Why SSR Mining Stock Plunged More Than 10%
On 11th May, the shares of the Vancouver-based mining company, SSR Mining, fell by 10%. The drop in the precious metal miner’s shares was fueled by the news of its merger with the leading low-cost intermediate gold producer, Alacer Gold Corp.
Investors weren’t impressed with the deal, and hence, the decline in the stock prices ensued. Here’s what went down:
The merger of SSR Mining and Alacer Gold Corp
The $4bn ‘merger of equals’ between SSR Mining and Alacer Gold Corp was marketed as a large scale geographic and commodity diversification endeavor. The two companies expected high growth prospects with an increase in gold production and a high generation of cash flow.
The deal worked out between the two maintained that the Alacer shareholders would take over 0.3246 shares of SSR for each Alacer share that they hold, without paying any premium.
Once the merger is finalized, the former SSR shareholders will own 57% of the new entity, while the former Alacer shareholders will claim the rest.
Additionally, not many changes were decided upon for the upper leadership. The position of the CEO was to be held by Rodney Antal,former CEO of the Alacer group, while the chairman of the SSR mining board was to hold on to that position.
However, investors didn’t seem too pleased with the merger and so when the stock market opened on 11th May, SSR sharers plunged more than 10% and Alacer shares followed suit.
The future of the merger
Even after the finalization of the merger, SRR will remain a relatively small mining enterprise. The poor response of the investors to the joint venture of SRR and Alacer isn’t looking good for the future of the collaboration. However, the leadership of the two companies seems optimistic about their collective growth.
It will indeed be interesting to see how the association between these two impacts the gold market in the future.
What should investors do?
Amidst the COVID-19 outbreak, the current situation of the stock market is uncertain. With the merger of the SRR Mining and Alacer Group, it seems like gold mining investors are left with limited choices.
However, if they want to diversify their investment portfolio, they should consider investing in physical gold. With the rising value of gold in the market today, investors are sure to profit from the purchase of the high yielding yellow metal in its physical form.
If you’re looking to buy some high-quality gold bullion coins, visit our website to check out our stunning collection of precious metals coins.
At Orion Metal Exchange, we have more than 50 years of experience in the field which makes us a reliable and efficient seller. For more information about our trade, talk to our experts at +1 800 559 0088.