AC - Hey just listened to the CC on the DEZ/AUY merger/acquisition and found a few things that were germane to our previous discussions, so I thought I might share them.
1. The deal values DEZ 'gold in the ground' at $100 per ounce!
2. DEZ brings fully 1/3 of the combined total of P&P reserves, 20% of combined M&I Resources and 50% of Inferred Resources.
3. DEZ brings about 22% of the combined 2006-projected Gold production and should rival Sao Francisco for the largest gold production site. DEZ's mine is likely the most complex of the combined mines as its rival in Oz produced is a heap leach operation.
4. Going forward to 2007 DEZ's mine is projected to be 33% of the combined company's gold production.
5. Price premium paid for DEZ is 21 to 29%.
My initial perception is that DEZ BOD sold us out way to cheaply. Yes, I know DEZ faced CapEx issues and was a one trick pony. However, the level of sophistication, efficiency and ore potential far exceeds the price paid. I think shareholders got screwed. Only $100 per oz for gold in the ground, DEZ has rights to a trend 150 km long and has explored only 10% of it. [This is equivalent to DEZ owning the length of the Cortez Trend in NV and having only explored one or two of the properties of the Cortez Juniors.]
Second I continue to like the easy, straightforward style of Bruce Humphrey. I cannot say I was enamored with Peter Marrone. Not as straightforward, but seems a bit like Telford who took over GG. If it’s out there he'll go after it and take it over. One of the 'great' ideas for achieving synergies between Brazilian mines is to rob the new trucks found at DEZ's mine and ship them off to another site. I guess DEZ's mine will be able to achieve the targeted 150% increase in production with old worn out equipment? THAT kind of mentality will kill morale at the acquired place faster than anything...been there, done that.
That said, I do not know about the companies that AUY used in the presentation as 'peers' but AUY did not rule out further 'accretive' acquisitions, so I'd suspect that if any of these companies have significant Latin America/Brazilian operations they are a take-over target. Peers listed are: Canterra, Glamis, IAMGold, Meridian, Agnico. IMHO Marrone doesn't want to be the head of an Intermediate Gold Company, he wants to be the head of a Major!
OK, so who has comments, ideas, points, information that can add to this discussion? How are others going to vote their DEZ shares? Are DEZ holders "selling on the news" or holding for additional value from AUY? For those considering selling, are cap gains taxes a factor in selling DEZ shares? Anyone selling their AUY shares? Anyone holding DEZ and shorting AUY?
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