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Resource Star responds to ASX query

Resource Star (ASX: RSL) has indicated in its response to an ASX query over its ability to fund activities that the company's major shareholder Red Rock Resources (LSE: RRR) has confirmed its intention to “provide ongoing financial support”.

The company said it has already taken up the offer from Red Rock for November 2011 expenditure via an advance in funds.

Last month Resource Star announced Red Rock Resources’ support would be provided either by:

1. Unsecured loans at market interest rates; or
2. Advancing funds as a prepayment of Red Rock Resources’ allotment under any Entitlement Issue undertaken by Resource Star; or
3. Convertible loans on commercial terms.

Any loans would be repayable no later than the completion of Resource Star’s audit for the financial year ended 30 June 2012.

In its response to the ASX today, Resource Star said it is very much aware of its operating cash flow position and it intended to also undertake a capital raising in the first quarter of 2012 to raise approximately A$2 million.

“The proposed capital raising, the acceptance of the offer of financial support from the company’s major shareholder and ongoing expenditure restraint are designed to ensure that Resource Star Limited is able to continue to meet its business objectives,” the company said in its response to the ASX.


Operations

Last week Resource Star announced it has been granted an extension to the northern boundary of the Livingstonia EPL0187/05R tenement, which provides a boost to the exploration potential of the project in Malawi.

The company is earning up to an 80% interest in the Livingstonia Uranium Project from Globe Metals and Mining (ASX: GBE).

Article originally appeared: http://www.proactiveinvestors.com.au/companies/news/22350/resource-star-responds-to-asx-query-22350.html