major insto shareholder agitating for change, page-6

DJ INTERVIEW: Australia's Resolute Faces Shareholder Anger

By Alex Wilson
Of DOW JONES NEWSWIRES

MELBOURNE (Dow Jones)--Disgruntled shareholders in gold miner Resolute Mining Ltd.
(RSG.AU) said Tuesday they are prepared to push for a change of management in an effort
to improve the company's performance.
Resolute shares reached a high of A$2.76 in May last year, valuing the company at A$638
million. Despite gold prices around US$600 an ounce or above, its market value has halved
although the stock added 3% Tuesday to A$1.39 as investors noted talk of a corporate
shakeup.
Fund manager Officium Capital, which has a 5.7% stake in Resolute, has sent a letter to
all Resolute holders with more than 100,000 shares laying out its complaints with
management and asking recipients to complete and return a questionnaire.
Officium executive director David Guy told Dow Jones Newswires the responses so far
have shown a high level of shareholder anger and if this continues Officium will push for
an extraordinary general meeting to try to force changes.
"The options are new fresh blood in terms of management and board and/or someone
coming in and giving shareholders a reasonable return up front," Guy said.
Resolute's share price has never matched its value and Officium does not believe
current management is capable of changing this, he added. "What they are doing
isn't working, it is trading at this discount to what it is worth and we are just
trying to see if other people are as frustrated as we are."
Resolute chief executive Peter Sullivan wasn't available to comment.
Amid a 27% surge in cash costs, the company late February said it produced 127,460
ounces in the December half, with output from the Golden Pride mine in Tanzania falling
14% to 63,487 ounces and the Ravenswood mine in the Australian state of Queensland
reporting a 12% dive to 63,613 ounces.
Patersons analyst Josh Welch said he is not surprised to see shareholder dissent
emerge.
"These developments are not surprising given a mediocre performance by RSG over
the preceding 12 months," Welch said in a client note.
Officium believes Resolute would be worth A$3 a share if its assets were broken up and
sold.
Welch said his discounted cashflow valuation comes in much lower at around A$1.42 a
share and that Resolute's portfolio comprises four challenging assets that pose
operational risks.
Despite this, he has boosted his rating on Resolute to hold from sell on the likelihood
any corporate developments will be a positive for the stock.
Resolute's largest shareholder is Alliance Life Common Fund, the vehicle of Sydney
investor Duncan Saville, which has a 38.7% holding, seen by some analysts as a stake that
has scared off potential predators.
Acorn Capital owns 6.5% stake but declined to comment on the Officium letter.
-By Alex Wilson, Dow Jones Newswires; 61-3-9671-4323; [email protected]
-Edited by Ian Pemberton

(END) Dow Jones Newswires
March 20, 2007 02:53 ET (06:53 GMT)
Copyright (c) 2007 Dow Jones & Company, Inc.

Tuesday 20 March 2007 17:53:23:630 AEST