I think some of you are being a bit hard on RMS management here...

I think some of you are being a bit hard on RMS management here after what has been achieved.  Resources are not just gold in the ground but gold you have a reasonable prospect of extracting profitably.  I think when the resources change up or down it is not just new drilling, but the whole mining plan that is taken into account.  For example RMS are saying that the most feasible plan to start with trucking ore is to cherry pick the best deposits which reduces the total ore but increases the grade.  What they think is in the ground does not change and may later be mined if further exploration merits a change such as building a plant there.

Building resources costs capital expenditure.  RMS plan seems to be only replenish resources as needed rather than longer term mine life.  This keeps the cash balance up for other growth opportunities.  Both cash in the bank and extra long resource life look good to investors but neither generates much return on the capital.  Share price only helps the company earn more when they are doing a capital raising.  Spending on growth means spending on things that will increase income and profit. 

It seems that before EM they were not able to do much organic growth, margins were decreasing if anything but nice cash flow.  The only way to really go forward with growth was these acquisitions.  As I said I did not like EM at the time but it has been cashflow positive and value accretive to us, even if limited by available ore it is still an asset making money.  We have to trust that EXU assets will likewise be value accretive to RMS, even if we pay more than we would like to. 

Some here (or at least from EXU) say that EM requires Tampia ore just to break even.  In this case then RMS post acquisition will not grow their production forecasts but only maintain them.  I think this is unlikely but if it proves true then we know that RMS acquisition here was not for growth but sustaining.  Not so happy there would consider selling but I do not think this is the case.

The remaining question of how RMS handled this and the EM acquisition is could we have got them (or another asset) cheaper, given both acquisitions are value accretive and cashflow positive.   EM was hard to judge as we did not see the negotiations.  Here with EXU there was a lot of resistance and arguing over value.  I did not see anyone really posting any answer to the risk of developing such a project with unknown financing, no one else even speculated as to a cost so valuations were bloated.  Even without the synergy trucking ore, RMS gets more value out of Tampia because we do not need to pay any financing costs.  This would be the same with any acquisition.

Do we get EXU on board now ... likely it seems more positive...

Is it value accretive for RMS shareholders ...  I think so and trust RMS management to judge this...

Would we have got EXU for less?  ... I thought the original offer was looking risky.  Maybe if nothing else happened we could have come back in 3-4 months with a new lower offer ...  hard to say.  There are risks here for both companies.  

For my own investment I was willing to wait and pick up EXU in a few months since I believed the price would drop after the RMS offer failed and drift lower, potentially a lot lower when they went for financing.  Their only hope for an share price increase after the Mace flop (in terms of share price not results) was the more efficient Tampia mine plan and BFS.  I think funding would have been costly at best if not impossible.  This is why I was disappointed with RMS increasing their offer.

RMS are in a different position, they need all of EXU in order to optimise the deal.  RMS management decided this improved offer was the only way to do this, and it was better than anything else they found.  We won't know if they could have got it cheaper but if it works out then better paying $12M more than missing out.  Sure the same amount could have been spent on a dividend for RMS holders but I do not think it would have made any difference to the offer acceptance.  RMS sharep price is still tied to EXU through this offer.

I do not think the cash paid will affect the future dividend payments much.  That is determined by capital spending which RMS are quite restrained with.  Even if there was a big splurge of capital development then any dividends withheld in 2019 would be accumulated in following years with increased production.  More likely RMS will bide their time developing any new resources that do not increase production and cashflow.