These numbers are a bit outdated or wrong? not sure but doesn't make much sense the only thing I can pull from it is that SLRs' stake in Red5 = 177 million, "Red 5 had debt of AU$102.5m at the end of December 2023, a reduction from AU$162.4m over a year. However, it also had AU$28.3m in cash, and so its net debt is AU$74.2m".
With the numbers that I quoted above that would mean that SLR as a solo entity would have 177m (Red stake) + 342m (SLR cash) = 477m, if they sold their Red stake and didn't merge. If SLR were to merge with Red they would most likely cancel their stake in Red losing 177m and gaining 74.2m in debt for a total loss of 177m (Red stake) + 74.2m (Red debt) = 251.2m. Instead of having 477m in cash, SLR would have 342m (cash) - 74.2m (debt) = 267.8m, this is assuming that the 177m stake is canceled and not used in the equation. A total of 477m vs 267.8m this is based on the December 2023 reports
I don't think the idea of the merger, is to merge then hand out dividends, if the Luke won't hand out dividends with what 593.2m in liquid assets why would he hand out dividends with 267.8m in liquid assets?
Honestly I don't know why anyone would want to hold Red over SLR at this point and time, the Net tangible assets of red is .10, it's trading at around 5x to NTA while SLR is trading at around 1.5x to NTA. I would say it's rather obvious that SLR is sharing it's equity with Red... (It reflects in the SP) Not sure on the math here, cause I'm bad at math, but I'm pretty sure that this means that SLR is giving Red a .325x NTA rating (if the companies merge) ((NTA of 5 + 1.5 = 6.5 then divide it by 2? for 6.5/2 = 3.25 but with shares on issue and all that the numbers might be a bit skewed... but it should roughly be .325 NTA after merging)).
I'm pretty sure the NTA doesn't account for Reds' mine life or SLRs' mine life though, but the NTA will be vastly affected over the next year or two by the gold prices and hedges. (This also correlates with my guess for where Reds' SP and SLRs' SP will end up upon a failed merger.
Reds' SP around .30c (NTA + gold mine, have no factored full mine life obviously, just factoring in short term cash flows and gold mined etc etc)
SLRs' SP around $1.8-2 (NTA + gold mine, again I haven't factored in a lot of things here, and I'm erring on the low side of the valuation to hedge my own expectations on potential gains, much rather have an unexpected happy upside/surprise {above $2} or expected outcome {$1.8-$2} vs saying it'll go to something like $2.20/$2.40 ((trading at x2 NTA like most other gold miners out there [only one unit of measurement for SP you should use other units of measurements to cross reference this one unit of measurement to arrive at an answer])) which would most likely lead to an unexpected unhappy outcome {below $2.20} or expected outcome {$2.20/$2.40}.
Also, SLR is trading at discount to Red, so even if it merges you would rather hold SLR than Red in the event of a merger, in which case I think that holding SLR is better objectively speaking. DYOR this isn't financial advice... SLR 1.61/3.43 = 0.4693877551020408c || Red = 48c. At the current SP If the merger happens you are basically buying Red at 47c instead of 48c.
I want to add you also end up getting a vote on the merger too, but if you only hold SLR and don't hold Red, then objectively speaking, it would not be in your own best interest to vote yes. I would say based on an objective view, that voting no would be the correct choice, both in terms of as a "trader" and as an "investor". Again I cannot stress this part enough but do your own research (DYOR), this is your life, your choice, I'm just giving you information that you may find useful, it's not financial advice.
(20min delay)