Quite interesting reading, although I only skimmed it.  Unlike...

Quite interesting reading, although I only skimmed it.  Unlike the reports conclusions I would say RMS offer is quite reasonable given the current state of play although the Mace update could change this materialy.  I would expect both RMS and ALK were able to assess the value of Mace in their respective offers. I think it is clear from RMS offer that they were valuing EXU not just for trucking ore to EM, but also to run as a stand alone project.  So they would have valued Mace accordingly.

The high valuation range of $0.143 seems to be based on the value of the offer from ALK + 30% premium for control. The valuation based on assets was $0.133, so 1c of any value increase from Mace is already accounted for. I for one think that ALK offered too much of a premium based on the EXU share price before RMS offer and now, so I do not quite agree with this valuation in the report.

The Valuation range of the offer from RMS seems to be based solely on RMS share price, so if RMS increased to 50c then the offer would be worth 12.5c and then maybe reasonable if not at the high end of the range.  This seems a bit unfair, because the higher RMS gets, the more likely the offer will be accepted, and then the arbitrage opportunity leads to EXU increasing and RMS decreasing, such as happened with the original offer.  This does not seem reasonable.

I did not see anything in the report that looked at the cost of financing for the project and the expected dilution.  It may have been there and I missed it as I only skimmed.  I think the financing is a big risk and should be evaluated. The ALK offer only covers more drilling and the BFS + a bit more from the options which I think may only cover the ongoing admin management expenses for 2 years, for up to 20% dilution.  Say Mace looks great and EXU rockets to 20c (basis pre ALK dilution and options), then Market Cap is $93M, so funding the plant would require a further 50% dilution and current holders are back to 25% share same as accepting RMS offer, but without the income and benefit from RMS other assets.  This is like a best case.

If it looked really good maybe they could get a loan, $120M say at 10% interest over 5 years, costs $200K payments (estimate) over 500k gold produced then you get $400 per oz in repayments.  Not pretty but then they have the mill paid off and if exploration goes well will then have free production.  This seems higher than I expected so maybe check this figure.  Neither of this seems that good and both require a significant discover in Mace, which is more risk.  On top of that there is another 2 years to wait before production starts, compared with RMS which could at least begin trucking ore before building a local plant if Mace adds up ...

"The Directors advise that construction of the Tampia Gold Project is expected to commence in the second quarter ofCY19 while production is expected to commence in the second half of CY2020."

If Mace was truly awesome then I believe RMS would have noted it. It seems to me that there is a lot of potential, which the EXU holders see, but do not truly appreciate the risk the way the market does.  Look at ALK share price, the market punishes unknowns in Financing even with a good project, with good numbers.  The RMS offer does not provide the maximum value to EXU share holders now, but why should it, since it takes away all the risk and brings forward production, adds in other regular income and even possible dividend.  The combined company is likely to do much better than EXU on its own would, with extra most extra income used for further growth.  EXU holders would get 25% of this extra synergy also.

So I am very happy with the RMS board did not up the offer, unless the Mace update shows something they missed.  This report shows a compelling comparison between the two companies financials and assets and risks.  Most of the risks presented against accepting the offer in this report were based on what would happen if less than 50% took up the offer so RMS did not have a controlling interest, or the offer was withdrawn on a defeating condition.  Although this would limit the options of those who had accepted, surely that does not matter if the report says EXU is worth more than the offer for holding long term?

I think the report could have been a bit clearer about these things and the risk potential, rather than relegating such comments into the risk discussion.  If someone saw some financial consideration given for financing then please point it out, I was surprised I did not see it.