This is my first and last post here, but I can try to shine a...

This is my first and last post here, but I can try to shine a little light, maybe, on the decision process.

RSL is listed on the retail sector. It had a dispensation from the Exchange allowing it to raise money last year and spend some of it on exploration. But one more license, or one more dollar raised for exploration, would trigger a suspension and relisting with filing of Chapters 1 and 2.

An RSL without the ability to raise new money or take on extra projects wouldn't have much chance of meeting investors' expectations, would it? So the sooner out of that straitjacket the better.

On a relisting of any company, there is a minimum of some figure - what is it? something like $1.5m plus one year's admin, but in any case enough to carry out its programme - required to be in the balance sheet.

So you know how much cash the company has - some fundraising sure to be required.

And any funds raised HAS to be at 20c or more per share. So consolidation sure to be required.

Now a fund raise where existing shareholders get a chance to participate is most equitable. So one might hope the RSL management would be decent enough to offer an entitlement issue rather than a placing. Seems that's the case, doesn't it?

And in order to get take-up of an entitlement issue the price of the new share offer is normally at a discount to the market price: the formula is normally like this:
Market price (say): 100
Rights Basis (say): 1 for 4
Offer price (say): 75
Ex rights price: ((4x100)+(1x75))/5 = 95
Discount of rights to ex-rights: 1-(75/95) = 0.2105, or 21%

Particularly for a small company, a discount of rights to ex-rights much under 20% will often convert to low take-up.

So if one takes account of the amount of money to be raised, and the need for a discount, and assumes a RSL price of 1.5c/1.6c/1.7c, then the rights price (and so logically the consolidation ratio needed to take that rights price over 20c) more or less defines itself. There isn't that much scope for the exercise of discretion.

Now, assume also that just as there are some shareholders who like a 1c/2c stock, there may be other 'potential' shareholders (who will be needed if the company is to grow) who will only look at a stock listed and named as a resource stock and with a 20c plus price!

You might (again thinking logically) want to give them some opportunity to enter if they express interest, because they are the 'new believers' and with the 'old unbelievers' potentially selling they are going possibly to be the driver for future price performance. But they are not existing shareholders so will have no entry point under the entitlement issue. Might not the 5m therefore be a way of ensuring that something was available to offer any (hypothetical) brokers and/or investors who were not existing shareholders but might have expressed interest?

Bonus warrants and loyalty warrants etc will have value (or not) according to their terms, but them aside, it may seem that RSL and their advisers have - at this stage -been less driving all over the road, than following tramlines offering little opportunity for deviation!

The road is wide, but the gate at this point may be narrow.......