@TazDYou've hit the nail on the head with the takeover offer and I quote:
SLR share price was $1.265 closing price 2 Feb
RED share price was $0.33 closing price 2 Feb
Consideration $0.33 x 3.434 = $1.133 v $1.265 (discount of 10.4%)
What Board of Directors accepts a price that is 10% below the current market price. They have accepted a price of $1.13 for SLR when the market price was $1.26.
How is the Board acting in the best interests of the shareholders by agreeing to a price materially lower than the market price? The simple answer is that they aren't and therefore they are in breach of their fiduciary duties.
It's worth noting again this offer was accepted when gold was circa $3,100 - it's now $500 higher making that 200,000 ounces in difference hedged by RED an opportunity cost of $100 million. SLR also earned an extra $50 million in quarter after the merger was agreed.
I don't think I've ever heard of a Board of Directors accepting a merger price less than the market price. How is this not criminal behaviour?
The other thing that grinds my gears is that SLR should update their reserves and resources before getting any valuation done.
The two underground mines at Mt Belches have been completely forgotten about thanks to the Board shutting them down and never again mentioning their names. Shouldn't an update be provided on their restart before any "experts" value SLR. These resources are virtually ignored in their valuation.
It matters because topping up the Randells mill with a second source of underground ore will significantly increase the profitability of Mt Monger.
Same for Flora Dora, Daisy, Sugar Zone and Spanish Galleon. As drilling results from almost a year show, all of these orebodies have extensions outside their stated resources that weren't included in the "expert" report. How can the IE report value the company properly when the reserves and resources statement is out of date.
That 6m @ 177m at Flora Dora and extremely high grades at Daisy should not be left out of any valuation. Then we have Spanish Galleon producing high grades of copper just when the copper price is going through the roof.
Serious questions need to asked to ASIC about what dirty deals took place to get this over the line. I can't help feel that SLR bought RED shares so that the vendor of RED shares could buy into SLR to vote yes to the deal. Surely this is insider trading is it not?
IMHO/GLTA
(20min delay)