Ann: Results of Annual General Meeting, page-23

Hi all,

I attended the AGM in Sydney yesterday and thought I’d report back and share my take on things.

With the protracted suspension we’ve been stuck for about a year, I can’t imagine anyone is at all happy with the current situation. I’m with you on that.

I’m ‘holding’ 40 Million with those all purchased at 0.2c, so I’m eager for Raven to shake off its lingering issues, get something with substance behind it, and be reinstated to official quotation. I abhor dishonesty in stock market dealings, but I’m not so naive as to think it doesn’t happen in companies I’m invested in. “Smoke and mirrors” is a term I’ve used in connection with REL on a prior occasion.

Thought I’d share that part about me before I went on about the meeting, just in case anyone got the wrong impression of where I sit.

I attended the meeting as I was concerned about a number of things. The main ones for me were:

• What is the status of the ASX query regarding the relationship between REL and Ochre Group Holdings, which was paid over $1 million for ‘advisory services’. [For those reading this post, you may not be aware that about $1.9 million was paid by REL to Ochre for ‘advisory services’ incurred over an 18 month period comprising FY2017 and the first half of FY2018, but that Ochre and REL have several common directors];
• What is being done about assessing the Tulainyo well and what was the reason for the poor flow test results, given that early indications (as per a number of announcements) were pointing to this being a successful well;
• What is the plan for getting this back on track, given that Resolution 8 related to raising funds via a Share Purchase Plan (SPP) issued to eligible holders, yet there is nothing really here to encourage holders to invest;
• Is there is a ‘realistic’ timeframe for reinstatement to quotation given that we have been notified that this is conditional on satisfying the ASX regarding the Ochre connection, and two other less crucial aspects (refer to Announcement of 8.6.2018); and
• Does John Begg continue to have a role with the company (refer to Announcement 5.7.2018 which advised that JB was to be retained for up to 6 months @ $356/day following the acquisition of Gasfields LLC).

The Attendees at the AGM
I think there were 14 people in the room and this included:

• Nathan (Exec Chairman)
• Kar Chua (Secretary)
• Some accountants from Enrizen One
• About 6 people that I felt may not have been holders (possibly hire a crowd)
• 3 people (including myself) that I identified as actual holders

Now, I may be wrong about the ‘hire a crowd’ attendees (in which case I apologise), however, I didn’t hear any of them talk about the firm and none of them lingered after the meeting. They were also very Sydney-fashioned so could have just come down the corridor at the request of the boss to sit in and add some numbers around the table.

The two chaps I identified as holders came from Gladstone and Perth, and it was good to have met them both for a coffee and conversation after the meeting had finished.

Executive Chairman - Nathan Featherby
Prior to the meeting commencing, Nathan made his way around the room and introduced himself to us all individually. I appreciated that.

There wasn’t any fanfare upon opening the meeting – mind you, it would have been a poor look to have a song-and-dance routine or crowing about progress/opportunities given the situation the company is in. Nathan read through a brief intro, noted the financial report for the year ending June 2018, and asked if there were any questions relating to the financial report. I felt that this was the appropriate time to query the Ochre arrangement - more on that below.

He then went through each of the resolutions, after which the meeting was opened for anyone to ask questions.

There was no formal presentation regarding activities, prospects or timelines.

Resolutions
As most of you will be aware, all of the resolutions were passed.
The proxy votes were displayed on a wall, and I noticed that all resolutions had between 550 Million and 570 Million ‘against’ each resolution, and this generally amounted to about 16-18% of the votes.
Upon asking for a show of hands for those in favour of the first resolution (and all subsequent resolutions for that matter), it was clear that the motions were to be carried. Accordingly, I neither voted for nor against any of the resolutions, but rather abstained from voting.

I found something interesting with regard to the proxy votes – that was the actual number of votes against. I remember reading Tom Fontaine’s post recently where he indicated that he was going to vote against all resolutions – he reportedly holds “over 500,000,000 shares” and was going to vote against all resolutions. Other posters also mentioned that they had posted off their proxy forms and had voted against all resolutions. Objectively, to me it seems that:

• Tom did as he said, but few other holders voted against the resolutions by casting their proxy; or
• Many people voted, but their votes never made it in time/or the form was ‘lost’.

Questions
No-one seemed to be taking the opportunity to ask Nathan any questions, so I hogged pretty much all of the question time. The main questions I raised were:

1. Given that the company is in voluntary suspension, but that the announcement on 8.6.2018 states that lifting of the VS is conditional upon REL providing to the satisfaction of ASX an independent legal review of the consulting arrangement between REL and Ochre Group where more than $1 million was paid for ‘Advisory Services’, can you please advise of the status of the legal review?
2. The announcement of 8.6.2018 mentions a “well post-mortem and new geoscience and engineering studies … to more fully assess the well results”. Can you discuss why the Tulainyo flow results were so poor when other prior indicators looked rather favourable?
3. In connection with the low flow from Tulainyo, is fracking being considered and, if so, what are the issues with progressing with this?
4. The resolution relating to the SPP will struggle to get any interest with the current predicament that the company is in. Is there any strategy to change this so that the SPP would have a reasonable chance of being undertaken successful?
5. Is John Begg still associated with REL in an official capacity, given that the announcement of 5.7.2018 mentioned he was to be retained for up to 6 months to assist with REL developing its growth strategy in California?
6. We have been in VS for about 1 year. What is a ‘realistic’ timeframe for resolving the issues and returning to quotation?

Answers and General Discussion
Nathan responded to each of these questions in a friendly manner. I never turned on the blow torch or pressed him hard on these, as I’d rather encourage cordial discussion rather than causing someone to clam up under hostile questioning.

Below are the responses to the questions I raised. They aren’t verbatim, but they do reflect fairly each of the answers he provided.

1. The legal review is nearly finished and is expected to be issued to ASX in a few weeks. Anticipate about 2 to 4 weeks to resolve this.
2. The poor gas flow from the Tulainyo well took the wind out of the sails. The success of drilling the well together with early signs during drilling (porosity of the rock and gas shows) all pointed to getting good results in the flow test. Nathan mentioned that none of the parties (REL, Gasfields, CRPC, or the drillers) could work out why the results came back as they did. The use of overly dense drilling mud is suspected, but so far, this has not been able to be confirmed as the actual cause, and it may never be known. NF also mentioned that the borehole only went about half way down into the gas bearing strata (this is shown on the cross-section given in the 8.6.2018 announcement), and REL together with the other parties are also reviewing if they re-drill this hole, or drill a second one away from the first as there is still the expectation that this formation is very prospective.
3. Fracking has been considered, however, this is normally a method to increase flows in tight ground. The porosity of the sandstone in which the gas was noted was relatively high and not consistent with undertaking fracking. My concern, however, was that if the mud was overly dense, the permeability of the sandstone may have been affected to the point that the gas is effectively blocked off from infiltrating through the sandstone and into the well. Perhaps a question better suited for John Begg.
4. Nathan was acutely aware that the success of the SPP is tied to having other prospects/opportunities. He mentioned that they are in discussions with CRPC regarding possible next steps, and their approach is to bring on something with less risk (for fear that the SPP would fail).
5. Nathan didn’t directly confirm if John was still being retained in an official capacity under the arrangements that were in place as per 8.6.2018 announcement. He did say that John still advises (however this sounded like a rather loose term) and that he had spoken to John only a few days earlier. He mentioned that John was very much still on the scene due to PCL being a substantial holder in REL. I didn’t press any further on this, but I didn’t get the impression that John was doing anything substantial in this advisory role to REL. That concerns me, as $356 per day is a lot for a company that has zero funds (putting aside possible fund raising options) and there should be some clear objectives with his role. I suspect that John is well connected and has good knowledge in this field – I just don’t think there was much that REL benefited from in the time John was/is providing advice. Hopefully something good has been happening in the background though.
6. Anticipated timing to be reinstated to official quotation was discussed as being 4 to 6 weeks. Must admit I’m dubious of this, as it will need to have funding in place, and SPP will need to be connected with something decent.

To Nathan’s credit, when I spoke with him after the meeting, he didn’t look to avoid the conversation and was instead quite happy to talk for a while without trying to push me along. He was really disappointed with the outcome of the Tulainyo well, which is the source of our woes (notwithstanding the accounting issues). We discussed the prospect of trading again, but noted that even if we weren’t in VS, there would still be little happening as few, if any, investors would be looking to buy. So our current predicament would not really be much different.
Must admit that I still hold reservations/concerns about the arrangements with Ochre, but it is ASX that they need to satisfy before being able to trade, not me. Considering the number of accountants in the room, I wonder what was going through their minds when the question regarding Ochre was raised. I’d expect that they are more than aware what the numbers mean and if the arrangement was legitimate.
I hope for all our sakes that the Ochre matter is resolved soon. Having spoken with Nathan, I also hope that he is able to pull something out of the hat. I was pleased to be able to talk to him face-to-face, and I’m keen to follow up on drilling matters with John.
I’m still interested in the Tulainyo project as there seems to be a number of appealing aspects with this. It may turn out that the recent well was an unfortunate dud but that a second hole redeems the project.
With the resolutions, I felt that there was little option other than to see these through so that something ‘positive’ is happening rather than us drift off into oblivion.
All the best folks – I think a lot will be riding on what other new arrangements Nathan can put in place, but I’m wishing him all the best with that.
Regards, Grasti