Posting some research on RIR that I started today as a possible "follow the money" play:
RIR shares were smashed down this week by negative reaction to the generous vendor terms and upcoming dilution for acquisition of the Hylea Co-Ni-Sc-Pt project in NSW announced on 6/12.
The announcement:
The reaction:
SP was tracking up in anticipation of an acquisition but tanked when the annc was released:
The reason:
The vendor will receive $4m cash plus $4m in shares at deemed price of 0.4c (1 billion shares => dilution), plus 1.5% sales royalty
RIR will raise the cash component through a $1.8m placement also at 0.4c, and a 3 for 4 rights issue to raise $2.2m.
(the cut-off date for eligibility to the rights has not been announced yet)
The players:
Neon Capital has taken advantage of the dump to buy shares on market to increase holding from 7% (52m) to 12.5% (92m)
On 6/12 they purchased 35,153,159 shares for $282,367 @ 0.8c ea
On 7/12 they purchased 4,846,841 shares for $33,928 @ 0.7c ea
=> Neon saw the dump as a good opportunity to accumulate and were standing ready to make a purchase. By increasing stake thru the on-market purchase, Neon increase their 3 for 4 entitlement to 75% of 92m shares, which is 69m shares at 0.4c
Now, Neon Capital is also the underwriter for the acquisition placement.
=> their fee is paid as 200m options exercisable at 1c with expiry of 2 years
=> as underwriter they get to mop up shares not taken up in the placement or rights offer
Additionally, Neon and RIR have a common director Tim Kestell who holds 51m shares held in name of Blue Capital Pty Ltd
This could rise to 89m if he takes up his full entitlement in the 3 for 4 rights offer.
So, Neon / Tim Kestell are bent on building up a big stake in RIR.
Combined holding after rights issue = (92+69) + (51+38) = 250m shares, plus underwritten shares not taken up in rights issue, plus 200m 1c options
=> they would be key drivers of a future mark up.
But there is an overhang of 1 billion vendor shares which raises some concerns:
Has an escrow period been imposed on the vendor as part of the acq terms?
Has Neon made an arrangement with the vendor to control timing of his sales of RIR shares?
Neon Capital is a private investment company run by:
Ross Williams – exec chairman
Peter Pynes – exec director
Tim Kestell – exec director
RIR management:
Gang Xu - MD
Keong Chan – non-exec director / secretary
Tim Kestell – non-exec director. Joined in Sept..
No chairman???
Taking a look at location of the RIR acq relative to other operators:
CLL is at top left of this RIR map.
HLX tenements are adjacent and to W, NW, and SSE of CLL.
RIR tenements in red are further to the SW of HLX (not adjacent)
The vendor to RIR is Providence Metals Pty Ltd. A post by @ddzx says providence is owned 100% by ex-RIM director THOMAS BURROWES, which will own 35.7% of RIR
In addition, a finders fee of 62.5m shares, also at 0.4c, goes to Henconner Pty Ltd. Who are they?
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That's all I have for now. I need to do some research on the track record of Neon Capital and TK.
