Ann: March Quarter Sales Results, page-91

If the merger succeeds then the SLR cash is now insufficient to close out the RED forward sales/debt as well as expand the mill and undertake a major cut-back at KOTH. All 3 were key objectives of the merger, but 1 or more now has to go. So which one should it be?

Closing out the forward sales to then achieve the A$ spot gold price has 3 outcomes:
1) you end up with the same financial result if the spot price stays the same;
2) you end up in front if the spot price goes up; or
3) you end up in a worse financial position that you would otherwise be if the spot price goes down.
So no short- or long-term financial gain for 2 of the 3 options. You would save some interest on paying off the debt.

If you undertake the cutback and expand the mill then you will have extra ounces available to sell in around 2 years. In the meantime you have the same expected financial outcome as before for the current production (and forward sales book). So no downside in the short-term but upside in 2 years as you have additional ounces that, unless there is a major fall in the spot price, would be cash positive. (There may be a downside if there is no capital to progress SLRs assets as it is all being used at KOTH).

So if merger proceeds (I am against due to recent rise in gold price) then in my view SLR's cash has to go towards expanded KOTH production rather than closing out the forward sales book and debt. However, I would like to know the new entities strategy prior to voting. But this won't happen so we will be voting in the dark on an unknown strategy that I may strongly oppose.

You would have to monetise the RED shares held by SLR to pay off the RED debt or close out part of the forward sales book. However, this would leave more shares on issue than was hoped for as part of the merger rationale. Rationale for the merger has changed significantly since the announcement. There should have been standard get outs such as material changes to markets and gold price, and performance of operations.