Fully Informed Market, page-3

Reply to mergernotaTO:

"You are fundamentally missing the point of a merger, when you merge you will have a 400koz gold company with 500mil+ cash that can expand from there..."

"The potential of the merger is that you create value beyond what each individual company can create...Let me ask you if you didn't merge the company what are the odds of SLR becoming a 600koz gold producing company in the near future..."

" This is basically what is happening you are acquiring a 200koz gold mine for 0 upfront cost and will now become a 400kozgold mining company with 500mil+ in cash. With 500mil+ in cash and assets to facilitate debt then I assume they could easily become a 600koz gold miner if they chose to do so. If anyone has any ACTUAL facts of why this is a bad idea to merger I would be glad to have my points refuted..."

Yours is the mentality of a bygone era, 1990s/2000s production growth for production growth's sake, bigger is better and biggest is best, which was proven to lead to destruction of shareholder wealth in the long run. Sure, a short term sugar high as passive funds must buy the bigger company, but long-term wealth destruction in most cases. On a "per share" financial basis, PRU and SLR have been the best performers on the ASX in recent years. SLR has achieved this by actually cutting production when needed, first at Mount Monger (Covid, lockdowns) then Sugar Zone (operational issues to fix).

Have you done any research into RED? It's not a case of merging to become a 400koz producer then taking the $500m and "easily becoming" a 600koz producer. RED will require hundreds of millions of investment, which will be evident when their life-of-mine plan is updated. This is why they have indicated they could sell Silver Lake's 11% shareholding in RED rather than cancelling the shares (i.e. Silver Lake's existing cash hoard could be insufficient, at the time of the merger announcement!, in order to maintain its production rate).

And you shouldn't be so blasé about hedging. Short-term hedging, within a year or so - part of PRU's business model - SLR also hedged ounces to lock in price for their relatively high cost Santa development - is fine. But long-term, years into the future, is outright dangerous practice. You see, it's not absolute price but price relative to costs, and costs are always rising. By the time this disaster is over in 2+ more years, one two three+ (pick a number) hundreds of millions of dollars will have been taken from RED shareholders and given to its debt financiers. RED continues to be an effectively 100koz producer, not 200k.