RSL was reconstructed from Retail Star (in liquidation) to...

RSL was reconstructed from Retail Star (in liquidation) to Resource Star. It shares were relisted on 21 January 2007 and traded through to 14 July 2008, when they were suspended at the Company's request pending an EGM to approve a reconstruction and release of a prospectus to raise exploration capital. The reconstruction was a 17 for 1, and the prospectus was for $5m. [ASX 4/7/2008], The shares were suspended at 1.3c?

The EGM approved both, but the timing was such (the onslaught of the GFC) that the prospectus didn't get away. [ASX 11/7/2008, 31/7/2008, 23/10/2008]The shares therefore remained on suspension.

With the support of Red Rock as a major shareholder and provider of loans for minimal operating expenditure the Company continued to operate. The farm in agreement with GBE was executed, as was a farm in agreement for the Tasmanian Gold tenements. An exploration program for rare earths and uranium in the Malawi, NT and WA tenements was developed, as outlined in the 11 Dec 2009 prospectus. [ASX 11/12/2009]

It returned to trading on 25 February 2010. Prior to the return, RSL raised $1.9m in cash through a placement at 20c, not including 3m shares (at 20c) to repay Red Rock loans. [ASX 11/12/2009]

An entitlements issue of listed options, 1 option for 2 shares held, strike price 20c, for shareholders of record at 28 June 2010 was made. The options were priced at 1c and raised $250,000. [ASX 16/6/2010]

A placement was approved at the July general meeting of 5m shares at 10c. [21/6/2010]

So, a shareholder that was in place at the suspension is in one of two positions. If, according to their investment strategy they sold in the period since relisting, then they may have made a loss depending on their entry price (consolidated 17 for 1). If they are still holding, then they may have bought options under entitlement at 1c (today trading 3.4c, high 8c). But, as has been noted here, a number of holders thought they were expensive.

They may have bought in the placement at 10c, today close 11c, high 20.5c.

They may have increased their holding somewhere along the way (high 20.5, low 5.5).

The reason I am in (in the last 6 weeks) is the underlying asset quality is substantially improved. They have 80% of the Machinga rare earth tenement, with a free carry down to 20%. [ASX 11/12/2009, page 148]. I think that is a fantastic deal. The tenements in Australian have good Uranium prospects, in accessible territory and with good proximity to other mining operations (see prior post on NT). Australian Governments are relaxing U export attitudes, in a world now needing low carbon energy, and with China building nuclear reactors faster than Great Wall utes, (Allow me a little licence here, lol), the landscape is rapidly changing.

The managers and directors have a good track record, and realistic pay scales. Unlike some!!!

For me, a good near term hold.

F111