RRL (ASX) Ann: Chairman's Address to Shareholders

Originally posted by DISCIPULA: ↑
I must say, I was astonished that a former director would publicly make such sensational subjective remarks:

I think the Board has made a series of blunders very recently, particularly in relation to the acquisition of the McPhillamys and also the other investment, Tropicana.
And my fear is - my fear is and from what I'm hearing from the Board now is that you're going to exacerbate those mistakes.

RRL SP declined more sharply than its peers’ since the AGM. These assertions have certainly counteracted the positive outcomes announced in the Biannual Exploration Results and AGM Presentation.

Mr Rose remarked that the acquisition of McPhillamys (9 years ago in 2012) was one of the Board’s recent blunders. However, the fact is that all current board members were appointed after 2015 (https://www.marketindex.com.au/asx/rrl).

Regis issued 35,714,286 ordinary fully paid shares (@ $4.20/share, totalling $150 m) in consideration for the McPhillamys Gold Project. That was less than 8% dilution to shareholders at that time with no cash outlay for purchasing a 2 Moz reserve.

@thecrabpest, the company indeed could spend $70 m to buy-back those 35,714,286 shares on market now @ around $1.7 - $2. Once the project is approved, it is not impossible to raise 150 m by an institutional placement @ $4.2/share (or more) to partially fund the development.

Due to delays and uncertainties in obtaining an approval, the McPhillamy project has long been excluded from RRL valuation by the market practically since 2014. We can hardly blame it for where the SP is now. In fact, RRL SP peaked close to $6 in Jul 20 when we had less certainty about the approval than what we have now (about 20:35 to 23:50).

The value of McPhillamy will eventually be judged/recognised by the market once the DFS is finalised, which can potentially lift the SP substantially. It was entirely inappropriate for Mr Rose to make unsubstantiated presumptions ahead of DFS.

“And I'm presuming that's going to be a very, very substantial investment …… I think it's terribly important that you don't exacerbate the problem, particularly at McPhillamys and that is getting into a long, costly exercise in developing it where there won't be a dollar return for quite some time into the future”

He should know very well that the Board would make investment decisions based on the DFS rather than anyone else's crystal ball. Nonetheless, using the AGM platform, he pushed his underlying message to the market that the McPhillamy project is a problem instead of value, provoking fears/doubts.

Mr Rose remarked that the acquisition of Tropicana was another one of the Board’s blunders: “You've probably paid a $1 for something that's currently valued at about $0.60 at the present moment”.

Although it is a widely circulated view that Regis overpaid for Tropicana, recent M&A cases in the gold sector suggested that RRL did not pay too much for the asset. The exploration results affirm that Tropicana “was definitely the right investment for us to make, and it will prove to be valuable many, many years into the future, well beyond what people give it credit for.”

According to his LinkIn profile, Mr Marcus H. Rose was a part-time non-executive director at Regis from 2003 to 2007. He is currently the executive chairman of Concept Financial Services Group (CFSG). It is surprising that an experienced company director does not look beyond very short-term market fluctuations to assess the value of a strategic asset.

Anyone think Regis overpaid for Tropicana should ask themselves:
What position will Regis be in now if it did not acquire a productive asset that can instantly generate cash flow at the time it did?
Was there an equally suitable asset with a lower price tag available at that time?
Is it worthwhile for Regis to risk losing the Tropicana deal and wait for a better deal?

Regis possess many attractive qualities:
Quality of a stable income earner, being a top-end mid-tier dividend paying producer
Quality of a growth stock as demonstrated in the Biannual Exploration Results
Quality of a speculative stock given the imminent approval of McPhillamy

These qualities also attract all kinds of predators and make the SP more susceptible to manipulations.

The best response from the board members to Mr Rose’s remarks would be BUYING RRL SHARES ON MARKET NOW.
Expand
The voting and engagement guidelines of the ASA has a Minimum shareholding requirement (pg7). Many ASX companies have adopted this policy, to name a few, Fortescue, The Star Entertainment Group, Link Group, oOh!media and Sigma Healthcare.

It is time for RRL directors to show us their convictions by buying on-market.

The current holdings of RRL directors

Last Notice
Director
Direct Shares
Indirect Shares
Options
Convertibles
1
12/11/2021
Jim Beyer
179,450
119,573
N/A
N/A
2
27/10/2021
James Mactier
0
86,234
N/A
N/A
3
30/06/2021
Fiona Morgan
56,155
473,035
N/A
N/A
4
30/06/2021
Stephen (Steve) Scudamore
N/A
34,484
N/A
N/A
5
30/06/2021
Russell Barwick
N/A
5,000
N/A
N/A
6
30/06/2021
Lynda Burnett
N/A
15,897
N/A
N/A

Directors' recent On-market trade (https://www.marketindex.com.au/asx/rrl)
Date
Director's Name
B/S
Units
Price
Value
1
05/11/20
Fiona Morgan
Buy
4,000
$4.11
$16,436
2
03/11/20
Fiona Morgan
Buy
7,000
$4.21
$29,452
3
Fiona Morgan

11,000
$4.17
$45,888
4
27/10/21
James Mactier
Buy
20,000
$2.02
$40,400
5
06/11/20
James Mactier
Buy
5,000
$4.24
$21,200
6
13/03/20
James Mactier
Buy
10,000
$3.01
$30,124
7
13/03/20
James Mactier
Buy
10,000
$3.01
$30,124
8
27/08/19
James Mactier
Buy
10,000
$5.14
$51,362
9
James Mactier

55,000
$3.15
$173,210
10
31/08/20
Lynda Burnett
Buy
6,000
$5.28
$31,677
11
21/12/20
Russell Barwick
Buy
5,000
$3.90
$19,475
12
30/12/20
Stephen (Steve) Scudamore
Buy
5,424
$3.72
$20,161
13
28/08/20
Stephen (Steve) Scudamore
Buy
6,795
$5.15
$34,965
14
04/03/20
Stephen (Steve) Scudamore
Buy
6,224
$4.06
$25,246
15
28/08/19
Stephen (Steve) Scudamore
Buy
7,589
$5.27
$39,958
16
Stephen (Steve) Scudamore

26,032
$4.62
$120,330

	Last Notice	Director	Direct Shares	Indirect Shares	Options	Convertibles
1	12/11/2021	Jim Beyer	179,450	119,573	N/A	N/A
2	27/10/2021	James Mactier	0	86,234	N/A	N/A
3	30/06/2021	Fiona Morgan	56,155	473,035	N/A	N/A
4	30/06/2021	Stephen (Steve) Scudamore	N/A	34,484	N/A	N/A
5	30/06/2021	Russell Barwick	N/A	5,000	N/A	N/A
6	30/06/2021	Lynda Burnett	N/A	15,897	N/A	N/A

	Date	Director's Name	B/S	Units	Price	Value
1	05/11/20	Fiona Morgan	Buy	4,000	$4.11	$16,436
2	03/11/20	Fiona Morgan	Buy	7,000	$4.21	$29,452
3		Fiona Morgan		11,000	$4.17	$45,888
4	27/10/21	James Mactier	Buy	20,000	$2.02	$40,400
5	06/11/20	James Mactier	Buy	5,000	$4.24	$21,200
6	13/03/20	James Mactier	Buy	10,000	$3.01	$30,124
7	13/03/20	James Mactier	Buy	10,000	$3.01	$30,124
8	27/08/19	James Mactier	Buy	10,000	$5.14	$51,362
9		James Mactier		55,000	$3.15	$173,210
10	31/08/20	Lynda Burnett	Buy	6,000	$5.28	$31,677
11	21/12/20	Russell Barwick	Buy	5,000	$3.90	$19,475
12	30/12/20	Stephen (Steve) Scudamore	Buy	5,424	$3.72	$20,161
13	28/08/20	Stephen (Steve) Scudamore	Buy	6,795	$5.15	$34,965
14	04/03/20	Stephen (Steve) Scudamore	Buy	6,224	$4.06	$25,246
15	28/08/19	Stephen (Steve) Scudamore	Buy	7,589	$5.27	$39,958
16		Stephen (Steve) Scudamore		26,032	$4.62	$120,330

No.	Vol.	Price($)
1	227466	$1.82

No.

Vol.

Price($)

227466

$1.82

Price($)	Vol.	No.
$1.83	173839	7

Price($)

Vol.

No.

$1.83

173839

No.	Vol.	Price($)
1	227466	1.820
1	369240	1.815
3	512555	1.810
2	515622	1.805
2	531980	1.800

No.

Vol.

Price($)

227466

1.820

369240

1.815

512555

1.810

515622

1.805

531980

1.800

Price($)	Vol.	No.
1.825	148196	5
1.830	117531	7
1.835	5752	1
1.840	8552	4
1.845	11949	3

Price($)

Vol.

No.

1.825

148196

1.830

117531

1.835

5752

1.840

8552

1.845

11949

(20min delay)
Last $1.82		Change 0.010(0.55%)		Mkt cap ! $1.374B

Open	High	Low	Value	Volume
$1.85	$1.85	$1.80	$26.27M	14.14M

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