I agree an interesting one. My first reaction is 'Why is FMR selling?' as I've seen numerous cases where smart operators have sold dud assets and ridden off into the sunset. Having said this, I don't believe it applies in this case because (i) Eloise is a proven long life operation so provided more ore can be found to replace the current resources once they are depleted, production should continue relatively smoothly and (ii) FMR is only receiving max $7 mio in cash - the rest of the consideration ($20 mio) is in A1M shares so this provides a level of comfort that FMR is in it for the longer haul.
I guess maybe FMR wants to take advantage of the current strong copper market to sell the asset and de-risk whilst still retaining exposure to the upside via their equity in A1M. Possibly they also feel that significant exploration drilling will be required to extend Eloise's mine life, so rather than trying to fund this themselves (and taking all the risk), they would rather lower their risk profile and have A1M fund this drilling and take the risk.
Aaron Colleran has a successful track record of deal making, however I'm unsure of the Board's technical skills to determine (or judge) whether Eloise is technically and commercially a robust operation going forward.
Let's see how the market reacts in the morning to the news.
GLTA & DYOR
A1M Price at posting:
24.5¢ Sentiment: Hold Disclosure: Held
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