I used to think a RIO takeover would make sense, but not so much any more. RIO have been pretty vocal saying that they are more focused on finding and building their own mines than joining the wave of dealmaking engulfing the industry. Their CEO added "We would rather use our competencies to develop the projects ourselves.”
The Puna JV's value is pretty much attributed to Pablo's expertise. It's neither a large or high-grade resource. RIO already have the resource, they just need the expertise, and they don't need to acquire AGY or the Puna JV to do that.
What's stopping RIO from signing Pablo on as a consultant? Or if Pablo stays loyal to JZ, why not Vijay Mertah who worked with Pablo back at FMC and was jointly listed on their patent? Vijay is already working as a consultant, so it would make more sense than stumping up several hundred million to acquire 58 hectares of ponds, a small resource on the boundary of their much larger tenement, and a production facility that hasn't proven its scalability yet.
With RIO's existing resource, I think for around $100m they could probably replicate what AGY currently have, and still have more than enough cash left over for consultancy fees.
AGY Price at posting:
11.0¢ Sentiment: None Disclosure: Held
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