Silver Lake Resources (ASX:SLR) has acquired some 383 million shares in ASX-listed gold producer Red 5 (ASX:RED) to become a substantial shareholder.
The $897.35 market capitalisation company reports that the purchase represents about 11% of Red 5’s issued capital in what it 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.
Its share price rose 21.59% to $0.267 as of 4pm AEST on the back of the announcement.
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 arise.
The company continued to build on its strong track record of cash generation with cash and bullion as of 30 June 2023 of $332.8 million with no debt.
“with a robust platform to grow the business through fully funded organic opportunities, whilst pursuing opportunistic M&A to deliver a larger, longer life and lower cost business“
In its FY2023 financial results report released 24 August 2023, Silver Lake said the strong balance sheet and forecast free cash flow generation provides the company “with a robust platform to grow the business through fully funded organic opportunities, whilst pursuing opportunistic M&A to deliver a larger, longer life and lower cost business”.
Silver Lake will also 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.
Silver Lake’s diverse portfolio of assets concentrated in Western Australia include the Mount Monger and Deflector operations.
The Western Australian operations are supplemented by the growth potential of the Sugar Zone mine and the extensive prospective and underexplored associated land package in Northern Ontario, Canada.
Write to Adam Orlando at Mining.com.au
Images: Red 5
