What are they taking If RMS are making 700 million a year for 13 years and we give away 45% of the company to gain another asset it reduces our return on investment as existing share holders by around 45% to be very accurate. This is the opportunity cost of diluting shares is $4 billion that will be distributed to new shareholders. 4 billion can be seen as part of the merger cost to existing RMS holders. Adding around 900 million shares to RMS dilutes existing shareholders profits.
On top of this we have to include 2.4 billion we are paying for the mine. Total cost 6.4 billion.
What does SPR offer. According to data they have approx 3 million ounces lets go out on a limb and say they make 3200 ounce profit for the life of mine. 9.2 billion. The added benefit to RMS is only 55% of that because of dilution Benefit total 5 billion.
Summary We are giving them 6.4 to gain 5 billion. This appears more of a corporate transaction than an investment decision on behalf of RMS Furthermore there is some risk based on resource clarification.
RMS Price at posting:
$2.19 Sentiment: None Disclosure: Held
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