Ann: Andover South Drilling Update, page-403

1. The capital raise. Ultimately, only time will tell why this capital raise was called after drilling and before the assay results being released. However, to me it was a significant red flag for the reasons that have been thoroughly discussed in this thread.

I did the math on it and I believe they did the right think from a risk management and investor return perspective to raise early and accelerate the program. It was not a huge hit to holders but ensured that additional rigs could be activated while they were available. They did also say the initial drilling gave "confidence" to expand it.

With the below plan to not release anything other than assays they were probably hoping the price would be a bit higher, but bit the bullet on the more medium term thinking of unlocking what it is the ground rather than worrying about a few pips here or there.

https://hotcopper.com.au/threads/daily-discussion.8264925/page-63?post_id=76186701

2. The latest announcement has informed investors that cores are being sent to Perth for scientific analysis. This means that RDN have visuals on the cores. The announcement has zero excitement and zero mention of visible spodumene, there are other reflags as well which are listed below.

"ASX does not encourage the reporting of estimates of mineralisation based only on visual observations..... In many cases, information derived solely from a visual inspection of a core sample before it has been assayed and analysed could give a misleading impression of the extent of mineralisation."

See here https://www.asx.com.au/content/dam/asx/documents/listings/compliance-updates/2023/listed-at-compliance-update-apr-2023.pdf

3. They have not shared images of the cores. They are not required to, however if it was a massive discovery you would think they would (like Azure did). It is strange that RDN have been following Azure's playbook until now but then deviate on providing images.

As above. And as per the commencement of drilling announcement, they always planned to have the results "interpreted" before any release. Obviously, just posing a picture of a core would be releasing results without interpreting it. It would have been contrary to their stated plan and timeline.

I posted that here - https://hotcopper.com.au/threads/ann-andover-south-drilling-update.8303604/page-5#post-76523226

4. This announcement states that they have moved onto exploring other target areas which were not part of the original program. The company’s cap raise was initially meant for targets 1, 2, and 7. However, they are now planning to drill targets 3 and 4 as well, which are substantial and costly due to their size. While they have funds from the capital raise, if they made a significant discovery, it would usually warrant a major announcement or wait for assay results. Instead, they announced plans to drill unplanned targets, which to me is indicative of the discovery not being what RDN was hoping for.

Could this not also go the other way? That 1, 2 and 7 look tasty, forget the gold project for a moment (which the CR was also for) and keep going? Hardly indicative of anything. And anyway, I think I read that 3 and 4 were mentioned in the term sheet for the CR.

It doesn't strike me as weird they they want to drill all the areas they call "Target Zones".

5. There is also the statement about management providing guidance to the technical team. To me this is indicative of the site team not being confident.

mate... they actually said "Management will continue to dispatch samples from the program on an ongoing basis, in order to provide guidance to the technical team leading the program."

Do you not want the technical team having assay results as early and quickly as possible to guide drilling? Seems like a pretty reasonable thing to do to try and ensure the best possible results and returns for holders.

6. Other posters have also mentioned that if the cores looked good from the visuals there would be insider trading concerns.

Absolutely not. Drillers and their associates would be one of the highest on the ASIC watch list. Nothing to worry about and the information they have is according to the ASX "could give a misleading impression of the extent of mineralisation". Would hardly we worth risking your job and jail to leak some visual results that shouldn't really be used for investing anyway.

And regardless, insider trading works both ways. Knowing bad news early can be just as profitable as good news. It is illogical to say that if the cores looked good they would need to immediately announce, because on the flip side they could short. The ASX guidance is clear, you shouldn't announce visual results unless you really need to and if there is an irrational fear that the drill team cannot be trusted that probably won't reach the threshold.

Personally I think Mode's theory of staving off an early takeover attempt works, and the commencement of drilling announcement suggest the cards were always going to be close to the chest. The other thing to consider is the Li price very much looks like a bottom right now. Not playing funny buggers with cores and other less accurate measures of success gives time for Li to start moving up again. Trying to pump the stock with visuals at the bottom of the cycle seems a bit silly. I don't think we will see much Li price movement before assay results but they gave it every chance for the chart to reverse and put some optimism back into Li.

The only red fag is this is a speculative stock. However, nothing management has done so far causes me any concern about the drilling program. Nothing you have mentioned is interpretable as a negative. They are just management decisions of unknown reasons. Only a pessimist (possible one infected by listening to negative nellies at the pub) could automatically look at these developments in a negative light.

Consider your "red flags" addressed.