I suspect that most EGA shareholders wanted a single asset company trading at a high discount to NPV when they bought into EGA. Had we wanted a diversified gold company trading at a premium to NPV we would would have bought one. Not for one minute can I see any logic in your sales pitch.
Nonetheless in any negotiation a seller should consider what its worth to a buyer as well before agreeing to an outcome. SLR gets - a stand alone asset for which they pay 30% of NPV - rather than using cash they use over inflated equity (my most measures) making the NPV equation even better for their shareholders - 100% of the operating synergies from using their own facilities rather than building a stand alone green fields - Near term production/growth to improve production and profit profile for the company. -Upside from expansion in resource base
As per above EGA shareholders receive - around 30% of NPV - paid in over inflated equity - none of the operating synergies - exposure to a diversified asset base that is lower quality than Rothsay - liquidity.... I have that every day on the ASX for my moderate parcel
It has been mentioned that a major reason for the deal is that "the share pice could fall if SLR walked" EGA has traded at 25c for the past two years before the project has matured and when Gold Price was $1300/oz In my opinion the share price will likely rise if we removed the anchor which is this deal and appoint a more commercial Board.
I will be going no where. Minimum acceptable outcome should be 60-80c in SLR shares which splits equally the value of the Rothsay developed under SLR.
The Pick
EGA Price at posting:
28.5¢ Sentiment: Hold Disclosure: Held
