The Silver Lake (SLR) Board have yesterday made their future intentions very clear about making acquisitions, with the $730 million cash/share proposal put to St Barbara.
I now can’t discount the possibility of SLR now moving their merger target sights over towards OBM.
They know OBM changes coming intimately.
In the past, there has been common directors (David Quinlivan is Chairman of SLR and former MD of OBM) and he has had past contact with Hawkes Point.
Hawkes Point would surely consider a sensible cash/share bid from such a good company, provided the price was right.
SLR could utilise the ~$330 million in tax losses and must be well aware Luke has progressively turned the company around and likely to ramp things up to 150,000 ounces per annum over the next couple of years.
Accepting part consideration in SLR shares gives everyone the opportunity to participate in the inevitable re-rating for both operations and entities.
Hawkes Point presumably wouldn’t accept an offer unless it reflected the production expectation of 100,000 ounces by year end and a likelyhood of 150,000 ounces not much further down the track.
Hawkes Point are a fund manager and must surely need to ‘touch’ the money again at some point - and what better way of doing that than some cash back and a nice chunk of more liquid shares in a bigger company that would be rated as a leading well run mid tier producer.
Management changes over the last 12 months puts enough distance between the players in terms of any potential conflicts of interest etc.
Don’t worry about pricing, as it could only happen if it was a very attractive proposition for OBM shareholders and executive.
OBM Price at posting:
15.0¢ Sentiment: Hold Disclosure: Held
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