I can't help but think that RRL should run the number over, and consider buying OBM.
Disclaimer: I do no hold OBM, but I used to own it, and it owes me about $25k hahaha
I think the company could do it for an all scrip bid, so no additional debt.
OBM is in the doldrums, having come down from highs of around $0.40c to low of about $0.055c
Current MC is about $55m.
If RRL was to make an all scrip bid of $120m, it would mean an additional 66.6m shares bringing the total SOI for RRL to about 820m
The case put forward by @Bull Whisperer about why they believe OBM is a buy (not neessarily an acquire) is below, but take a look at the original thread (and give a TU) at https://hotcopper.com.au/threads/obm-opportunity-share-price.6554750/
What Makes OBM Attractive
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Very great opportunity for investor's to invest at this share price level can not see it lasting much longer before it starts to rise steeply in my opinion.
* 470,000 ounce and adding mining reserve.
*1.2 MTPA processing plant and all inclusive infrastructure owned.
* 1210 km square exploration package.*infrastructure also including 2 camps Daveyhurst 270 room with approval for another 250,Riverina 64 room camp. There are also 2 airstrips on lease package.
* onsite preparation sample lab.*on the trail of what may be some nice lithium deposits.
*Approximately $350,000,000 in tax credit's owed to the company,will not pay tax for a few year's if I'm correct.
*$15,000,000 in bank at present which will have some adjustments.
*Cash flow positive has been acheived.
*(NO DEBT) .
Now in my opinion all above is worth a lot of money the whole overall story is looking very good moving forward,really think at this sp if not taken advantage of if affordable would be a lost opportunity can be hard to come by what is on offer at present at this price.
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OBM Background
OBMs fall has been due to a number of reasons, but the primary have been grade and ramp up issues at their Davyhurst mine.
Gold grades have been significantly (about 40%) under what had been advertised, and they have had issues with processing, but these have been mostly sorted out.
The latest quarterly shows they are extremely close to turning cashflow positive.
Their open pit which had good production numbers and higher grade than previous quarters has now been decommissioned.
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Why RRL Should Consider Buying OBM
All of the reasons listed above.
OBM need money, and RRL is making money
RRL are good operators, and their knowledge, processed, governance and discipline would go a long way to helping address the issues at Davyhurst
$350m in tax credits - if you can get these on the cheap, you can help mitigate some of the pain from the hedges
Help diversify the operations. Currently Duketon has 3 plants, but it is one geographic region (https://www.google.com/maps/dir/Davyhurst+Gold+Mine+Processing+Plant,+Ularring+WA+6436/Regis+Resources+Ltd+Garden+Well+Mine,+Bandya+WA+6440/@-28.7119743,120.4577712,8z/data=!4m14!4m13!1m5!1m1!1s0x2bb30fa72d0caae9:0x84da7e31a535534c!2m2!1d120.6711679!2d-30.0372096!1m5!1m1!1s0x2baf0a04403e860f:0xcac8e6a15dcbc369!2m2!1d122.3632792!2d-27.8958534!3e0)
The 2 mines are about 360kms away (4.5 hour drive)
OBM is located in a good geography - the Eastern Goldfields region of Western Australia and Davyhurst is located just 120 km north-west of Kalgoorlie.
Very large land holding has potential for significant increases to gold reserves.
There is currently uncertainty with McPs - this is relatively low cost, low risk and low opex acquisition
There is potential for Lithium - prove it up and spin it off?
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Why Should OBM Holders Accept
Get a part of a significant, well run, highly profitable company that has a lot of upside.
Access to experience, cash and other resources that can accelerate the turnaround at Davyhurst
OBM are still not out of the woods as the open pit really saved the last quater.
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Ultimately, it wouldn't cost the company a lot, and there is the potential for significant upside with some drilling and expertise.
Thoughts?
(20min delay)