I admit up front I am not a holder here but hold RMS and ALK (often but not currently) so feel I am quite neutral on who you decide to partner with.
I was really surprised to read here that the ALK offer is prefered to the RMS offer because of the relative dilution. Do you not look at synergy with a takeover or merger? I would be appalled as an ALK holder, fortunately I am currently out after they have not been able to develop the rare earth project which I have followed for nearly 10 years waiting for their funding agreement.
RMS has done very well developing mines and made me a ton of money. They have always worked with a shorter mine life but have always replenished their reserves each year, it is a financial decision not to invest too early in drilling but to focus on expansion. They may be struggling to find enough mill feed but they are still making cash on it. They are management with a proven track record here, and in the same region as EXU. ALK have also proven management but from following both companies for so many years I would not put their gold mine management at the same level as RMS.
EXU seem to be intent on building their own mill which is about$ 80-$100 Million, where you get that free with RMS as well as a share of their cash on hand which is greater than what you have made selling 20% EXU to ALK. That is synergy. You are also not counting the discount applied to future cash-flow which would be some time longer down the road without RMS.
I am also concerned that ALK seem to be valuing the EXU shares at about the same level as RMS with their offer when all things are considered. With their friendly approach and the support of EXU management they have probably seen all the good news that EXU promises from the resource definition and drilling program but still value it the same... What happened to the talk of offers and bidding wars to 20c?
From my experience investing in developing mines the 1-2 year process is not kind to investors after you get the kick up from the resources. Like in Alkane I typically sell and use my money elsewhere until things start to happen, usually at a lower price. I really do not understand what people are expecting here...
someone talked about RMS offering a 4c dividend to EXU investors ... well you realise you will get that just by holding RMS for 2 years while your mine is developed?
Someone else talked about gold price rising ... well the money made in this environment is in companies growing their portfolio in these conditions, like RMS is, NST and EVN have done. Price of companies in development over this period like ALK have just been stagnant or drifting down. You will have good leverage to the forecast increase in AUD gold price right now with RMS.
For all your disdain of the RMS board, they are making a strategic offer, and I doubt they will have the support of shareholders to increase it significantly, and have no reason not to walk away. As a holder I would rather the deal goes ahead but not willing to pay more, give or take 10%.
Look at the cash flow figures and do your own forecast for the next few years in both your options here?
