Shares of Ubika Gold 20 Index component Sulliden Gold (TSX: SUE) jumped 33% on May 21, 2014 after the company agreed to be acquired by Rio Alto Mining (TSX: RIO). The transaction creates a Peru-based, mid-tier gold producer with near-term production potential of about 300,000 ounces of gold annually.
The Ubika Gold 20 Index is comprised of 20 promising junior gold producers and developers, chosen based on various proprietary criteria including Net Asset Value (NAV), resource analysis and earnings, in addition to qualitative factors such as management and geographical risk. It is a successor to the Ubika Gold 50 Index, created in February 2010, which since its inception has generated a return 25% greater than that of TSX Venture exchange.
Sulliden Gold isn’t the first component of the Ubika Gold Index to be acquired and it likely won’t be the last. Other companies in the Index that have been taken over in the past include Avion Gold, Gold-Ore Resources, PMI Gold Corp., Rainy River Resources, and RX Gold & Silver.
The following gold juniors in the Ubika Gold 20 Index are considered attractive takeover candidates:
1. Alamos Gold Inc. (TSX: AGI): This gold producer owns and operates the Mulatos Mine in Mexico, and has exploration and development activities in Mexico, Turkey, and the United States. Alamos has approximately $410 million in cash and cash equivalents and is debt-free. The company said it expects to produce between 150,000 and 170,000 ounces of gold in 2014 at cash operating costs of $630 to $670 per ounce of gold sold, excluding royalties.
2. Argonaut Gold Inc. (TSX: AR): Argonaut’s primary assets are the production stage El Castillo Mine in Durango, Mexico, and the La Colorada Mine in Sonora, Mexico, in addition to the advanced exploration stage San Antonio project in Baja California Sur, Mexico, and the Magino project in Ontario. The company currently has $81 million in cash and no debt. It has a Measure and Indicated gold resource of 12.5 million ounces. Argonaut expects 2014 gold production of 135,000 to 150,000 gold equivalent ounces at a cash cost per ounce sold of $750-$775.
3. Dalradian Resources Inc. (TSX: DNA): The company is developing its high grade Curraghinault project in Northern Ireland and despite the recent pullback in gold stocks its shares are still up 31% so far in 2014 to its recent price of $0.85. The company announced an updated resource estimate on April 16, 2014, which showed 3.5 million gold ounces (one million of which are Measured & Indicated) at about 10 grams per tonne.
4. Pilot Gold Inc. (TSX: PLG): The gold project developer has a stake in two projects in Turkey with joint venture partner Teck (40% in one and 40% with the possible of earning up to 60% in the other), as well as an 80% interest in a high grade property in Nevada (recent drill results included 10.6 g/t gold over 30.0 metres). Major shareholders include Newmont Mining (15%) and Teck Resources (9%), both of which could be potential suitors for Pilot.
5. Rio Alto Mining (TSX: RIO): After striking a deal to buy Sulliden Gold (TSX: SUE), the hunter could be the hunted. The newly-merged company is expected to produce about 300,000 ounces of gold annually within the next couple of years. Rio Alto forecasts its all in costs to fall to between US$990 and $1,094 per ounce in 2014, and adding Sulliden’s assets could create even greater cost-savings synergies in the future.
To view other potential takeover candidates download your free Ubika Gold 20 report at: Here
Disclosure: SmallCapPower.com did not receive any compensation for coverage of any of the companies mentioned.
