Monsters of Rock: It was over, but now Silver Lake has revived its bid to enter the Leonora gold picture
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Here we go.
Silver Lake Resources (ASX:SLR) was disappointed after a time crunch and target board unwilling to negotiate scuppered its plans to snare the Gwalia gold mine from under the nose of family custodian Raleigh Finlayson and his Genesis Minerals (ASX:GMD).
Finlayson, you may remember, has a strong filial connection to Gwalia. Not only did the son of Goldfields pastoralists work there in his youth, but the old bosses Peter and Chris Lalor of Sons of Gwalia fame happen to be his uncles.
Silver Lake’s MD Luke Tonkin has his own history with the mine and district, having briefly led Sons of Gwalia in the mid-2000s.
The most logical next step for Genesis in its play to consolidate the region, given it now owns Gwalia and most of Dacian Gold (ASX:DCN), owner of the nearby Mt Morgans gold mine, would probably be Red 5 (ASX:RED) and its King of the Hills gold mine.
Red 5, notably, was talking up M & A chatter it was having behind closed doors with the St Barbara (ASX:SBM) board while Finlayson was trying to engineer his own deal.
Silver Lake has now gone and injected itself back in the conversation by picking up 383 million shares in Red 5, mopping up an 11% stake in the emerging gold name, which is now worth an imposing $934 million after a 20% bump from the trading activity today.
It’s ‘strategic’ they say.
“The acquisition of the holding in Red 5 is considered a strategic investment. Red 5 owns the King of the Hills operation and has an established broader footprint in the
Leonora district in Western Australia,” SLR said in a statement.
“Silver Lake’s significant organically generated cash balance and forecast free cash flow provides it with the ability to move quickly on opportunities as and when they
“Silver Lake will continue to make investment decisions and deploy capital into organic and external opportunities, consistent with its stated strategy to become a larger, lower cost and longer life business.”
How did the SLR shareholders respond to the news? About as well as you’d expect given the sell-offs that accompanied its bids for the Gwalia mine earlier this year.
$822.5m but cashed up ($322.8m in the bank at June 30) Silver Lake copped a hiding after revealing it was the mystery buyer of the Red 5 stock, falling 8.3% in afternoon trade. We’ll see if the reaction changes as the games progress.
Genesis fell early but recovered slightly to a 4.88% loss.
A lot of the focus has turned to the bottom end of the market today, where Wildcat Resources (ASX:WC8) appears to have found the spodumene discovery Pilbara Minerals (ASX:PLS) never made at the Tabba Tabba project, once a significant tantalum mine.
In the ASX 200 the materials sector fell 0.46% largely thanks to a crushing day for the battery metals sector, with big names Pilbara Minerals, Allkem (ASX:AKE), MinRes (ASX:MIN) and IGO (ASX:IGO) all in the red.