Having recently highlighted the acquisition potential of Kimber Resources (KBX) based on positive exploration results of its Monterde project, my interest was piqued today by the news that Kimber had appointed Agnico-Eagle's (AEM) VP in charge of Latin American operations as a member of the board of directors. As followers of the gold miners will know, Agnico has been one of the most aggressive buyers of junior gold miners, having most recently acquired Grayd Resources (GYDRF.PK)for its growing resource and land position just on the edge of Agnico's multi-million ounce Pinos Altos project. The purchase is a virtual blueprint for what might be an eventual bid for Kimber Resources, which would add another 39000 hectares of exploration land in the Sierra Madre gold belt that has already delivered 500k ounces of high-grade gold resource.
While Agnico is certainly not the only potential buyer of Kimber, the company has shown itself willing to step in to purchase resource on the cheap several times in the past year. Its strategic investment in Rubicon Minerals (RBY), as well as its purchase of Grayd Resources, show that Agnico has proven highly skilled at grabbing highly prospective projects by providing the necessary capital for junior miners to continue drilling and exploration.
Given the huge amount of cash flow Agnico is going to be throwing off at $1800 gold, another acquisition the size of Grayd can be pretty easily absorbed with a quarter or two of cash flows. And given the synergies that Agnico might be able to achieve by continuing to consolidate its land position around Pinos Altos, the appointment of an Agnico VP to the board of Kimber would seem to foreshadow a fate similar to that achieved by Grayd for Kimber Resources.
Disclosure: I am long KBX.