Sat Mar 08, 2014 10:58 pm
Summary of my thinking,
Resolution 3, specifically states that the placement shares will be used rather than the company’s 15% annual placement for a 3 month period. So any single share that is issued will be from an approved placement, NOT the 15%.
As I explained on another thread, unless IOP sell the Russian Assets it appears our only recourse is a stake in the holding company for the Russian licences based on the info RRL &IOP have provided and Russian Law. RRL appear to have been expecting this at the end of November. My guess was to trigger the RBL in the absence of Texas funding.
On the RBL. The lender has the upper hand in all negotiations. The more risk that is put onto the Lender the higher the interest rate. The lender will also need to ensure that the company has sufficient cash flow to service its other needs, other debts as well as the initial period of servicing the RBL. In the case of RRL, I believe that the RBL will be secured against the Trinidad Holding Company. It will be prudent of RRL to ensure that they have sufficient cash resource to avoid a default and lose the assets!
Considerable work will have gone into the FDP, which is independently verified. If Rory changes this there will be time delays, as the analysis has to be reworked. There is an argument that the additional funds are to enable the FDP to be accelerated.
RBL is not used for financing exploration. Just think about the risk and security. Those that are invested in FRR will be very conversant with this and you have to ask why was this not used on the NIKO resources. RRL could finance Exploration through security against production from other assets but are not currently in a position to do so.
My personnel view is that we are struggling with the RBL approval based on fundamentals, rather than just formalities. The fact that the term “financing” is now used suggests alternatives are being considered.
IOP / Texas may surprise us before the EGM. If not do the placement, remove the uncertainty, push on and restructure the share base just before we enter the ASX 300 if we retain a dual listing.
IMO