Hi writer,
if it's ok, I will mutate the question into.... is there anything better on the ASX that RMS could invest in.... versus SPR (particulary when SPR is 70km up the road? Particularly when as I have postulated in the past, there are some real synergies that could be unlocked if Mt Magnet was in lockstep with the Dalgaranga operations (versus say SLR and REDs merger.... really no synergies at all).
i.e.
* RMS have 7m+ tonnes of low grade ounces in stockpile they want to monetize (hence they have kept looking at expanding their plant) when POG is high, but... cannot do this due to not having extra throughput.
* RMS are building cash as a rapid rate, but also rapidly depleting their most profitable asset (Penny)
* Almost every producer I can think of, have a very clear focus on 'upgrading' their assets whenever possible, particularly with a view to extending LOM plans and reducing their cost curve (SPR will do this in spades)
* The sheers expansion of processing capacity the two operations would have potentially upwards of 5.1mtpa throughput (the Dalgranga plant can chew through soft ore at upto 3.2mtpa (has done so in the past)) This is a massive increase (250%) over the already stretched Checkers plant at Mt Magnet than cannot get above 1.9mtpa.
* RMS recently acquired MGV with their 960k ounces. The majority is open pit, yet.... RMS have their Eridanus pit with potentially 600k+ already... MGVs open pits (that are not yet in any mine plan) could easily turn west and become the baseload for the Dalgaranga plant, meaning no wasted throughput as SPR might potentially be planning to do.
* 1 company cuts out a large amount of management costs...
* True synergies in regards to operations, purchasing power of supplies, kit, fuel, staffing flexibility etc.
* A merged entity would move up the ranks of the indexes, almost guaranteeing a further re-rate
* SPR have large losses, which is the opposite of RMS
* The stars are starting to align in regards to market caps.... SPR $1.4b, RMS $2.2b - 40-50% premium with some cash...
If there is any other asset or entity located in W.A that suits RMS better, I am firstly embarrassed that I do not know about it
and secondly that I don't own any of it
That all being said, I don't discount that RMS will walk away, if the board cannot quite stomach giving away potentially 50% of their company (I do think many of the large holders would be willing to accept such an offer, even if the retail holders cry foul, I am trying to be practical here), yes, the could sell their stake for a nice profit, but... then after almost 3 years of talking up a 3rd hub, of promising the market they would 'upgrade and enhance' their asset folio, after 7 deals where RMS never walked.... will they do it this time?
They would be back to square one, literally. Would RMS really want to spend north of $220m on Edna May Stage 3, or... on SPR?
I am confident that SL and his growing team are match fit for brining SPR back into production, I guess for me the question is, what does the big end of town really want, a single asset producer (BGL is so interesting for so many reasons, because, it was never acquired and I am slowly getting the impression, that the narrow veins are the real reason), or.... a 2 plant operation with a 3rd (Rebecca/Roe) and 4th (Glenburgh) project pipeline that will even give CMM and EMR a run for their money....
All of the above is pure speculation and simply something to muse over which sipping some gin
(20min delay)