Hey Brian, out of interest, if you push out your valuation...

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speculator101

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06/10/20

15:48

Post #: 47887203
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Originally posted by brianchu82: ↑

Seems like plenty of opinions here already and they are divided. This is bound to be an interesting transaction. Though I had hoped the merger would he on slightly better terms for Saracen shareholders, being one myself and owning no Northern Star stocks since earlier this year.

Based on the EV/AISC adjusted production metric, NST currently is priced at around $15 000/oz while Saracen is priced at around $12 800/oz. The simple addition of the merged entity implies a pricing at $14 900/oz. However, note that this combined entity will be much larger and commands a higher multiple. I do not believe a mere addition of the two market caps justify the final valuation when there is economies of scale at play and also the combined entity being included in the ASX 50 if it is not already.

I actually am very positive about this transaction when I think about what the market will be like after the turn of this year. The general economy globally will be hobbling and trying to catch up on the shutdown from the virus and central banks and governments will not be cutting stimulus. Regardless of who wins the US election, it looks like precious metals will be benefiting and inflation will be pretty rampant not necessarily on the CPI front but shoved into the asset markets, which had been the case since 2003.

I wouldn't take the pro-forma market valuation figures at face value, focus on the operational and financial figures for now.

Cheers,
Brian

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Hey Brian, out of interest, if you push out your valuation metrics, what do NST/SAR look like in 2021, 2022?
I still feel that SAR had better assets, and could easily have taken on 1 more asset to push towards 1m ounces.
Longer mine lives, lower AISC. Simple as that. Ray is clearly taking one for the team, and whilst I know that proves hes the better manager...
SAR should have deserves at least a 40% of the total company.

Anyway. It will be interesting to see how quickly this merged entity starts getting valued at metrics similar to NCM....

Also... I wonder who is going to step into SARs shoes... i.e. Next 600-800k producer.

SAR Price at posting: $5.76 Sentiment: Hold Disclosure: Held
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Hey Brian, out of interest, if you push out your valuation...

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