The resource stocks we’ve unearthed could be potential M&A targets in 2020, as the sector is set to consolidate further following a big year for mining M&A
SmallCapPower | January 20, 2020: The total value of mergers and acquisitions in the mining sector was ~$31B last year. “2019, was the year of mega deals” mentioned Peter Grosskopf, CEO of Sprott in an interview with Kitco. Some notable deals include the Barrick – Newmont merger, the Kirkland Lake – Detour Gold merger, and Equinox Gold’s acquisition of Leagold Mining. Grosskopf thinks that with the gold price increase expected to continue into 2020, sector consolidation will persist. While 2019 was the year of mega deals, he thinks 2020 will be the year for mid-tier deals. Grosskopf mentioned he likes single mine companies as top takeover targets, as they are simple economic financial plays and easy to integrate. Today we have identified four mid-tier resource stocks that fits Grosskopf’s criteria for a takeover target.
*Share price data as at January 16, 2020, data obtained from S&P Capital IQ
Victoria Gold Corp. (TSXV:VIT) – $8.69
Victoria Gold is engaged in the exploration and development of gold properties. The Company owns the Dublin Gulch property, which hosts the Eagle Gold Deposit. Dublin Gulch is in central Yukon, ~370 km north of Whitehorse and ~80 km from the town of Mayo. The property covers an area of approximately 550 sq. km. The Dublin Gulch property also includes the Wolf Tungsten Deposit, the Potato Hills Trend, including the Olive, Shamrock and Nugget targets, NND Cat B land and other targets. The Company’s other properties include interests in Donjek, Aurex, Canalask, and Clear Creek in Yukon, and Island Mountain in Nevada.
- Market Cap: $497.3M
- 30-Day Return: +9.5%
- 90-Day Return: +20.1%
- 90-Day Average Trading Volume: 56,490
Wesdome Gold Mines Ltd. (TSX:WDO) – $9.12
Wesdome Gold Mines explores for, extracts, processes, reclaims, and sells gold in Canada. It principally produces gold in the form of doré bars, and silver as a by-product. WDO boasts over 30 years of continuous gold production and the Company’s principal assets include the Eagle River Mine, which consists of three contiguous mining leases and 442 contiguous active mining claims covering an area of 7,958 hectares; the Mishi Mine that consists of 19 patented mining claims, five mining leases, and five staked claims covering an area of 3,055 hectares; and the Eagle River Mill located near Wawa.
- Market Cap: $1,252.4M
- 30-Day Return: -2.9%
- 90-Day Return: +36.0%
- 90-Day Average Trading Volume: 1,052,180
Pretium Resources Inc. (TSX:PVG) – $13.87
Pretium is a Vancouver-based gold company that owns the producing Brucejack gold project in British Columbia. The Brucejack Mine is made up of four mining leases and six mineral claims that total 3,304 hectares. The mine is a low-cost, high-grade, underground mine. Additionally, the Company is conducting exploration and evaluation of assets at the Snowfield Project and Bowser Claims.
- Market Cap: $2,570.7M
- 30-Day Return: +1.3%
- 90-Day Return: -15.5%
- 90-Day Average Trading Volume: 501,120
Novo Resources Corp. (TSXV:NVO) – $3.57
Novo’s focus is to explore and develop gold projects in the Pilbara region of Western Australia, and Novo has built up a significant land package covering approximately 13,000 sq km with varying ownership interests. The Company’s main focus is the Karratha gold project covering approximately 8,000 square kilometers of tenements in the Karratha region of Western Australia. We think Kirkland Lake Gold could be a potential suitor as the Company has operations in Australia and currently owns a 16.7% equity interest in Novo. Eric Sprott is also a Director of NVO.
- Market Cap: $636.9M
- 30-Day Return: -1.7%
- 90-Day Return: 25.0%
- 90-Day Average Trading Volume: 200,230
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