Analysts and commentators typically viewed St Barbara's move to take over Allied as a bad deal for St Barbara shareholders and a good deal for Allied's board and investors.
This sentiment was supported by the contrasting share movements for St Barbara and Allied.
While there has been some recovery for St Barbara's shares of late, Macquarie doesn't believe there will be much to cheer about for at least the next year.
"In the medium-term, 6-18 months, we see production misses, $A1000-plus cash costs [per ounce] and capex increases as providing negative news flow," Macquarie said in a report last week.
"But on a longer-term basis, 18 months-plus, we see greater than 400,000 ounces of production from a diversified asset-base with falling cash cost and a prospective exploration program as being drivers of strong positive news flow."
The Gold Ridge mine in the Solomon Islands had net cash costs of $US1368 per ounce in the June quarter, and excessive cash costs were one of Macquarie's concerns after a recent site trip there.
The other worries were that mill throughput had not met its nameplate capacity of 2.5 million tonnes per annum and that metallurgical recoveries of less than 80% were experienced after the plant refurbishment.
"Given what we saw at the site, we have taken a more conservative view of both capex and timing as we believe improvements will be via incremental change rather than a large instantaneous step change," Macquarie said.
"We forecast capex of $A25 million over the coming 2.5 years with production not reaching more than 100,000 ounces until full year 2015.
"We also note that management stated about 50% of operating costs are fixed. As such minor improvements to production significantly impact cost per ounce."
Interestingly, the analysts believed that drilling at Gold Ridge so far had not tested whether the four separate pits all hooked into one bigger source of mineralisation.
"What became apparent to us in attending the site, as opposed to looking at maps, was the continuity of the strike at Gold Ridge and that the intervals between pits are a result of limited drilling rather than resource discontinuity.
"As such, while they are currently discrete pits they may well be contiguous - something we see as more likely given the current $US850/oz pit shell and mineralisation trends.
"Therefore a targeted drill program to answer this dilemma will allow mine planning on an economical long-term life of mine basis.
"We note this drill program is included in the current capex forecast of $A15 million."
On the Simberi mine in PNG, the analysts said it remained somewhat of an enigma to them.
"On the surface it appears to be constrained by the fact it's a high cost, more than 100,000 ounce per annum mine in a geographically remote area, but the range of upside scenarios which are on the horizon all point to a large upside.
"For us the upside lies with: economically mining the sulphides; the geologically prospective setting of Simberi and its sister islands; and to a lesser extent increased plant capacity of 5mtpa.
"With further capital investment we see Simberi being able to reach 90,000oz-plus of annual production by FY2015.
"That said, despite forecasting processing costs to fall by about 20 per cent we see the cash-operating costs as remaining more than $A1050 [per ounce] over the life of mine."
The acquisition of Allied Gold also provides exploration acreage on the nearby Big Tabar and Tatau islands.
Macquarie said their geology was prospective for significant sulphide discoveries and this was the key area for growth in the acquisition, especially as the Lihir mine is 80km away in a similar geological setting.
Ultimately the investment bank slapped an underperform rating on St Barbara even though it is more attracted to the long-term upside of its stock than "we have been for a long time".
