If I am reading the proposal correctly, GMD will pay SBM $600m (including contingency) for all the Leonora assets. SBM indicate that the Leonora asset have a 10.5m oz resource, with exploration upside. GMD paying $57/ resource oz. The initial synergies were thought to be $200m on an NPV basis (deferring capital and blending Ulysses ore at the Gwalia mill). Obviously those synergies are no longer valid as Gwalia costs are now significantly higher, still would have the advantage of blending Ulysses ore.
Sounds like a good deal for GMD, if they get it across the line or SBM is in a lot worse shape that was thought and need the deal, end up with cash (buys time to sort out Atlantic and Simberi) and ~15-20% of GMD, rough numbers but looks like less than 50% of the Leonora Province that they would have had via Hoover?
GMD Price at posting:
$1.10 Sentiment: Buy Disclosure: Held
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