I contacted one of the new directors and this is what’s being proposed. I fully support this proposal and imo is great news for all us holders.
This clearly shows that Anton Billis and his team are very serious about getting our projects moving with this proposed funding. Anton is putting his own money in and also rewarding every holder the opportunity participating in a CR at a lower price than he is paying.
Sooner we get funding and get our cobalt out of the ground the better imo. Hopefully this removes us away from all this other nonsense that we can’t discuss on hear due to warnings etc, imo. Time for a fresh change in my opinion. GLTA.
May 2023
The Directors
Rimfire Pacific Mining Limited Suite 142, Level 1
1 Queens Road
Melbourne Victoria 3004
Gentlemen
Lake Grace Exploraon Pty Ltd
ACN 009 406 437 Suite G1,49 Melville Parade South Perth WA 6151
FUNDING PROPOSAL
The purpose of this leer is to set out a proposal from Lake Grace Exploraon Pty Ltd and its associates (“Lake Grace”) to assist Rimfire Pacific Mining Limited (“Rimfire” or “Company”) in procuring sufficient funds so that the Company can acvely explore its highly prospecve Lachlan Fold Belt acreage with the objecve of making a significant discovery.
Background
Rimfire holds a substanal exploraon porolio in the Lachlan Fold Belt.
Lake Grace considers the ground to be highly prospecve.
Unfortunately, save for two relavely modest drill campaigns which commenced in February and March 2023, respecvely, moneys spent by Rimfire on exploring the ground posion in its own right have been few and far between.
Indeed, according to Rimfire’s quarterly reports, no funds were spent by the Company in the half-year ended 30 December 2022, the year ended 30 June 2022, the year ended 30 June 2021 or the year ended 30 June 20201. To be clear, that represents in aggregate a period of three and a half years during which the Company did not incur exploraon expenditure.
Instead, whilst the Company spent what lile funds it had on administraon, including directors’ fees and the like, all exploraon effort over this period has been funded through two earn-in agreements with Golden Plains Resources Pty Ltd (“GPR”).
As you are aware, the source of GPR’s funds through this period was Lake Grace (and other enes associated with Anton Billis) in the amount of approximately $4 million, of which more than $3 million was provided directly to Rimfire.
1 This is based on secon 1.2 (a) – Cash flows from operang acvies - exploraon and evaluaon – of the Company’s various Quarterly Reports.
1
You are further aware that, in mid 2022, a dispute arose as to the beneficial ownership of GPR, with the maer scheduled to be heard by the Supreme Court of Victoria later this year.
The upshot is that, since that me, Mr Billis’ enes have ceased providing funding to GPR.
As a consequence, GPR has defaulted on its contractual obligaons to Rimfire. According to Rimfire’s December 2022 Quarterly Acvies Report (released to ASX on 27 January 2023), as at 31 December 2022 an amount of $2.4 million was due and outstanding and accruing interest. Some of the outstanding amount has since been paid or renegoated.
The Company’s December 2022 Quarterly Acvies Report also noted that the Company’s cash posion had declined to $0.14 million and that the Company had put in place cost deferral measures including ceasing payments to directors and reducing salaries of senior management.
Fortuitously, Rimfire was able to announce on 21 February 2023 the compleon of a share placement at 0.6 cents per share, raising new capital in the amount of approximately $1.2 million (before costs).
No doubt, raising further new capital will remain problemac for Rimfire moving forward given the current circumstances.
Proposal
Lake Grace’s proposal involves a two-stage approach to capital raising that entails two crical elements:
An upfront placement at 0.8 cents per share that can close quickly and with certainty as to the amount raised; and
A follow-on entlement offer at 0.7 cents per share which gives all eligible shareholders the opportunity to parcipate on more favourable terms than the placement.
Pursuant to the first stage, Lake Grace will subscribe by way of a placement for such further shares in Rimfire as to increase its interest from the current approximately 11.53% of the Company’s shares on issue to 19.99% of the Company’s shares on issue. Pricing would be at 0.8 cents per share, which represents a small premium to the closing price of Rimfire shares on ASX on 17 May 2023 (the last trading day before this leer was finalised). This would result in an issue of approximately 209 million shares to raise approximately $1.67 million. We understand that Rimfire has sufficient ASX Lisng Rule 7.1 capacity to undertake this placement quickly without seeking shareholder approval.
Pursuant to the second stage (the record date for which would be aer compleon of the placement), Lake Grace and other Billis enes (other than GPR which remains subject to dispute) would commit to taking up their full entlement under a 1 for 6 entlement offer at an issue price of 0.7 cents per share. This price represents a 12.5% discount to the proposed placement price.
If fully subscribed, the entlement offer would result in an issue of up to a further approximately 364.32 million shares and would raise up to a further approximately $2.55 million less any costs (and would raise not less than approximately $0.4 million, being the amount commied by the Billis enes (other than GPR), assuming the offer is structured in a manner which allows all of the Billis enes to parcipate).
2
Should Rimfire want certainty of funding under the entlement offer, Lake Grace (or other Billis enes) would also be willing to underwrite the shorall (if any) under the entlement offer (without charging any underwring fees) subject to any shareholder approvals required or deemed desirable.
As the placement would be handled principal to principal, Rimfire would avoid paying capital raising fees on the placement and, if Rimfire chooses to have the entlement offer underwrien by Lake Grace, it would also save a considerable amount on underwring fees.
The proposed placement issue price of 0.8 cents represents a 33.3% premium to both the price at which shares were issued by Rimfire earlier in the year pursuant to the capital raising referred to above and the price at which it is proposed that shares be issued to directors pursuant to the Noce of Meeng issued by the Company on 17 April 2023. The proposed entlement offer issue price of 0.7 cents per share represents a 16.7% premium to Rimfire’s previous capital raising price and, as noted above, a 12.5% discount to the proposed placement price.
In the current depressed market environment for raising new capital, we consider it is highly unlikely that Rimfire could raise new capital in such amounts on anything like the terms that are now being proposed by Lake Grace.
Benefits
We consider the proposed injecon of new capital (to potenally raise up to approximately $4.2 million) would likely be seen by both shareholders and the market as an extremely posive development.
Given the uncertainty as to whether or not GPR will meet its financial obligaons, let alone the ongoing ownership dispute concerning GPR, this is even more important than would otherwise be the case.
More than that, Rimfire would connue to have as its largest shareholder companies associated with Mr Anton Billis.
As you are aware, Mr Billis is a well-known mining identy, having previously achieved significant recognion through the success of two companies he founded, Tribune Resources Limited and Rand Mining Limited, companies with an aggregate market capitalisaon of approximately $270 million.
Holding effecve Board control of Rimfire as is proposed, Rimfire can be sure that, in Mr Billis, the Company would have the strongest of supporters and backers.
Mr Billis’ intenon would be to procure for the Company all the technical experse required to enhance the chances of mineral resource discovery.
Moreover, Mr Billis would commit to ramping up the exploraon effort which the Company’s ground posion rightly deserves.
A board comprising current director, Mr Misha Collins and proposed new directors, Messrs Anton Billis, Oliver Douglas and Roland Berzins, brings together persons with all the experience and experse to enable an ASX-listed exploraon company to achieve its highest potenal.
Finally, acceptance of the proposal would see both the angst arising from and the expenditure incurred in the current proxy fight avoided.
3
In summary, we consider that the proposal the subject of this leer has considerable benefits for Rimfire and is very much in the best interests of all shareholders.
Condions
In order for Lake Grace to be prepared to proceed on the basis proposed, the following condions would need to be sasfied:
The Board of Rimfire appoinng as directors Messrs Anton Billis, Oliver Douglas and Roland Berzins; and
Messrs Ian McCubbing, David Huon and Andrew Knox resigning as directors of Rimfire (and Mr Huon also resigning as an employee).
Note that we are fully supporve of outstanding directors’ fees, senior management fees and accrued unpaid entlements being paid in full.
Other
We trust you will agree that this proposal is worthy of the utmost consideraon of the Rimfire Board, acng in the best interests of all shareholders.
In our view, the proposal provides Rimfire with the best opportunity of raising funds so that it can undertake its own exploraon (to enhance the chances of making a major discovery). The proposal also gives all shareholders an opportunity to parcipate at a 12.5% discount to the proposed placement price.
Rimfire is more than welcome to share this proposal with shareholders. Indeed, we intend to make it public and, therefore, assume that Rimfire will also be required to do so.
Please contact us as soon as possible to discuss and formalise this proposal. Unless extended, this proposal will lapse on 31 May 2023.
We look forward to discussing this maer with you at your earliest convenience. Yours sincerely
Anton Billis
Director
Lake Grace Exploraon Pty Ltd
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