A great run of really good, intelligent posts here. Thanks guys and several TU.
One thing that is difficult to quantify is the resulting synergies from the merged company, of which there are a multitude.
1. Admin Once merged, there will be many redundant jobs, from janitors, techs, accountants, rents, etc. Savings in this will be considerable. And savings go straight to the bottom line without detours.
2. Technically the combined Geoscience Database sets, assays, magnetics, gravity, geochemical, will reveal an entire region rather then two stand alone project sets. Priceless!
3. IGR have already completed, and paid for permitting, mine design/engineering work on two open pits, (Majestic & Imperial, as well as extension to existing Salt Creek pit. The UG mine decline for CEB is already to two levels down. How much is all this work worth? On the books you could classify it as Intangible Assets.
4. Assuming the ore from Daisy Milano will go to Salt Creek and Majestic/Imperial ore to Lakewood, you are looking at a goodly trucking savings there as the distance is considerably shortened. A few extra truck loads a day with less fuel burned. Plus blending ore to meet market conditions
5. With the size and scope of the cash flow, the new SLR will be able to wring better prices out of a lot of areas. If, (Please note the if), SLR in the future need bank finance for a major expansion or acquisition, funding will be easier and cheaper than before. Larger bulk purchases will bring down the cost per widget. If for example IGR and SLR at present both have three exploration drill rigs apiece contracted, Uncle Les will be able to say I want six at a better price. If SLR and IGR each need 1000 gizmos annually for maintenance they can then say give a better price for two thousand, and on and on. Quite simply, size can make for savings in the cost structure. Just look at Bunnings.
While in Perth, I normally go to a weekly Friday lunch put on by a principle of an Independent Geo Consulting firm. Last week, three different mining people described Uncle Les with the exact same term. "He's a head kicker". There were also some people associated with Sirius and the new to be floated KIN. They had a slightly different term, "Butt Kicker" None of them were implying that he's an ornery jerk or worse. Just that he went ahead with things with focus and get out of the way.
The full scope of these synergies will not be truly reflected at the end of FY 2013 because it usually takes close to year to fully merge two decent size companies into one humming enterprise. EOFY 2014 should be an absolute blockbuster in my opinion.
History does't repeat itself, rather, historians repeat themselves.
SLR Price at posting:
$3.60 Sentiment: Buy Disclosure: Held
