Ann: Investor Presentation - Diggers and Dealers, page-28

yes..............

WA gold producer Red 5 is tidying up its register after it bedded down a $2.2 billion merger with rival Silver Lake Resources.

Gold producers Red 5 and Silver Lake merged in June. Rob Homer

Street Talk understands the company sent out Euroz Hartleys to find buyers for a $138 million stake in Red 5 after Wednesday’s closing bell. The block trade was priced at 34¢ a pop – on par with the closing price and a 5.94 per cent discount to the five-day volume-weighted average price according to a term sheet seen by this column.

It’s not your vanilla after-market block trade. Sources said the shares being sold by Euroz belonged to the pre-bid stake that Silver Lake had built in Red 5 over 2023, before the two camps agreed to a scrip merger in February. Usually, companies in a similar situation prefer to cancel these share once the merger comes into effect,

But Red 5 has chosen a rarer path, choosing to sell them via Euroz to boost its own $453.7 million cash and bullion balance sheet. Potential buyers weren’t offered a reasoning to Red 5 boss Luke Tonkin’s decision on Wednesday evening.

But fund managers know Red 5 has made no secret of its M&A ambitions beyond the Silver Lake deal. In particular, its Deflector mine’s reserves are down to 295,000 ounces of gold – and a replacement needs to be found soon. The $138 million selldown should go a long way in boosting its M&A firepower, should Tonkin pull the trigger on an acqusition.