RE: RHA5 Aug 2018 10:33
salmonsandwich, no genuine investor sets out to regularly to harm their investment and you have wisely steered well clear of this. Your genuine concerns have been expressed before and the reason for share dilution is quite simple. Cash rich companies do no need to dilute shares to fund projects.
A stable mining revenue stream is needed to avoid share dilution and this can only occur after many years of construction; optimisation and snagging. RHA is now in that end point when extensive production can bring in considerable sustained revenue.
Many small cap companies like PREM have to dilute shares to raise funds in order to discover; acquire and develop projects. The share price can often fall when market confidence wanes especially after dramatic setbacks such as the sudden fall in world tungsten prices.
With a lower the share price, more shares have to be issued than before to raise the same amount of funding and the share dilution is magnified. Consequently, opportunities to acquire valuable projects worthy of future development are put on hold.
The current share dilution could also have been somewhat smaller if new investors could have read uncluttered project overviews. Many were put off investing and other with long term shares sold after being caught up in the discontent.
If only things in the past had been even slightly different. As an example, what if the dramatic fall in world tungsten prices had not occurred and ore prices were at current levels.
RHA would have been generating a stable revenue stream and projects such as Zulu lithium well advanced and possibly without any need for joint venture funding. Opportunities to acquire valuable projects would have been easily realised and importantly, timescales met as PREM could have easily have paid for quicker solutions.
Thankfully World tungsten prices are now back on track and set to improve so that PREM can pave the road to a quick recovery in share price once the 90% RHA ownership issue is finally put to bed, probably during this month.
Given the recent change in Zimbabwean ownership policies, the RHA share ownership issue is now largely symbolic. We know that PREM wants to get back into production without any further delays and has a contingency plan to obtain 100% ownership of RHA, albeit reluctantly. Either way once tungsten ore shipments have resumed, the Zimbabwean Government will obtain much needed tax and export levy income.
We should get a further update on RHA tungsten and Zulu lithium at the AGM on Thursday 09 August starting at 10:00 AM.
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