Stalking the best gold and silver juniors a profitable summer sport
Posted on 01 June 2008 with no comments from readers
Ask anybody in mergers and acquisitions where they expect the action to be this year and energy and mining will top the list. But the big miners are changing tack and going after undervalued minnows rather than their rivals.
This new strategy makes sense, even for cash-rich mining companies. And many are sitting uncomfortably on huge cash piles which they now need to invest to maintain future growth in the face of diminishing reserves.
Insiders say big M&A deals are less attractive. Partly this may be down to the post credit crunch problems of raising debt. But the same credit squeeze is making life difficult for the smaller players and encouraging them to sell out at attractive prices.
This is a great market for shopping for choice mining properties, those potentially highly valuable claims which junior exploration companies have run out of money to explore. Thus micro M&A is back in the mining sector, and a rash of deals can be expected this fall.
However, with gold prices on the way up this sort of investment interest will surely quickly revive stock market interest in the junior mining sector which has plumbed an all-time historic low this year.
There are plenty of companies sat on choice assets that they bought for bargain basement prices five years ago in the early days of the gold bull market. These assets are most likely close by those of existing gold producers and well known to the potential buyers.
It will be the owners of these assets who get the M&A calls this autumn, and these are the companies to be buying now to benefit from the inevitable uplift in junior share prices that will follow.
‘It will be a different market in a few months time,’ says my old friend Peter Spina of www.goldseek.com. And hunting out the best buys among the gold and silver junior explorers on his website could be a very profitable way to spend a little time this summer.
