There Are More Sharks In The Water As Kaminak's Acquisition Arrangement Reveals It Received Multiple Bids

| About: Goldcorp Inc. (GG)


Kaminak's Management Circular shows that Goldcorp was one of three parties that were seriously interested.

All this interest came after the publication of the Kaminak Feasibility Study.

Investors should be paying very close attention to other explorers as they release their critically important feasibility studies.

Going over the acquisition circular in the recent deal between Goldcorp (NYSE:GG) and Kaminak (OTCPK:KMKGF) (which we covered previous), we found something really interesting that went unmentioned in the acquisition press release and is worth noting by serious gold investors.

What we found was the acquisition story wasn't a straight-forward deal between the two parties, but instead, it actually involved three serious parties and an earlier and lower bid by Goldcorp that got rejected. There are a number of details in this circular that we want to cover and feel would be instructive for investors and we will do it in pieces.

The Bidding Process Started after the Feasibility Study was Released

Source: Kaminak Management Circular

Investors should note that even though Kaminak had been developing the Coffee property for years and had a Preliminary Economic Assessment (PEA) on the property, it wasn't until the Feasibility Study (FS) was released that the company really started getting requests for confidentiality agreements. That's very important and shows the significantly greater value that an FS carries over a PEA as that was the final straw that made the Kaminak sale possible.

For an investor that means that if you're holding an explorer or developer in anticipation of a buyout, there's a much greater chance of a buyout if the project has the FS done. Additionally, it also shows that investors should pay very close attention to companies that are about to release feasibility studies - even more so than PEA's. Point is that investors should attach a lot of weight to feasibility studies.

Goldcorp Was One of Three Serious Bidders

Goldcorp wasn't actually the first company to come to Kaminak after the release of the feasibility study as we find out in the circular:

Source: Kaminak Management Circular

This company was actually never named and it wasn't until a month later that Goldcorp approached and gave Kaminak its initial offer - which wasn't high enough:

Source: Kaminak Management Circular

So that's two companies with serious offers for Kaminak, but it doesn't end there as a third company was also seriously interested:

Source: Kaminak Management Circular

Long story short, Kaminak got a new revised offer from Goldcorp that was better than the other offer(s) that it received and decides to continue the transaction with Goldcorp. But what is clear here is that there were at least two other companies that were serious enough and looking to make a multi-hundred million dollar purchase for a Canadian gold project.

So that's all what we know, but what we do not know is who were the other two parties that were making these advances - that would be terrific information to know as it would allow us to tailor our potential acquisition targets to these particular companies.

Now we start with the speculation. We think two companies fit the bill fairly nicely as potential acquirers for Kaminak: Centerra (OTCPK:CAGDF) and Kinross Gold (NYSE:KGC). The Centerra name was thrown out first by Matt Keevil from the Northern Miner podcast and for us it makes a lot f sense. While Centerra isn't the first company that comes to mind when investors think of Canadian operations, they are having a really bad time in Kyrgyzstan and we think they're desperately looking for a new project. The undeveloped Coffee project makes a lot of sense for them.

Kinross is also another potential acquirer and they probably make the most sense as they already have active mines in the region. Additionally, there is probably no other miner that has as much experience in cold weather open-pit mines than Kinross and that's exactly what Coffee would be.

We would love for readers to share their own thoughts in the comments on who these potential acquirers could have been.

Conclusion for Investors

While of course it is only our educated conjecture on whom these potential acquirers are, we do know that there are at least two companies interested enough to put a multi-hundred million dollar offer on a Canadian gold deposit. That means that investors should be actively looking for other projects that offer a similar acquisition as Kaminak's Coffee project. Think multi-million ounce open-pit mines in Canada (preferably) or other safe jurisdictions.

Unfortunately, it is easier said than done as there really are very few attractive deposits that meet even that low standard. So the next step is to pay very close attention to the handful of feasibility studies coming out through the end of the year and see what may fit. After all Kaminak's serious acquisition interest came after the feasibility study came out - they are quite important.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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