A substantial shareholder in RSG has just mailed a letter to some shareholders outlining their concerns about RSG. Their main concern being management inaction in getting the share price to reflects its value (which they believe is >$3).
I have posted the letter below, and their contact details if you wish to contact them :
Letter From Officium Capital
RE : RESOLUTE MINING LTD
22 Feb 2007 represented a sad low in the ASX performance of Resolute Mining Ltd (RSG).
On a day that the New York closing price of gold rose over US$20 an ounce, and a comparable group of Australian listed gold producers rose b/w 5 and 7%, RSG fell by 0.9%. This is a pattern which seems to repeat regularly and in fact, its ASX performance since then has been even worse.
We have over the last several years, with increasing frustration, endeavoured to explain to the Chairman and CEO of RSG, that they were not successfully coveying to the market the underlying value of RSG’s assets (which we believe is considerably higher than the current share price, or indeed any price that the company has traded at in the last 7 yrs); they they needed to do better as a management team and as a Board; they they needed to seriously respect all the shareholders’ interests and endeavour to maximise value for those shareholders.
To say that these efforts have been unsuccessful is an understatement somewhat akin in size to saying that RSG’s share price performance has been unsatisfactory.
For clarity, let me give you some background on our organisation. We have an economic interest in the performance of RSG that dwarfs that of RSG’s Board and Management. Officium Capital manages the Officium Special Situations Fund which owns 13.25 million RSG shares. Financial Planning clients of our listed associate Snowball Group Ltd own approximately 20 million RSG shares and the writer owns just over 3.1 million RSG shares in a personal capacity. All of these shares have been acquired over the last 7 years at prices below current RSG prices of circa $1.40. We are not embittered – we are simply shareholders who are incredibly disappointed in, frustrated by, the performance of RSG and in particular its Board and Management.
We are not ordinarily “corporate activists” however the time has come when we simply cannot continue to accept the poor performance of RSG and its board and Management. We estimate that on a private market break up basis RSG is worth more than $3 per share (perhaps considerably more depending on the assumptions used). Current RSG management have indicated to me that they consider their performance to have not only been acceptable but in fact to have been good and further, that they do not focus on the share price. That much is certainly obvious. But neither do we, ordinarily. However we have a strong belief that over time the price and value of assets, and in particular listed shares, should roughly approximate each other and that if they do not, someone will eventually ensure that they do. We have waited, and waited for price and value (>$3.00) to approach each other but they have not.
Accordingly, we are forced to consider doing something ourselves.
We would like to ask you (as a fellow major shareholder in RSG) to consider providing us with feedback on the issues listed below. You can do this by completing the enclosed questionnaire and mailing it back to us in the enclosed envelope or emailing me.
Issues:
1. The performance of RSG.
2. The performance of the Board of RSG.
3. The performance of the Management of RSG.
4. The divergence between the current share price of RSG and the underlying value of the company.
I trust that this has not been too great an imposition and that you will view this as a useful first step to realising the value present in RSG that the current Board and Management of RSG seem unable to realise.
(20min delay)