Westgold-KRR combined market cap now 1.7 billionSo what do I think about this merger? Well, first of all krr is merging with a very similar sized company, which is worth at the moment about 889 million canadian dollars. Krr is worth about 867 million dollars at the moment.
Wgx has over 1000 employees and has a tremendous surplus of expensive mining machinery that can be utilized immediately to advance KRR's many mines and deposits. So KRR gets access to 1000 workers and gets probably 20 or 30 million dollars worth of free equipment which would have required maybe 2 -4 years to buy on their own. KRR also gets access to a bank account that has more than 100 million dollars canadian with zero debt.
Krr shareholders finally get their wish of receiving a dividend. When a company gives a dividend it discourages nefarious investing groups from shorting the stock.
One of the main reasons that I was interested in investing in KRR in the first place was the potential for a 10X or 20X move up during a powerful gold bull run. If one invests in a mature gold company like Newmont , the upside share appreciation will be less, more like a 4X or something like that. Because they are merging with a 200k producer that is severely undervalued as they are, the explosive upside for share appreciation is still intact and arguably accelerates the potential share price appreciation because this deal saves a lot of time and speeds up the progress immensely.
This combined company is going to make 100's of millions of dollars profit every year and will grow to a 1.5 million ounce producer before 2029 by buying out other companies
Northern Star was a 500K producer in 2018 and by 2023 were almost a 1.5 million producer.. .
Right now the market cap of WGX/KRR is about 1.7 billion $ cdn. WDO is a 100 k producer valued at 1.6 billion $cdn.
I think WGX now is a screaming buy as this new company will do extremely well in the future. If a company like Newmont bought out KRR now, KRR shareholders would be losing the explosive upside because krr would be a drop in the bucket for a large major. Yes, maybe Newmont would pay much much more to acquire krr but it would be a one-time deal..
Anyways, I think this is a good merger and krr shareholders will benefit greatly in the future..especially in a multi-year raging gold bull market.
Just my 2 cents ...take it or leave it..