Size MattersMiners are entering a time of consolidation in which a primary tool of acquisition will be shares of stock. As a combined entity, AEM and KL would have more equity for acquisitions.
The price of gold faces major headwinds. Its biggest consumers, individuals in India and China, are in dire straits and not likely to fuel any big rallies any time soon. Meantime, copper producers are producing gold in quantity as a byproduct of copper production. Demand destruction and supply overhang could cap the price of gold quite some time.
Gold juniors are not there yet, but they are moving toward a capitulation trade. It won't happen overnight. As a combined entity, AEM and KL could take advantage of that macro trend, better than either could alone.
I would add that KL's share price has been supported by its now-discontinued buying program, which has kept its technical numbers better than they would have been without it.
The real problem with the merger is it pushes value development out past many investors' time horizon. But in the long haul, size does matter. The optimist's viewpoint.