why 43.5 cents - where to from here

I first started buying RMS shares in May 05 when the first high grade results started coming out of Wattle Dam. At that time it looked like RMS could become a gold producer without too much dilution of the share capital. Both the open cut and underground mining at WD have been excellent and both Joe Houldsworth and more recently Ian Gordon have done a great job of getting the gold out of the ground.

In March 09 RMS was admitted to the ASX300 index thus opening the door for many fund managers to invest in the company. Instead of forward selling a small amount of gold and letting the funds buy on market, a 13,4 million capital raising at 53 cents was done to sophisticated investors at the very low of the market. This was followed by a $4.5 million SPP that capped the share price until June. When the shares started to show some positive momentum the board decided to put in an eleventh hour takeover bid for DIO. Eventually RMS accepted AVOs offer and pocketed $42.4 million after receiving cash and selling 11 million AVO shares at $1.80 ( AVO currently around $2.70). All in all RMS issued 106 million shares and banked $60.3 million. We now have 291 million shares on issue.

RMS will soon have $100 million in the bank with a minimum of another 100,000 oz scheduled to be mined at very low operating costs over the next 18 months. They have their own mill at Burbanks. There is another 25,000 oz low grade (2.5g/t) at Black Cat that could be used to pay for day to day expenses when WD mining is completed.

Three farm in agreements have been announced and a 5 cent capital return is imminent. This still leaves plenty of cash in the bank for more farm ins or acquisitions in the near future.

The main problem is that at least one of the funds that got shares at 53 cents in March 09 has put their BOT computer to work to trigger stop losses and to shake out ex DIO holders and also forcing some long term RMS holders to give up and look for greener pastures. So far it has been a very successful operation. I think that a $20 million buyback would make it much harder for the BOT to operate.

We will hopefully get some more information at the EGM on 30/6 about the future plans for the company. An indication of future dividend payments would be nice.

What would other shareholders like to hear from the RMS board? What should they do with the money that is flowing in every month?


Hope to see some of you in Adelaide on Wednesday.


Cheers TF