Faced with a gold market slump that’s set to hit four years, many juniors have been forced to take extreme measures, which includes merging with other miners. That being said, any one of the following six junior gold companies could be the next takeover target or even make an acquisition of its own.
Faced with a gold market slump that’s set to hit four years, many juniors have been forced to take extreme measures. This includes merging with other miners to save on costs as well as avoiding a dilutive financing, as seems to be the case with companies such as Soltoro Ltd. (TSXV: SOL), Newstrike Capital Inc. (TSXV: NES), and AuRico Gold Inc. (TSX: AUQ). That being said, any one of the following six junior gold companies could be the next takeover target or even make an acquisition of its own.
Timmins Gold Corp. (TSX: TMM): Timmins was already a profitable Mexico-focused gold miner before announcing the acquisition of Newstrike Capital in February 2015. Acquiring Newstrike’s Ana Paula project is expected increase Timmins Gold’s total Measured & Indicated gold resource by 75% along with a 34% jump in the gold grade. The combined company is also forecast to mine gold at all-in-sustaining cash costs of less than US$780 per ounce. Potential suitors for Timmins Gold include Goldcorp and the soon to be merged Alamos Gold-AuRico Gold.
Argonaut Gold Inc. (TSX: AR): The majority of Argonaut’s assets are in Mexico, with its producing El Castillo Mine in Durango and La Colorada Mine in Sonora, although it does have a development stage Magino project in northern Ontario. As of December 31, 2014, the company had $51.4 million in cash and equivalents. Argonaut has a Measure and Indicated gold resource of approximately 11.5 million ounces and for 2015 it expects to produce 135,000 to 145,000 gold equivalent ounces at total cash costs of $700 to $750 per gold ounce sold. Seeing that Goldcorp also has operations in both Mexico and Ontario, Argonaut would appear to be an appealing acquisition target given its market cap of just $313 million.
Pretium Resources Inc. (TSX: PVG): Although its Brucejack gold project in northern British Columbia isn’t expected to go into production until 2017, the 6.9 million ounces of probable reserves in its Valley of the Kings area grading 15.7 g/t is difficult to ignore. A feasibility study done in June 2014, estimates average annual gold production of 504,000 ounces during the mine’s first 8 years at all-in sustaining cash costs of just US$448 per ounce using a US$1100 gold price assumption. Silver Standard Resources Inc. (TSX: SSO) has a large stake (about 13%) in Pretium as does China’s Zijin Mining Group Co., Ltd. (nearly 10%).
Primero Mining Corp. (TSX: P): Primero’s CEO Joseph Conway was the former boss of IAMGOLD, taking it from a $50 million joint venture company to a $6 billion gold producer. Primero owns 100% of the San Dimas gold-silver mine in Mexico and 100% of the Black Fox mine in northern Ontario. Its production is expected to increase by up to 20% in 2015 to between 250,000 and 270,000 gold equivalent ounces with all-in sustaining costs estimated at US$1,000 to $1,100. One of Primero’s directors, Rohan Hazelton, is currently Vice President of Strategy at Goldcorp.
Richmont Mines Inc. (TSX: RIC): Richmont has two operating mines in Quebec and one in northern Ontario. The company forecasts production in 2015 of 78,000 to 88,000 gold ounces at a cash cost of US$850 to $940 per ounce. Upside for this company could come from developing the deep, high-grade zone at its Island gold mine, estimated at about 9.5 g/t. Richmont Mines has a market cap of about $228 million.
Treasury Metals Inc. (TSX: TML): Treasury owns the Goliath Gold Project located near the city of Dryden in northwestern Ontario, which has a 1.7 million ounce Indicated and Inferred gold resource at a gold equivalent grade of about 3 grams per tonne. Infrastructure also makes this project appealing, as the property has road access, existing power lines, and the nearby city of Dryden (about halfway between Thunder Bay and Winnipeg) has a Canadian Pacific Rail terminal. Goliath’s proximity to Rainy River and Red Lake could pique the interest of both New Gold Inc. (TSX: NGD) as well as Goldcorp.
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