Ann: Real Energy raises $2.34M in a placement, page-43

Below is an extract from my letter to the Board dated 9th October, 2017. For the record, I am pro Real Energy but I would like some clarification from the Board as to why they deemed it necessary to dilute LTH’s for the money raised to simply sit in the Bank. I would like a clear answer accompanied with a business plan to move forward along with estimated costs and timelines enabling shareholders (and the Market) to fully understand Managements direction both short and long term and what, if any future funding issues may arise.

A little more transparency in relation to these “small” Capital raises and there specific purpose would be appreciated. Too many unanswered questions in the interim creating unnecessary negativity at a time we should be progressing with the acreage and experiencing positive movement in the SP.

Good Luck All.

Attention : Mr Lan Nguyen; Mr Scott Brown; Mr Norman Zillman.

Dear Sirs,

My wife and I are long term shareholders. Unfortunately, in recent times we have begun to question some of the decisions of the Board. In~particular the decision to raise new funding on two separate occasions during this calendar year alone.

The first Capital raise in June 2017 whereby the Company issued 25,000,000 new shares @ A$0.08 for a total amount of A$2,000,000 (before costs) and;

The second Capital raise in October 2017 whereby the Company issued a further 26,000,000 (approximately) new shares @ A$0.09 for a total amount of A$2,340,000 (before costs).

It was our understanding the Company was financially stable, in that there was sufficient cash in Bank to continue its normal operations. We have now (within the past three months) issued an additional 50,000,000+ new shares and raised approximately A$4,000,000 giving the business in total approximately A$9,000,000 cash in Bank.


Can you please explain why it was deemed necessary to;

1. Raise the initial A$2,000,000 in June 2017 and what exactly the funds were required for.
2. Why a separate Raise was required within 3 months (October 2017) and what exactly the funds are required for.

We understand there will be times when a business needs to raise additional funding but we fail to understand why you have undertaken two separate CR’s effectively diluting long term holders for no specific purpose and at the same time incurring two separate costs to do so. In addition to this, the timing, lack of information for the CR and your decision to not offer the new share issue to existing shareholders (at the same price level) has created an instant and negative reaction from the wider market causing the share price to fall unnecessarily, thus removing the positive sentiment and momentum recently experienced in the SP.

We will be extremely disappointed if there is no specific purpose for the recent Capital raise and request the Company outline its purpose in detail with a time line attached so that we, as shareholders can continue to provide our ongoing support. Failure to do so will simply demonstrate to us that the existing Board of Directors do not consider or value their shareholders. We hope this is not the case and trust there is positive news on the way to reward long term shareholders who continue to support you.


We look forward to your reply.