SLR - Silver Lake Resources

[aus_trader]

I was busy this week and missed this announcement from SLR on Wednesday.



I haven't gone through all the information in the three announcements released on Wednesday so I haven't yet been able to form an opinion about this merger and its impact on SLR and DRM shareholders. However, it's clearly big news for both companies.

Anyone else had a closer look at the details?

I think the Doray Minerals Limited (DRM) shareholders have a slightly better outcome. SLR already has 4million Oz gold in resources and at current mining rates it will be decades before it carves out the entire deposits. Doray has dwindling gold resources and I've seen in other forums how people viewed the company running out of gold to mine in the near future. So I think Doray shareholders would be quite happy to jump on the opportunity to join a much bigger company when combined with SLR for security.

I have sold SLR few days ago in the Speculative Stock Portfolio as the price has stumbled on the merger news. Time will tell if the merger is a good one and if the combined group can bring efficiencies to bring the mining cost down, given both are fairly high cost producers. If so I may buy the new company down the track...

 

[barney]

Anyone else had a closer look at the details?

Also been out and about so not well versed in the scenario ……….

We know SLR are well cashed up with good future projections

DRM have potential but their debt almost equals their cash on hand so maybe some financial logistical problems there that are a bit more pressing than are obvious?

The merger gives SLR a continued healthy tax advantage for the short term while acquiring a solid Company with potential .... This tells me that SLR are seeing a lot of financial upside from the deal.

In a nutshell, it looks like SLR management are doing their job to me, and DRM management see that the longer term deal will see them in a better position than they may have ended up in otherwise … win win

That summation was based on 5 minutes of reading so take it with a grain of wasabi!!

 

[aus_trader]

Also been out and about so not well versed in the scenario ……….

We know SLR are well cashed up with good future projections

DRM have potential but their debt almost equals their cash on hand so maybe some financial logistical problems there that are a bit more pressing than are obvious?

The merger gives SLR a continued healthy tax advantage for the short term while acquiring a solid Company with potential .... This tells me that SLR are seeing a lot of financial upside from the deal.

In a nutshell, it looks like SLR management are doing their job to me, and DRM management see that the longer term deal will see them in a better position than they may have ended up in otherwise … win win

That summation was based on 5 minutes of reading so take it with a grain of wasabi!!

I couldn't really see a great deal of advantage for SLR from the deal, perhaps it's the tax advantage which is a completely different way of looking at this merger. For thinking outside the box, like given

 

[barney]

I couldn't really see a great deal of advantage for SLR from the deal, perhaps it's the tax advantage which is a completely different way of looking at this merger. For thinking outside the box, like given

… Cheers @aus_trader ….. but I take no credit for my observation … other than I "observed" it in one of the Company Reports

What it does tell me (if my summation is correct) is that is SLR management are thinkers …. and management at this end of the market who are industrious, generally reward their shareholders …..

I don't hold SLR but I like the way they go about their business, and I suspect shareholders will eventually reap good rewards from them

 

[aus_trader]

… Cheers @aus_trader ….. but I take no credit for my observation … other than I "observed" it in one of the Company Reports

What it does tell me (if my summation is correct) is that is SLR management are thinkers …. and management at this end of the market who are industrious, generally reward their shareholders …..

I don't hold SLR but I like the way they go about their business, and I suspect shareholders will eventually reap good rewards from them

Sounds good barney, I'll be monitoring how the combined company (if there is no issues with merger) progresses...

 

[greggles]

I don't hold SLR but I like the way they go about their business, and I suspect shareholders will eventually reap good rewards from them

The thing that bothers me about SLR is the lack of imagination. I don't understand why they wouldn't try and grow revenue and reserves with another couple of acquisitions. The merger with DRM is a scrip deal. They have close to $120 million cash in the bank and cash in the bank isn't doing anything. At least some of it should be invested. I'd like to see SLR do a little more than just plod along with their Mount Monger operations. It's a nice little earner for sure, but for goodness sake do something meaningful with that huge pile of cash.

 

[barney]

The thing that bothers me about SLR is the lack of imagination. I don't understand why they wouldn't try and grow revenue and reserves with another couple of acquisitions. The merger with DRM is a scrip deal. They have close to $120 million cash in the bank and cash in the bank isn't doing anything. At least some of it should be invested. I'd like to see SLR do a little more than just plod along with their Mount Monger operations. It's a nice little earner for sure, but for goodness sake do something meaningful with that huge pile of cash.

I get the feeling given that there is a bit more going on than is obvious Greg …

DRM have some good projects but probably didn't have the finance to bring them to fruition …. SLR do.

I think you will find that their spare cash will be well used in the short medium term ….. but that is just an assumption.

The Da Vinci projection of 100,000 ounces at a very low AISC in itself looks very profitable … SLR have the cash to turn this into a lot more cash ….

Again I am only quoting from a "quick read" of announcements, so if I have the bull by the horns, my apologies.

 

[greggles]

I get the feeling given that there is a bit more going on than is obvious Greg …

DRM have some good projects but probably didn't have the finance to bring them to fruition …. SLR do.

I think you will find that their spare cash will be well used in the short medium term ….. but that is just an assumption.

The Da Vinci projection of 100,000 ounces at a very low AISC in itself looks very profitable … SLR have the cash to turn this into a lot more cash ….

Again I am only quoting from a "quick read" of announcements, so if I have the bull by the horns, my apologies.

Perhaps I am being a bit harsh, but SLR has been undervalued for years and I think a lot of that has to do with the way it is perceived. It's long overdue for a re-rate but it keeps stalling. I'd like to see a bit more creative thinking by management but I suppose the merger with DRM is a good start. It does seem to have a lot of potential. Let's see how the next few months play out.

 

[notting]

DRM have some good projects but probably didn't have the finance to bring them to fruition …. SLR do.

And the best time to buy another goldie is when gold is in a funk. It was a hard move to swallow for short term but longer term will serve them well as it did NST!
When gold is doing well, when ever that will be, this thing will be a king maker!

 

[aus_trader]

The thing that bothers me about SLR is the lack of imagination. I don't understand why they wouldn't try and grow revenue and reserves with another couple of acquisitions. The merger with DRM is a scrip deal. They have close to $120 million cash in the bank and cash in the bank isn't doing anything. At least some of it should be invested. I'd like to see SLR do a little more than just plod along with their Mount Monger operations. It's a nice little earner for sure, but for goodness sake do something meaningful with that huge pile of cash.

I am monitoring the progress of the merger and what the combined company will develop into. So just wandering with this scrip deal is it still going to result in having that 120m cash available for future projects or is some of it going to be used for the merger and integration costs?

 

[$20shoes]

I'll put SLR as my top pick for the Stock Tipping Competition for CY 2019. I'm basing this purely on some charting probabilities in GOLD and the current price structure of SLR.

So currently with Silver Lake, we have price consolidating in a wedge like pattern after the most recent highs were reached in January 2017. I'm taking this as a consolidation while GOLD goes through and extremely complex ABC correction and we should expect prices to continue onward after this. I havent done a true Elliott Wave count but we may have completed Wave 1 and 2 in a 5 wave structure up.

SLR continues to exhibit longer term strength IMO. I use the Stochastics in an unusual way - almost as short term trader (grey line) and long term investor (blue line) sentiment. You can see that trading in Aug 2018 and Nov 2018 pushed trading interest to oversold, while the longer term blue Stochastic remains elevated and in a more bullish posture. I'll take this as increased probability that a breakout above .60c will succeed.

There's a chance that a very clear down leg in GOLD will eventuate in Q1 2019, but I expect a very bullish XAUUSD to exceed $1800 in later 2019, particularly if the markets show signs of tanking.

 

[$20shoes]

It's broken into a gallop today. May try and clear the 60c mark.

 

[greggles]

It's broken into a gallop today. May try and clear the 60c mark.

It's time for SLR management to use that ~$120 million cash war chest to start adding value for shareholders. There is no need for the company to have that much cash in the bank earning a pittance in interest when it could be put to much better use. SLR is worth much more than the current share price would indicate but the uninspired management style is, in my opinion, stopping instos from getting on board and realising the true value of the company.

 

[greggles]

Just one further thought. With so much cash in the bank and $430 million in accumulated tax losses, SLR must be quite an appealing take over target, especially against the background of a bullish gold price and the recently announced merger with Doray Minerals.

~$120 million in cash, plus $430 million in tax losses, plus SLR's and DRM's gold assets has got to be an attractive proposition to some larger cap gold miners with an SLR market cap of only $300 million?

 

[Miner]

Today's volume level and price increase are rather interesting compared to last few days sales volume.
Maybe @greggles is on the money

 

[barney]

Just one further thought. With so much cash in the bank and $430 million in accumulated tax losses, SLR must be quite an appealing take over target,

Absolutely …… It should be a good year for these guys if the ducks align.

 

[greggles]

60c appears to be a hard ceiling of resistance for SLR and while it broke through it a few times between May and July last year, it always ended up back down under it again. It would be nice to see SLR get above 60c and consolidate there, but we are going to need more volume and less supply.

 

[barney]

but we are going to need more volume and less supply.

Or that Takeover offer you suggested

 

[$20shoes]

It will make an attempt. Its got some carry at the moment. Whether it holds is another matter.

 

[barney]

It will make an attempt. Its got some carry at the moment.

Agree … and yesterdays bar was a solid looking confirmation if it holds …..

If we retrace and close at 54 cents or even 55 cents at this point would take a little bit of shine off the move …. not a big deal if it happened but not conducive to follow through in the short term. Longer term however, it looks positive both T and F.