The EV/EBITDA metric for SLR implies stunning good value or problems..... you know the old saying "things are cheap for a reason" ( ???? ) WHen NST presented earlier in 2017, they boasted NST EV/EBITDA was only 5.5 compared to Bloomberg's Mid Tier Gold Producer average of 9.6 (!). RRL was 6.6, SAR 6.2, OGC 5.4 and DRM 1.8 (no surprise) ..... and up to date comparison would be useful.
Cool Hand tried (unsuccessfully) to make a case for SLR undervaluation by the market in his Diggers&Dealers presentation (see slide 13) where SLR appeared cheap on EV/Resource, EV/produced oz, and EV/Reserves
A 'share buyback' for SLR is a thought I've had for some time, and it certainly makes sense done the right way, and can certainly put a floor under the SP, by declaring that SLR's M&A team can't find better value externally. But, when I floated the idea with a 'senior SLR identity' he dismissed the idea out of hand. He said that "our institutional investors" would disapprove of such use of SLR's capital reserves. I still think that it's a very good idea unless there's a very suitably priced M&A candidate that is amenable to a not too unfriendly M&/or A.
I always was lead to believe that the best way to buy other companies is with your own shares. But if those shares are allowed to devalue, then M&A becomes more expensive if your the acquirer, or your company becomes cheaper for an acquirer, especially one able to find suitable finance for the deal. Acquiring SLR would be a self-funding deal.
So, at this juncture, I think there would be a lot of value in SLR declaring a buyback..... 'details to follow'.
There's one opponent that shorters fear - a cashed up company intent on buying its own cheapened stock.
But getting this board to comment, let alone do anything seems unachievable. This is totally unacceptable!
SLR Price at posting:
37.0¢ Sentiment: Hold Disclosure: Held
