We are turning the table on our readers when we discuss takeover targets in this week's Resource Sector Digest.
(Vol. 89 - May 22, 2017)
Brought to you by Itinerant and The Investment Doctor.
In this edition we shall:
- Set the scene,
- highlight actionable ideas,
- comment on news releases, and
- link to relevant articles.
Quality contributions in the comment section receive a 50% discount for annual subscriptions for Itinerant Musings this week. Make sure to ask for it if you are keen.
In case you missed out on previous editions of this newsletter, simply click here, here or here to catch up.
Setting The Scene
Junior miners developing quality projects will eventually attract the interest of larger producers looking to replenish their project pipeline, as was proven yet again last week by Eldorado Gold (EGO) proposing to take over Integra Gold (ICGQF). The deal is valued at C$590M, and its metrics have been discussed in detail here by fellow author Peter Arendas. Integra management has played its cards very well as the deal offers plenty of value for shareholders who get a chance to exit near all-time highs. Or cast in numbers, this deal will crystallize a 265% gain for readers who followed our Top Idea back in October 2014.
The next weeks will almost certainly bring a pronounced uptick in junior miners being framed as the next best takeover target, with ample reference made to Integra Gold as the blue print for various alleged success stories in the making. It's times like these when investors in this space are well advised to remember what Integra Gold has (and most of the names about to be thrown around don't have): a well-developed quality project, controlled by a capable team with a clear exit strategy. Lamaque is of sufficient size to fit comfortably within a mid-tier miner's portfolio, it's located in a good jurisdiction, and it has access to plenty of infrastructure. And the team around CEO Mr. Stephen de Jong has delivered a remarkable job in developing Lamaque towards an exit at the right time. This is a team well-worth following in the future.
We will refrain from adding to the noise by picking the next takeover target here ourselves. Instead we would like to turn the table and invite readers to throw their own hat in the ring. Please fire away and name your very own favorite to become the next junior to match Integra's performance in the comment section below. We'd love to hear your ideas, and we'd love to hear why you picked them.
Actionable Ideas
No investment idea in the resource sector has stood out sufficiently last week to warrant a mention here, at least in our humble view. Best to keep the powder dry for now, and count on summer doldrums to throw up the odd opportunity. However, if the urge to buy becomes overwhelming, consider thinking outside the box.
News Releases
News release of the week goes to White Gold (GFRGF) for attracting Kinross Gold (KGC) to its registry, and adding the major's land package in the namesake district in the Yukon to its already impressive portfolio. Well done - and see this back issue of our newsletter for more detail on this junior.
Drill result summary:
- Osisko Mining (OTCPK:OBNNF) used 9 g/t over 9.4m as the headline for its most recent drill results release from Windfall.
- Fortuna Silver (FSM) finally reported results from drilling at Caylloma, Peru. Reserves are running low at this mine, and these results bode well for a much-needed resource expansion.
- Barkerville Gold's (BGMZF) weekly news release reported 39.05g/t over 8.25m as the best result from its Cariboo gold project in BC.
- Arizona Mining (WLDVF) announced results for five exploration holes from Taylor Deeps. We note impressive zinc-lead-silver intercepts, but also the absence of manganese values.
- Cordoba Minerals (OTCQB:CDBMF) confirmed earlier results at Alacran in Colombia reporting several long gold-copper intervals.
- Trek Mining (LWLCF) is finally doing what Luna Gold (LGCUF) should have done - i.e. get those drills spinning at Aurizona and find near-pit gold.
- Sandstorm Gold (SAND) investors should take note of reported results, as the streamer is still leveraged to the company as well as the project itself.
- Probe Metals (OTCQB:PROBF) is expanding its Val d'Or East project and has reported results from another 19 holes. Grades and thicknesses bode well for the resource update scheduled for later this year.
On to financing news of last week:
New Gold (NGD) has successfully closed the re-financing of its $300M Senior notes. After redemption of the currently outstanding notes, the interest rate will drop to 6.375% (from currently 7%) and maturity will be pushed back by five years to 2025. A good result indeed and part of the reason the share price has outperformed peers since we called a buy for subscribers.
Falco Resources (OTCPK:FPRGF) announced a C$25M bought deal with units selling for C$1.29, up from the last round which went at C$1.07. Funds will be used to advance the Horne project in Rouyn-Noranda, Québec.
Eastmain Resources (EANRF) on the other hand is placing C$9M worth of equity with common shares priced at C$0.40, just about the 52-week low.
ER data by YCharts
In other news we note Ivanhoe Mines (OTCQX:IVPAF) updating the resource estimate for its Kakula discovery. The combined Kamoa-Kakula resource has reached the 1B tonne mark, and counting.
BHP (BHP) management is battling activist shareholder Elliot Associates asking for the mining house to get rid of its listing in London and re-think its oil and gas strategy. The Sydney Morning Herald has the details.
Sibanye Gold (SBGL) announced the pricing for the rights offering needed to finance part of the Stillwater (SWC) takeover. Celeritas Investments thinks that no value has been destroyed, but we continue to think otherwise.
And thus we reach the end of this offering. The Investment Doctor will be up again for a change of pace next week, and we are already looking forward to seeing youse all again in due time.
And Before We Go...
We suggested you think outside the box a little earlier in this piece. The Investment Doctor's European Small Cap Ideas is an excellent place to start.
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
