VAU - Vault Minerals

Hi Moit, we are on exactly the same page with regard to the potential outcomes of Resolution 10, and hopefully all will finally see the benefits of voting YES and the possible negative implications if the vote is not approved. (And i would love to meet up with you and your wife at siana, but believe me the balut is not something to look forward to (its a bit like the first and only durian i ate in malaysia some years ago, yuk!).

Hi Andrew, with regard to your question of the placement and Resolution, how it works etc. Its been split into 2 different tranches due to the limitations of raising capital under the ASX listing rules - no company can issue shares (in fact securities, as it also includes the issuance of options in the same way as shares) beyond 15% in a 12 month period without getting shareholder approval (ie to "refresh").
Thus the first tranche of the shares, being 102 million, have already been issued to placees. The second tranche is for 198 million shares. In total we have 300 million shares covering both tranches.

The Resolution is unusual as it sets out jointly the company seeking shareholders both approve:

1. The ratification of 102 million shares, already issued;
2. The approval to issue 198 million shares, yet to be issued.

in the same Resolution.

In voting YES you do both, ie ratify the first part and approve the second part. In voting NO, you don't ratify the first part but they have been issued under the 15% rule, thus there is no refresh if it got voted down, but you also don't approve the second part which were not issued. ie RED gets only $17million over the first part of the placement, and not the last part of $33 million. Thus they fail to meet the test of the Condition Precedent to Sprotts loan agreement, thus they miss out on the loan as well as the second tranche UNLESS RED can renegotiate that subsequent to failure of the Resolution being approved. That is a HUGE RISK in my view.

RED has combined the ratification of tranche 1 and approval of tranche 2 in the same resolution which is commonly put as separate resolutions - that clearly has been done purposely to force it through, but in that process runs a significant risk of it failing as a result, if too many shareholders revolt and put in a protest vote over the total issue. I personally believe you can't afford to risk putting in a protest vote over this issue notwithstanding it not being ideal.

I hope that explains it and puts it in the right perspective for you.

I have scanned a few posts on HC, by posters who have made certain points re the Resolution 10, and in their "expert opinion" why RED can remain issuing more shares and stick within the 15% rule to raise sufficient funds to comply with Sprotts conditions: They forget that the 15% rule must include the equity used to acquire Merrills equity in Siana which occurred earlier this year, ie they maxed out with that first tranche of the placement, thus the need to seek shareholder approval for the second tranche.

The posts that suggest shareholders should vote no and make RED go back to the market, possibly for a shareholder issue or even another placement fails to understand the dynamics of equity raisings, the risks of such, and the timing of such.
Firstly, RED would have to arrange another shareholder meeting to seek approval for any additional equity raising for placement etc. If they did that, who knows who would be prepared to agree to meet that, what pricing etc, what the timing etc. It would put the existing schedule for Siana development behind as contracts would need to be pulled and future contracts withdrawn from tender, and in fact potentially put the entire development build process in doubt!
Furthermore, any shareholder issue, such as a rights issue or SPP would have other serious repercussions - as well as add questions of timing, pricing (which in itself puts a cap to the existing share price), then likely for shareholders not wanting to add to exposure who dump existing shares to the value of their entitlement under the proposed issue. Its not a smart strategy.
Anyone who is serious about their investment in RED must realise there is now no turning back with the development, that regardless of whether this deal is a good one or bad one, its the ONLY one available that allows Siana to be developed on time, or even at all. Its the ONLY one that provides the certainty that we should all be seeking.
Anyone who has no shares, or minimal shares that says we should vote no is only trying to create a smokescreen and in fact has no interest in the welfare of shareholders of RED. I include posters such as Smity who have no shares and have no genuine interest in RED's share price going up, clearly they should not be someone you consider as providing balanced opinion, they in fact provide reckless negative advice for their own self-interest, not the interest of RED shareholders.

I am most concerned as a genuine RED shareholder. I state once again, that whilst I don't believe that the RED deal already arranged is ideal for us shareholders, in order to maintain our optimum value in our investment, we MUST support the deal, and approve of the Resolution, ie vote YES to Resolution 10!
If you don't vote YES then I believe you may have put the nail in RED's coffin, of your own doing. Its up to you RED shareholders to make the right decision, for your OWN benefit.

HI Beatle,
Very measured post this morning and its good to see that a lot of support is now for approving Res 10 . I hope your detailed explaination of the delay to getting final finance and the possible delay to the project will resonate with RED shareholders.AS you are aware there are many hudles still to come for Red management in the execution of the contracts until Sciana is finally built.
I will also be supporting proposal at the AGM.

Thanks Mardo, good to know you are prepared to consider a logical argument of why voting YES to Resolution 10 is a far safer option for any current RED shareholder, and should be carefully considered and accepted ahead of any emotional protest vote.

On another very important point with regard to RED, or any other gold stock, and the fairly hefty fall in the US$ gold price on Friday US time, it should be noted that for RED, being an ASX listed company although with an overseas project, its main benefit is derived from gold in the A$ equivalent. That is how the valuation will always be established for RED. Let it be understood therefore, that the A$ currency has to a large extent continued to keep pace with its US currency, thus with a sympathetic relationship to the $US dollar gold price in recent times, ie, the A$ gold price remains fairly well within a range despite the drop in US$ gold price overnight.

To see how the aussie gold price has traded over the past 12 months I provide you with the 1 year chart for Aussie gold:
http://www.xe.com/currencycharts/?from=XAU&to=AUD&view=1y

Therefore, any over-reaction and a head for the exit on RED or any other aussie gold stock due to Friday's drop in US$ gold price is misguided (although the market doesn't seem to recognise that in the short term, it tends to react to the US$ gold price, even for aussie miners in Australian gold mines!).

Hi Beatle, I thank you for the really valuable work and commentary you have been providing for all interested RED clubhouse members on Res 10 and other matters.. However, I have to admit to being more than a little worried about your sleeping habits as you seem to post at all times of the day and night (dependent which hemisphere one is in).What does poor Mrs. Beatle make of all of this? AB

Hi Beatle
Seems your point regarding the previous issue of 40 mill shares to merril is quite an important issue also. Some have stated red can get the 25 mil equity raised just by issuing 15%, but as you state part of that 15% has already been issued previously this year so this first tranche can only raise 17 mil on it's own. I'm certainly learning a bit here re cr rules etc. Thanks for keeping the facts coming. I appreciate the fact that you refer to figures that can be referenced in published reports, at least allowing me to confirm your comments, unlike some.

Hi Anderbond, if you were able to solve my insomnia I would be eternally grateful, but in fact I think that RED getting up in the 30 cents range would solve part of the problem! My wife just sleeps through it all, she's used to it now, so when I roll around in bed awake in the middle of the night i just get up and check either the dow or gold price or what someone has posted! It allows the time to pass by, although it doesn't do my health any good I am sure!

Andrew, many of the posts on HC are made based on personal opinion, and that is also important as it gives us all an idea of what people are thinking about. What needs to be carefully considered though are some of the apparently authoritive statements that are convincing but sometimes ill-informed. Its just as well you have posed some of the questions here on ASF which have provided a chance to clear up the confusion.

Hi Bealte, strange to think that I have insomnia also, and that it seems to be a common illness among the share-crazies like us, hopefully your RED holding isn't contributing to it?

Although I no longer hold, I'd like to see the reso 10 passed, yes the shares are being sold cheap, but 20% (random % figure taken, but talking about a MINE at Siana being built!) of something is better than 100% of nothing (No Siana, what's the value of RED then :/?). If Mapawa is anywhere near some of the estimates given, noone will care about the "cheap" to be issued, their only problem would be what type of wine they use to celebrate with (RED wine, naturally). Anyway good luck with the reso 10 Beatle & Co, hopefully the voices of reason (you guys) manage to pass the reso, I've read quite a few dissenting opinions on the HC, hopefully they control as many shares as their quality of post suggests about their intelligence .

Hi ParleVousFrancais,
Good to read your post and know that you continue to follow RED although not ready to take the plunge yet. I suggest that until the outcome of the AGM you will probably have much of the same in terms of share activity and price range. Its been fairly capably range bound, not sure if that's by design or chance.
I agree that for RED shareholders sakes I hope that Resolution 10 is approved. I really don't like the thought of Siana development being put on hold or even held up for a few months whilst arranging a new financing arrangement.
In the case of HC posters, I firmly believe that what we read there is not necessarily the protests of a few dissenchanted shareholders or past shareholders. There is possibly some other relationship history between the posters and RED management that is causing some to try to stir the real shareholders. I would be interested to find out when Smity ever held shares in RED (if ever!), and if he ever worked for the company or had some similar working arrangement (say as a contractor) with them! Mind you, I'm not sure he would ever be prepared to answer any of those sorts of delving questions, as it might then open his true motives and involvement with RED! Its strange that he has not ever posted about RED on ASF!
As for insomnia in my case I believe its all about following the markets far too closely, and its not a healthy way to live! When I worked in fulltime work many years ago I found the work pressures would build up but it didn't seem to have the same impact as I find with following the markets night and day that I do now. For you in particular its not a good thing as you are much younger and presumably require much more sleep. Lets hope that the markets remain reasonably buoyant so that we all benefit for the efforts we put in!

Good evening Beatle and all other high profile Red club members.

Unusually, I just received a phone call from a young lady from Red asking whether I had made my mind up on voting on the 10 resolutions, what I had decided upon and whether I had sent it off. Also asked whether I wanted to add anything further, only saying that the level of being kept up to speed with anns. etc is a little on the thin side. Must think I`m a little forgetful. Very pleasant phone manner, yet it left me with a lingering feeling urgency on their part.

Curious as to who else has been approached in this way and what their response is. Do hold obviously and fall in the group of owning over the 100,001 mark. Have never had this before. Cheers everyone

Hi all
Following the various facts clarified i have gone from a yes vote- to a no vote- and now back to a yes vote. Seems like teaching them a lesson by voting no is not going to help my cause any. Re smity, i wonder if he has any relationship with red, he just seems to like stirring the pot. I notice he gets pinged for flaming etc every couple of weeks for almost every stock he posts on. One of those kids sitting on his own you avoid in the playground. Anyway thanks for taking the time to clarify the many and varied issues at stake here and good luck to all. Lets hope someone rams a drill right into the head of a mega nugget at Mapawa. Regarding drill samples, is 1g/t I assume 1 gramme gold per tonne material processed, and is that a normal economic level for mining gold, or is that purely an indication that there may be better levels around. What sort of level would be the trigger point for getting excited. Obviously it also depends on the amount of resource, but when i notice some of Doray's results comming back 26g/t and visible gold im just curious what is considered economic for processing or building a new mine.

Hi Buckfont,
I got a similar phone call the other day and it also was a bit strange to me.
They must be a consious of some of the negative posts arround the traps.
I also hold a large no of shares & just said I would see them at AGM,Regards

Hi all true RED club members. First of all, Buckfont, mate i got exactly the same thing today. From a lovely young lady. The only thing is she wouldnt talk to me. She wanted the owner of the securities. I said you can talk to me and is it to do with the proxy form. She ummed and arred. I replied with, just vote for RES 10 and ill be happy... So when can i talk to this other person, can i leave you my number. Thanks for letting me know what she was going to say...

Beatle i think Smity maybe a disgrunteled ex employee, or someone that has lost out. Maybe buying in the highs and selling them at a lost in the lows. Completely losing out. Maybe someone should do some research before investing in it, or working for them. Who knows, but i think he should MOVE ON and BUILD A BRIDGE, GET OVER IT !!!


Last of all i got finally today what everyone has been talking about. Thats the letter from a certain somebody by the name of Bill Pike. I appreciate the fact the he wants to vote against Resolution 10 and he makes some interesting points. What i dont appreciate is the fact that he knows OUR ADDRESSES and where i live. How would he have any clue as to where i live if he wasnt higher up in the food chain, or some high up broker. But i intend to track him down. I got into this game a fair while ago now, thinking things where highly confidential.

SOMEONE TALK TO ME!!!

Hi All RED members, great to see a post from Buckfont - i feel left out, no young girl has called me!!! (just as well, my Mrs would be on my back - just imagine when I go to the mine opening next year, lol!). I have got a letter, a few of them actually from Bill Pike.

With regard to your question about the grade Andrew, actually its all dependent upon the tonnage and grade, and other various aspects such as gold recovery, waste to ore ratio, etc that determines the economic grade cutoff, but for the type of deposit that RED is seeking, and assuming the tonnage is in excess of 50 - 100 million tonnes, then a grade of 0.8 - 1.0 g/t (yes grams per tonne) would most likely provide very attractive economics. As the tonnage of the deposit increases, then the treatment plant will increase in size (ie higher capital cost but reduced operating costs) to achieve economies of scale. That will also be benefitted by low waste to ore ratios - Mapawa drilling so far has confirmed acceptable grades in the top overlying layers, which usually means there are low waste to ore ratios, subject to the depth of mineralisation and the angle of pitwall stability. Everything that has been reported to date has given Mapawa positive vibes in terms of potential economics, although its still early days and much more information is necessary to determine whether it will be a standalone operation or a source of supplemental feed to Siana.

Moit, Bill Pike or anyone else for that matter is entitled to get a copy of the latest shareholders in RED 5, at a cost which depends on the number of shareholders. He would have to pay around $400 for RED's register of shareholders I would imagine. I understand he was also quite agitated last year with the earlier placement that brought all the insto's on board through Petra Securities. I'm glad he didn't try this stunt on RED at that time, we certainly wouldn't be in the comfortable position now if it wasn't for last years placement! I don't believe he is anything different to some other shareholders in RED that also are not linked into the current placements, he has indicated he would be granted Sophisicated Shareholder status (which either confirms he is on an annual salary of >$250k pa or has net assets of $2 million (or is it $2.5 million), and his shareholding in RED is 3 million shares, a tidy number but in the scheme of things nothing special (even yours truly has more than that, but also a little fish).

With the gold price falling tonight it seems all gold stocks may come under some pressure price-wise, and if RED also is under a bit of pressure I wonder how that might affect the voting on Resolution 10, and how the placees might now think of getting the shares at 17 cents - some interesting times still to be played out!

Hi all, Hi Beatle. Thanks for your insight into Bill Pike. I wasn't aware that anyone could get a copy of the latest list of shareholders. I was a little annoyed at the fact that he knew my address. It sounds like he has a habit of doing such things. But anyhow, i know now.

Beatle i think you have too many shares...(and you continue to buy more). The least you could do is save some for others, lol. I forgot to mention to you yesterday, you are not the only one that gets up in the middle of the night and looks at the gold price and the Dow. I do that as well. But also the FTSE, the Dow futures, the Aussie dollar and the gold price before i go to bed. Its normally the first thing i do when i wake as well other than greeting my family with my presence. Its a vicious cycle, lol. You never know, you could get that call today from that lovely young lady. There are certainly people out there that will be voting against RES 10. Feelings are definitely mixed. I think it could go either way.

As for the drop in gold price and market sediments, it is looking rather ugly at the moment. I'm still not sure if it will affect RED in general, but REDS market depth isn't really painting a rosy picture at the moment. Cheers all.

Hi Moit, thanks for your comments once again. I agree that the general market plus the resources sector is likely to come under pressure today, the combination of Dow plus drop in commodities overnight have both impacted to produce a perfect storm for us today.
But if it were analysed more carefully then the drop in gold price overnight would not be considered as badly if it was realised that the aussie dollar is also coming off at a considerable rate, and just to put the current A$ gold price in perspective, take a look at this 12 month chart of price:
http://www.xe.com/currencycharts/?from=XAU&to=AUD&view=1D

I realise however that logic doesn't work on a day when some people will just want to get out in many stocks. Having gone through the worst day of 1 day trading in history as a mining analyst with a stockbroker on Oct 20, 1987, I realise you can't do more than just sit and watch it play out if you are confident the wave will pass over you (having felt like I was on the Titanic on that day!). Today fortunately is not that day by a long shot!

RED is still a cheap stock at this price, even on this day, based on fundamental value, that's what keeps me strong, knowing that gold production is around the corner, and its not just a speccy explorer with nothing ahead of it, its in a unique position, and if this Resolution gets through has ample funds on hand to cope with any short term blip caused by the general market!

Whoops so sorry, I realised that I copied the link to the aussie dollar equivalent gold price for 1 day, not the year - if you didn't realise that and therefore never pressed the Y button option, then you can see it here:
http://www.xe.com/currencycharts/?from=XAU&to=AUD&view=1y

It gives you a good idea of how the gold price remains in a solid position - recall that RED's feasibility study was at US$800/oz, and at the current gold price/exchange rate remains at around 33 cents per share, fully diluted for the possibility of new equity late next week.

Although RED has not been spared from the sell off on most equities today, its been quite resilient! Once the markets settle down hopefully by end of next week, we will have clarity on Resolution 10, and then a rush to the finish of Siana development line...

Hi There Moit,
The Registar of Shareholders cost $482 from memory and the mail out at least say another $500 odd. And no I don't "have a record of doing these things" but so what if I had? There should have been a Shareholder Placement on previous occasions in my opinion as there will be hopefully this time. All of those who voted "yes" to Resolution 10 will of course not take up their shares at 17c that my efforts will have achieved for them?
I am not sure if some of these posts are company plants or if Australians have really become timid. As part of Resolution 10 the Company are asking us to "ratify" the placement already bedded down. The only reason for that would be to sell us out all over again.
Not this little black duck.
Cheers
FW Pike

Hi FWPike,
Interesting to read your post. Before I ask you some questions, I can assure you that I am NOT a company plant, I am a very concerned shareholder that is worried that risking the finance package at this stage could completely put at risk RED's development of Siana. If your holding has been 3 million shares for the past couple of years then I can confirm I have held considerably more shares in RED than you over that period, and that I have held that number for a far longer period of time - I starting buying shares in RED (as Greenstone Resources in 1998 or it maybe 1997, don't recall exactly the first date!). Of course the number of shares doesn't mean anything, anyone has a right to their own say for the number of shares to which they own and are therefore entitled to vote over. But your suggestion that some Australians are timid, is way off the mark, I am Australian shareholder in RED, and I can be a black duck too - but I act on logic rather than emotion when it comes to an investment that has significant value and potential additional value for me!
I don't have any problem with your argument that RED should have done better with its share issues than has been presented to us, both in minimising the share issues and possibly the price, but I do have considerable concerns when presented with the facts that have now been released to the market, of how voting of NO to Resolution 10 could put at risk the entire development program for Siana.
I also don't agree with a major shareholder share issue in the context of having it become a major part of any financing, as without that issue being underwritten then there is no certainty of anyone taking up the shares and with timing of such an issue, amongst other things.

My questions of you are:
1. Do you believe that if Resolution 10 were to fail, that it could put the entire financing and development of Siana at risk?
2. If Resolution 10 were to fail, what do you believe RED should do next in progressing the company's business?
3. Did you have a similar major concern with the initial Petra placement last year, and complained to RED management on that occasion? If so, in retrospect do you concede that the Petra placement was positive in the past 12 months, or do you still consider it should not have been done?

Having stirred the market considerably by circulating the letter to shareholders, I think we need to hear your answers to those questions, and you need to provide your view of an alternative route for RED going forward rather than provide criticism without an alternative going forward, after all I am a shareholder more concerned about the future direction of the company.

Hello Beatle,

On the previous occasion that Red 5 made a placement that cold shouldered retail investors I advised the chairman that if it happened again i would oppose it. It did and I have.
No I do not think that the sky will fall in if Resolution 10 is thrown out as hopefully it will be. The gold in the ground is not melting. This placement was four times oversubscribed as I understand it. Many other companies include retail shareholders in their capital raisings. These guys need to learn to do likewise in my opinion.
As you say that you have more than 3M shares, were you included pray? If not, why are you not incensed?
Cheers
Bill