Has anyone looked at the financials of Stornoway / Renard yet?
Option (i) might be a play to pick up any accumulated losses in the entity or enabling Winsome to write them down at a greater book value than what they may be paying for them... The downside is it comes with other potential unknown risks/claims as well.
If there is $1b of infrastructure there and is only ~ 10 years old, then this might have our tax people frothing. For anyone not aware, lets say there was $500m of accrued losses in the entity that owned/operated the Renard mine, if Winsome can get access to these losses - ie carrying on the business of mining through the same company, then they might be able to offset the first $500m of profit against. If they were paying 26.5% (guestimation) tax otherwise on the $500m, this would leave $367.5m after tax. So, using these figures, after tax profits (and dividends) would be ~36% higher whilst being able to write them off against losses that may be purchased for cents in the dollar.
Option (ii) looks to be the clean option that they would likely opt to take if something was turned up in DD, or they could not get a satisfactory agreement with creditors or other parties that might have a claim on the entity.
I am interested to know what the environmental / make good obligations are on the mine as well - that would likely be high on the list of risk items for the team.
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