Admittedly, I don't understand much about mining and all those mumbo jumbo. But I read the announcement and come to this conclusion.
As of now, this acquisition does not add/subtract value from GDO. It is a good deal for Rand Uranium. It is a neutral deal for GDO. It is now up to management to turn this opportunity into a good deal by reducing cost and also making better use of all the infrastructures, etc. Once cost is reduced, that is where the value is unlocked. Looks like we will have to wait say a couple of quarterlies again to see if management can turn production cost around for the operation. If they can, then GDO will surely fly. Of course, the rising/falling POG will affect the whole thing as well.
I personally believe the management can achieve the production efficiency based on their past experience. In view of that, this is really a good time to buy. By 2012, if GDO is not taken over yet, we will look back at this acquisition and proclaim what a stroke of genius this move is when the POG is at $2000...lol
GDO Price at posting:
47.0¢ Sentiment: LT Buy Disclosure: Held
