We are initiating coverage on SLR with a HOLD recommendation and set a A$1.15 price target. SLR is generating strong cash flow from its Deflector mine, however, production is forecast to cease in FY27. Mt Monger provides a stable production base of 90-100kozpa, however, with Deflector winding down over the next three years, SLR’s group production is in decline. Re-starting Sugar Zone could partially offset this however we expect SLR is likely to become more active corporately, evidenced by its recent acquisition of an 11% interested in Red 5 (RED AU, BUY, A$0.39 price target).
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