I already have SLR shares but I see a better return from EGA going into production on its own than if it is subsumed into SLR. SLR is short on reserves and so wants EGA's. The real question is at what price? I want a better deal than SLR is offering. Taking shares leaves me with the risk on SLR at a much depreciated valuation than if EGA goes into production on its own.
SLR wants to buy EGA at the following metrics: EV to Production = $598/oz(based on 57 Koz p.a.) EV to Reserves = $145 /oz EV to Resource = $75.1/oz EV/Gross Operating Earnings = 0.6 based on an AISC of $1069/oz at a POG of $2000
These ratios are low, especially the Production and Earnings ratios. SLR shares will dilute these by 5 times for Production and 8 times for Earnings. SLR has an average AISC of $1403/oz compared to an estimated $1069/oz for EGA.
Do these figures make you feel appreciated as an EGA shareholder?
EGA Price at posting:
28.5¢ Sentiment: Hold Disclosure: Held
