SPR (ASX) Cruch time....

Originally posted by Joelstar: ↑

"Ridiculous".
Maybe Dim there's another lens to look at this through.
Perhaps these recent events could be considered smart plays by both MZ and SL
Could we soon be seeing a Spartan riding upon a golden horse.
Pragmatic operators like MZ & SL probably understand that a merger with synergies often means 1 + 1 = 3.
Since Mt Magnet update, RMS market cap has taken a rather large hit (35%).
Think about it this way, RMS shareholders will be much more willing to support a merger now that Mt Magnet's warts have been exposed for the world to see.

Now let's break this down even further.
1. Why would Simon mention a 2-year production time frame? Could this create an undeniable carrot for SPR holders to accept a merger presuming that RMS will 100% be able to utilise Dalgaranga's mill immediately processing (aka monetising) 3mt stockpiled ore.
2. Why would MZ release a 17-year LOM? Is it to show the market Mt Magnet will still be mill constrained even after mill upgrades? Conventional mining wisdom suggests a 10 year mine plan (infrastructure adjusted to suit mineral inventory size) is the most optimal strategy. Leaving a large drop off in ounces from FY27 potentially softens RMS holders into accepting the prospect of a merger to fill in the glaring production gaps.

Why does 1 + 1 = 3?

Let's look at the 2 companies individually and collectively.

SPR Market Cap $2,050,000,000
RMS Market Cap $2,540,000,000
Combined $4,590,000,000

SPR Liquids $252,110,000 (minus 20 million estimated expenses for Mar Q)
RMS Liquids $1,059,060,000 (adding 150m cash build for Mar Q and SPR share value 254,600,000 * $1.60)
Combined $1,311,170,000

SPR trade payables - receivables plus Interest-bearing debt $13,338,000
RMS trade payables - receivables plus interest bearing debt $52,466,000
Combined $65,804,000Enterprise Value
SPR $1,811,228,000
RMS $1,533,406,000
Combined $3,344,634,000

RMS Mineral Resource Inventory 8,700,000 (EV to Resource $176)
SPR Mineral Resource Inventory 3,151,700 (Ev to Resource $574)
Combined Mineral Resource Inventory 11,851,700 (Ev to Resource $282)

Now let's compare the merged entity with both RMS/SPR and its peers.

EV

EV/Resource

EV/Reserve

I meant to post this earlier today

Expand

Let the games begin!

I was dead wrong about RMS bidding for SPR.
SPR - MC $2.049b plus options $2.140b
RMS MC - $2.541b
I assume it will be a full script merger.
At a nil price premium, the combined company will be owned 45.7% SPR shareholders and 54.3% RMS shareholders.
If RMS pays a 5% premium (i.e. SPR SP $1.68) the ratio is about 47% to 53%.
If RMS pays a 10% premium (i.e. SPR SP $1.76) the ratio is 48% to 52%.
At a slightly over 18% premium (i.e. SPR SP $1.90) the ratio is 50%/50%.
A small premium means exactly that small i.e. probably no more than 5%.
In my view the key is that a small premium will be very good for RMS shareholders (less dilution) and I think the RMS SP may go up potentially significantly. If I am right, then do not be disappointed by the small premium as the upside could be a much higher RMS SP. When mergers make sense, it is like 1+1=3. The premium is nowhere as much as NST for DEG (over 40%) but the external expert reckons NST are paying too much.
Whether or not the details are released on Monday or not there will be a TH from both stocks.
It will be very interesting to see how the RMS SP reacts once trading recommences.
Will another bidder come out of the wood works? We may not know for at least a few weeks or even over a month if one does emerge. SPR has a very attractive resource. That may be the best outcome i.e. a bidding war.