Whilst I can agree with some of your points that you have made I think the "synergies" that AMI are talking about are not necessarily logistical/geographical synergies, they are more synergies of AMI do have management and a workforce that know underground mining and also know how Pybar (the previous owner/vendor of Dargues Reef) works and what they are good at (mining underground) and what they may not be so good at - grade control geology and exploration geology.
Its always a bit strange how sometimes mining contractors can become mine owners, sometimes its accidental, metal prices or exchange rates or loans/finance get called in and sometimes this accidental ownership can become longer term as the mining contractor uses the mine as a training ground and an ability to screen and hire a workforce that they can then use on their higher value contracts at other client mine sites.
Anyway - shouldn't be too dismissive of Rationale Point 2 - going from 2 to 3 production centres is a logical step for AMI directors to take, its not like AMI management should be telling investors to sell their AMI stock and buy another company instead. The case that AMI management need to make is that their acquisition is at the right price and realising the increased value of the transaction in the future. Thats why your closing statements about this becoming apparent in 6-12 months are true. This is a high grade underground complex orebody with a lot of exploration upside, all things that AMI mine planners/engineers/geologists and other technical staff are familiar with. If the real AISCs are between A$1150Oz and A$1350Oz and the mill is new and there are no production/grade control issues then I think that it should work out. It not like there are heaps of idle gold mine projects with relatively new mills ready for production sitting around idle at the moment. Except maybe Henty, but AMI have chosen not to pursue that - probably for many good reasons.
AMI Price at posting:
50.5¢ Sentiment: Hold Disclosure: Held
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