This is a very bad report advising that Royal has continued to waste money on acquiring more iron ore rights and is considering emerging its assets with the chairman's other Braemar Holdings.
Royal has around $1.6m cash in the bank and little prospect of raising further capital. The price of Iron ore today is $56 pt or AUS $70 pt FIS in China. There is no way Royal can ever get a $20 billion project off the ground at these prices. There is no one who will fund this project until another boom happens and everybody knows that is not going to happen for a decade.
1. The agreement with Iluka is unnecessary as it involves cash to be spent on acquiring iron ore rights in EL4842 more than 30 Kms further away from Razorback. The agreement calls for Royal to spend $250,000 pa until Royal declares DTM followed by further $1,500,000.
DTM could be in 10 years time. That's could mean a $2,500,000 spend on exploration just to hold these rights. Such an agreement is completely inappropriate at this time.
Royal has many areas in its current Red Dragon projects that are more prospective that this project that is hidden below the surface and highly speculative.
What about spending this money at Levi Range (visible, outcropping and is part of the Dragon Project) which is a closer to the port by 40 kms or the tail of the Dragon or the neck or head of the dragon not to mention the big area of ground already held below Iron back ridge not yet touched.
What was the chairman thinking when he signed this agreement?? It seems that Royal needs more than just one person who can make such a decision. A more independent BOD is required immediately.
2. Vending further Braemar leases owned by the chairman into Royal which I assume would greatly increase his own share holdings in Royal we assume is simply a bad idea for Royal.
Royal has an outstanding obligation to Mintech and Goldus around $2.5million which it cannot pay. This is its primary asset.
Loadstone owes and has defaulted on its purchase contract with Helix over that purchase and currently owes Helix $1,000,000 plus interest since 2014. (see Helix web site). Is Royal going to assume this Helix liability of $2.57 million
Braemar Iron one of the Chairman's other companies purchased the iron ore rights in EL 5129 where I am reasonably advised that final amount of the purchase price remains outstanding to those parties.
Since acquiring other leases Braemar Iron has spend very little money on exploration in those leases.
There are huge liability for Royal to take on all these extra Braemar assets where Royal cannot pay for these extra expenses and has only $1.6m cash left in the bank. Stop this proposal now and spend no more money on it.
3. There is no ways except for a miracle that Royal is likely to be able start on a iron ore mine in the near future.
4. Royal is still spending big and running out on money.
5. The BOD should be looking to preserve its cash or use it to acquire non iron ore projects.
MFE Price at posting:
1.5¢ Sentiment: Hold Disclosure: Held
