Ann: NST: Northern Star and Saracen agree to a Merger of Equals, page-46

Seems like plenty of opinions here already and they are divided. This is bound to be an interesting transaction. Though I had hoped the merger would he on slightly better terms for Saracen shareholders, being one myself and owning no Northern Star stocks since earlier this year.

Based on the EV/AISC adjusted production metric, NST currently is priced at around $15 000/oz while Saracen is priced at around $12 800/oz. The simple addition of the merged entity implies a pricing at $14 900/oz. However, note that this combined entity will be much larger and commands a higher multiple. I do not believe a mere addition of the two market caps justify the final valuation when there is economies of scale at play and also the combined entity being included in the ASX 50 if it is not already.

I actually am very positive about this transaction when I think about what the market will be like after the turn of this year. The general economy globally will be hobbling and trying to catch up on the shutdown from the virus and central banks and governments will not be cutting stimulus. Regardless of who wins the US election, it looks like precious metals will be benefiting and inflation will be pretty rampant not necessarily on the CPI front but shoved into the asset markets, which had been the case since 2003.

I wouldn't take the pro-forma market valuation figures at face value, focus on the operational and financial figures for now.

Cheers,
Brian