Gold explorer ALT Resources Limited (ASX: ARS) has shown no movement in trading on Monday after the company announced that it must undergo cancellation of Directors shares as per ASX listing guideline.
In the process of Placement, the company has issued 1,000,000 shares to its Director without taking the requisite approval of shareholders. As a result, ASX Listing Rule 10.11 has come into play which does not provide for ratification of securities issued instead implies Selective Reduction to be undertaken. That means the company has to perform the selective reduction of shares capital and accordingly cancel the shares issued to Directors.
Let’s understand what happened?
On 8 November 2018, ALT Resources announced that it is undertaking a capital raising of up to $2.3 million via placement. It outlines the issue of up to 76,666,666 shares at a price of $0.03 per share, reflecting a 10.78% discount to the company’s VWAP being $0.0336.
Accordingly, on 21st November 2018, the company completed the issue of 19,602,033 shares as the first tranche of $2.3 million placement. Then in respect of the second tranche of the placement, the company obtained shareholders’ approval at ARS’ Annual General Meeting held on 22 November 2018. Subsequently, on due receipt of shareholders’ approval, the company issued 25,522,981 Shares under the second tranche of the placement on 26 November 2018.
But the shares issued under this second tranche of the Placement included issue to Directors. It consists of 166,667 shares issued to Director, Ms. Neva Collings and 833,333 Shares issued to Director, Mr. Andrew Sparke. But the share issue to Directors without taking a prior consent of shareholders as per ASX listing 10.11 has brought the company into the purview of Selective Reduction process implied by ASX. Under this process, the capital of the company will be selectively reduced, and Directors shares will be duly canceled.
ALT Resources stated that it is currently in the process of preparing a notice of general meeting following which the shareholder approval will be obtained for the Selective Reduction.
ALT Resources Limited (ASX: ARS) is an exploration company. The company is principally engaged in the exploration and development of gold, copper, and silver.
The stock of ALT Resources last traded at $0.026. Moreover, there has been no change in ARS’ daily price movement on 10 December 2018. Over the past one year, ARS has witnessed a massive performance change of negative 61.19% which in the past three months has changed to -13.33%.
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