Ann: RLC rights issue of options, page-17

Options provide for additional leverage for those who are bullish on the underlying asset.

The RLC options have a premium of 2c and a exercise price of 8c. The cost of conversion is therefore 10c.

Anything under 10c, the options don't make sense for a conversion in theory.

However, assume that at sometime before expiry, RLC's share price rises from 10c to 15c.
Now, the options are worth 7c each (15c - 8c exercise price)

You've just profited 250% on your options (2c to 7c). Whereas a sp rise from 10c to 15c would only be 50% profit

For this leverage, options are generally traded at a premium to intrinsic value the further away from expiry it is. As such, the options will likely be trading at >0c from quotation - a premium for the extra leverage.

The directors also converted their unlisted options and plan to participate in the entitlement as per statement in prospectus. Another vote of confidence. I believe we will drill the second target as soon as CB-1 coring is completed as to eliminate drill rig holding cost (very expensive). This will ensure there is no downtime between drills.

I maintain that we will have so much news flow coming this financial year (CB-1 core assays, CB-1 brine analysis, next drilling news/assays/analysis). The MT surveys suggests the news will be good lol - but as aways, contact m.d Geof Fethers for any questions or queries regarding RLC's strategy.

If all goes well and RLC does well, the options will be very profitable and a good source of equity finance for the future drills.

ALSO - today is the ex-date so no shares bought will receive entitlements to the option issue.

Happy investing.