Hi Calm, I can understand where you are coming from (not just on the SPR threads) regarding RMS, E/Vs, cash generation etc. I guess for me, the main difference above all else, is RMS is actually making good money, because of it's assets that are not at Mt Magnet (it's only operating mine at Mt Magnet right now is low grade (for an U/G mine)). Hub and spoke. Also, both Penny (18 months) and Cue (24 months) have short sugar hits (which I know you know, but just explaining for context). RMS has worked incredibly hard to reduce it's non-sustaining capex numbers to almost zero over the past 2 years... across the board.
No spend of note on its' next 'production hub' for at least another 2 years (perfect timing to have Dalgaranga hitting it's stride timing wise), just a bit of drilling and an awful lot of 'studies'.
They keep delaying the Eridanus open pit/underground mine plan and in turn, costings for upgrading Mt Magnet (it's a bloody old plant I have been told, by HC posters who have visited the plant recently). RMS holders have also noted that RMS could easily pay out a special dividend, or just raise the dividend payment amount, but they don't...... the obvious and logical reason, they are banking every $$$ to give them as much firepower as possible to use on SPR (though I don't discount the potential for RMS to pivot to another target if SPR moves out of their reach).
The current market caps of the two companies seem quite... similar, if I think of RMS offering SPR a 50% premium (basically a merger of equals). IMHO - this is what Mark Zep is trying to do... build enough cash, mine life and reserves at Mt Magnet to sort of balance out Dalgaranga (I don't think there is any chance of actually matching the two assets, except......... if you have a big pile of cash to go with it).
i.e. SPR - roughly 1.76b RMS - roughly 2.7b
50% premium for SPR.... $2.65b + $100m in cash or something like that (bet the brokers are running all sorts of comps on this).
RMS quarterly today is from memory, one of the shortest I have read in many years (make of that what you will).
As for whether SPR will have an AISC of $1200. Yep. The main difference, it should be achievable for a decade+, versus 18-24 months.
Oh, and to really show my frustration/respect (RMS are playing the game well, I salute them on that, plus they have been able on balance, to operate their mines better than most others) simultaneously, if RMS wants to have it's cake and eat it too, (i..e. have the longer mine life and more reserves), it will need to front up and admit to the market that to make Mt Magnet a 180-200k p.a producer for another decade, will cost north of $300m (that is my current estimate for the plant upgrade, stripping of Eridanus open pit and misc items). Then the AISC for Mt Magnet would/will be very different.
Though I concede SPR will need to eventually own up to the total cost for modifying the plant and restart-pre-production costs.
I can only imagine the potential discussions that are ongoing (I feel it would be naïve to think otherwise).
Interestingly, it just over 2 months to the day that SPR had it's last drill results announcement. Since then.... Nothing but corporate news... Capital raising... RMS took itself to 19.99% Board changes Sale of Glenburgh.
Going to be very interesting to see what happens next.... deal... further assets sales for SPR... drill results...?
Good luck to all holders.
SPR Price at posting:
$1.38 Sentiment: Hold Disclosure: Held
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