I've always struggled with the view that SLR has short life assets.
Daisy which is at the heart of SLR's success has close to a million ounces at 18g/t. Since the last reserves report they have made further discoveries of very high grade.
French Kiss, Cock Eyed Bob, Santa and Flora Dora all have underground potential backed by a big open pit at Santa. There was significant potential at Lorna Doone as well. The same for Deflector - it is now pumping out enormous amounts of cash. In the last three quarters Silver Lakes has increased cash and liquid investments by $150 million. They are currently trading on an EV of less than $600 million with a million ounces of real reserves (I don't include Sugar Zone which have their reserves reclassified as resources as until they are proved economic.) These reserves are generating over $1000 ounce easily so the value of the "short" reserves is over a billion dollars twice SLR's EV.
It is on that basis alone that SLR shareholders are being ripped out.
The problem isn't SLR's short reserve life - it is Luke Tonkin and the board who have completely shafted shareholders.
Tonkin has form shafting shareholders. He closed down CEB, Maxwells and Sugar Zone with no notice whatsoever. He never gives briefings, rarely releases exploration results and has underinvested in exploration. French Kiss, Lorna Doone and Flora Dora all had massive potential years ago, yet instead of spending on the drill bit he went and bought Sugar Zone with what would appear little understanding of the resource.
To think that he would give away SLR reserves for half the current value of their reserves and resources and infrastructure for nothing is an absolute disgrace. Someone mentioned that he was going to get a pay rise at the merged company. If that is true that explains everything. I mentioned a few times over the years on this thread that Tonkin was running SLR down so that it could be taken over cheaply and that is exactly what is happening.
I got out in August because Tonkin showed his true colours when he shut down Sugar Zone with no notice after pumping up its tyres for the prior 18 months blowing $300 million of SLR's cash and equity in the process. One minute it was full steam ahead, next minute it was halted. Even 6 months after shutting it down to explore further he still hasn't released any exploration results. The uncertainly around Sugar Zone and Tonkins inability to communicate is pushing down SLR's share price which should have been twice as high based on the operating performance of the Deflector and Daisy.
While Tonkin is in charge the new company will struggle as well. If the board gave a rats about shareholders they would put someone else in charge who would communicate to them via briefings and see to lay out a mine plan, not keep them in the dark.
I hope this deal falls over for the sake of long suffering shareholders and Tonkin and the board gets the sack.
The assets are there but management isn't.
Good luck all.
GLTA/IMHO
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