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With Meridian Gold Inc.’s (MDG) board of directors rejecting an unsolicited $3-billion takeover offer from Yamana Gold Inc. (NYSE:AUY) and Northern Orion Resources Inc. (NTO), Blackmont Capital analyst Richard Gray thinks there is a good chance of a higher offer from Yamana or a competing bid emerging.

However, if neither option surfaces, he continues to like Meridian’s “low-risk, low-cost and highly prospective exploration portfolio” and has a “buy” recommendation and C$39 price target on the stock.

Mr. Gray thinks Meridian will try to demonstrate the value of its shares through the El Penon gold and silver mine in Chile, its Mercedes exploration project in Mexico and the Jeronimo deposit in Chile. Meridian’s board said the offer “does not provide a basis to enter into discussions with Yamana” and the premium offered “does not reflect the value of Meridian Gold’s proven, high-quality, precious metals-focused asset base.”

Source: Yamana Could Raise Bid For Meridian Or Face Competition