@TazDThat's brilliant analysis - well done. In my opinion BDO...

@TazD

That's brilliant analysis - well done.

In my opinion BDO should be found guilty of misleading and deceptive conduct with a report like this.

Not only are the gold price assumptions understated, but they also use the same price for both companies. This is wrong because it disregards the short-term hedging that RED will be getting until the almost the end of 2026. SLR will be receiving almost $1000 more an ounce for around 80,000 ounces per annum over the first two years that won't be subject to significant discounting which in my view is overstated at 10% p.a. The cost of those hedges is around $150 million dollars yet is ignored in the gold forecasts.

Secondly where are the copper credits - I note the experts include the Royalities from the Philippines but ignore copper credits.

Thirdly the value of the RED shares is valued at circa $118 million whereas they are valued at $184 million by SLR in their activities report.

Fourthly, the value of the cash and the more mature mine development is ignored in terms of risk. To discount both companies at the same rate when SLR has so much more cash and is debt free compared to RED is again misleading. Furthermore, three mills diversify risk.

Finally, (I could go on but what's the point) the idea that SLR has a mine life of four years is laughable. Daisy has a resource of a million ounces at 20g/t. Do they really expect us to believe that Daisy won't deliver up more high-grade ore with a resource like that. There have already been high grade discoveries since the last reserve statement. Not to mention the report ignores the upcoming resource statement for Spanish Galleon and the expected restart at Cock-eyed Bob in 2025. SLR should come out with an updated reserves and resources statement given they have spent a lot more than RED this year on exploration. Sugar Zone is pretty much worthless in this report. That may not be far off the truth, but at $3,600 per ounce it is viable and worth a couple at least $100 million.

For some strange reason, SLR has higher corporate costs - almost three times higher than RED of around $16 million. I assume this is correct but is it a function of stamp duty or a one-off cost in FY 2023. Has this been taken into account. The report also says the combined corporate costs will be higher in the combined company that the sum of individual companies. If that's the case, then what's the point of merging the two companies - shareholders will be worse off.

I'm not sure what Tonkin really thinks of this deal. Given he is on the board and is going to be able to cash out the SLR shares, he has a conflict of interest so the Board should not be recommending anything.

Regardless, his strategy of running the mines with a short reserve life is going to cost shareholders dearly. It's absurd that SLR is valued at $1.15 a share or $1.1 billion. Not withstanding its less than its current market cap, that places an EV of only $600 million on the company or $800 an ounce of reserve for Mt Monger and Deflector. The remaining Deflector ounces are generating $2000 an ounce right now and Mt Monger is generating $1500 an ounce so why is the value of the reserve half of that, excluding all other resources, Sugar Zone etc.

Yet again how is anything other than misleading and deceptive? I get there are always risks, but SLR shareholders are getting a slice of the RED mine and required mine development which has a much higher risk that that of SLR.

I think this little doozy at the end of the report says it all.


Using a gold price that doesn't exceed $2,100 over the next five years looks pretty false to me. Using the same gold price for both companies when one is going to get $1000 less an ounce for the next two years for half of its production also looks pretty deceptive as well.

SLR is going to be picking up debt, out of money hedging and a huge capex bill for further stripping - its all downside for SLR in this deal.

GLTA/IMHO