With its share price at record lows, minerals explorer Rex Minerals’ chairman David Carland has moved to calm shareholder’s nerves.
Rex shares closed yesterday at 25 cents, less than half its value six months ago and well short of its $2.80 mark of early 2011.
The nerves follow last week’s confirmation that the company had failed to attract finance for the construction of a mine at its Hillside prospect near Ardrossan.
It accepted the resignation of its chief executive and put its proposed large-scale concept on the back-burner while it investigates downscaled options for the project.
Investors headed for the exit door, sending the share price into freefall.
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Its current price matches the float price of 25 cents back in September 2007.
Others had come on board in various capital raisings over the years; it raised $5.5 million at 40 cents in March 2009, another $5.6 million at 70 cents in May 2009, and dipped in again for $42 million at $1.70 in November 2009.
The investors who spent $87 million buying in at $2.50 in October 2010 would be more concerned.
Carland’s letter to shareholders today maintains the view that it’s still all systems go.
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“My overriding message to you is that, as a company, Rex Minerals Ltd remains committed to the development of a large-scale copper-gold-iron ore project at Hillside ,” he writes.
“A feasibility study is nearing completion and the work to date reaffirms Hillside as one of the world’s best, near-term, low-capital intensity, high-quality, copper-gold projects.
“A mix of positive and negative commentary about Rex and Hillside has been broadcast in the past week, so I want to address these issues and reinforce your board’s absolute commitment to advancing Hillside as expeditiously as possible and in a way that maximises shareholder returns and respects community concerns.”
Carland goes on to affirm the company’s previous position re its viability, adding that the new option for a lower capital start to the project will be subject to
“a short-term review, which we are calling an extended feasibility study”.
“Hillside is economically robust. A smaller-scale start-up will, by its very nature, be easier to finance and allow for a broader range of possible partners, or greater opportunity to ‘go it alone’,” the chairman said.
“The greater share of equity we retain for shareholders, the more value we believe will be created and returned.”
The latter comment appears to acknowledge that it might be difficult to raise any more capital from the market.
Rex still has more than $20 million in the bank.
But that won’t build a mine.
Shares opened trade at 25.5 cents.
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