Ann: Daily share buy-back notice - Appendix 3E , page-8

re: Ann: Daily share buy-back notice - Append... pisces

You are probably right that RSG is in a strong financial position. At 31-12-11 they had $50m cash plus $20m in receivables from bullion. However as an offset there were $42m in short term payables, so net only $28m in the black on short term assets/liabilities. I think they also have considerable expenditure planned for capital ($200m over 2 years?) and exploration. The 47m share buyback at $1.80 (their recent buy price) involves expenditure of about $83m, which is quite a lot.

Fortunately they are generating considerable positive cashflow due to the higher gold price and improved operating costs, so they should be OK for a while.

I would have thought they could use their funds in a better way to enhance shareholder value. The buyback was announced on 29 September when the share price was $1.40 and there was an immediate bounce in the share price from that level.

If the gold price does fall back to $USD1400 then continuing with the buyback at the elevated price would not be a good use of funds because they will deplete their cash balance.

Torpedo

I also think the instability in Mali will blow over in the fullness of time, and I believe they should be able to operate OK. Unfortunately the bad impression will stick for some time in the minds of investors.

loki