500% in a year.

But the Australian Mines share price has tumbled since then.

It closed on Tuesday at 11.5 cents, shedding more than 10% in a day and more than 20% in a week.

So what happened?

Last week Australian Mines announced it had secured $20 million from international investors by diluting its shares and had paid a fundraising fee exceeding $750,000 for doing so.

Then at 3am Australian Eastern Standard Time on November 13, Australian Mines held its AGM where a series of resolutions were passed on a show of hands.

These successful resolutions included providing financial assistance to the Australian Mines directors Michael Ramsden, Michael Elias, and Dominic Marinelli, according to an announcement made to the ASX.

The successful resolutions also included issuing shares and providing loans to directors Benjamin Bell, Michael Ramsden, Michael Elias and Dominic Marinelli.

Another successful resolution included an “increase of aggregate amount payable to non-ex”.

Two resolutions were withdrawn which comprised of providing a loan, issuing shares and giving financial assistance to Australian Mines director Neil Warburton.

And it seems little else was resolved at the meeting aside from filling most of the directors’ pockets.

While companies are permitted to provide financial assistance in accordance with the Corporations Act 2001, I would be feeling a little bit restless if I was an Australian Mines shareholder.

Australian Mines reported a loss of about $1.67 million for 2017, up by more than 50% on 2016’s loss of about $1.02 million but better than the loss of $2.57 million the company reported for 2015.

At this stage Australian Mines appears to me like a highly speculative stock and I certainly won’t be jumping on board for the ride.

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Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.