Recent M&A Activity in Gold Stocks

Thursday April 30, 2015, 3:00pm PDT

By Teresa Matich+ - Exclusive to Gold Investing News

 

Certainly, while the sub-$1,200 gold price might not be pleasing for gold bugs, it appears to be a good time for gold-mining companies and gold juniors alike to pick up assets.

 

First up, Yamana Gold (TSX:YRI,NYSE:AUY) announced plans to acquire Mega Precious Metals (TSXV:MGP) last Friday, causing Mega’s share price to increase by 100 percent to $0.09. While Mega holds a number of properties in Manitoba, Nunavut and Ontario, it appears that the company’s Monument Bay gold-tungsten project in Manitoba is what attracted Yamana.

Monument Bay is the most advanced project in Mega’s portfolio, and currently holds 2.1 million ounces at 1.52 g/t gold and 248,000 metric ton units (MTU) of WO3 in indicated resources as well as 0.51 million ounces at 1.58 g/t gold and 95,000 MTU WO3 in inferred resources.

 

Under the terms of the agreement, Yamana will acquire all outstanding shares of Mega for 0.02092 per Yamana share plus C$0.001 per Mega share. All in all, that’s total consideration of C$17.5 million for shareholders of Mega.

 

Following that deal, Galane Gold (TSXV:GG) announced plans to acquire privately held Galaxy Gold Mining on Wednesday. Galane operates the Mupane gold mine in Northeastern Botswana, while Galaxy has operations in the Mpumalanga Province of South Africa.

 

Galane has entered binding share purchase agreements with majority shareholders of Galaxy to acquire roughly 78 percent of the company, representing about C$2.4 million. Once that’s complete, Galane will make an offer to all other shareholders of the company to acquire all remaining shares of Galaxy.

 

“This acquisition is consistent with our approach of acquiring production or near-term production assets at a fraction of the replacement cost to position ourselves as a substantial gold producer with minimal additional capital requirements,” said Galane CEO Nick Brodie in Wednesday’s release.

 

Last but not least, OceanaGold (TSX:OGC,ASX:OGC) announced on Wednesday that it has signed a non-binding letter of intent with Newmont Mining (NYSE:NEM) to acquire the latter’s Waihi gold mine in New Zealand. OceanaGold will buy the mine for US$101 million in cash plus customary adjustments, while Newmont will retain a 1-percent net smelter royalty for one exploration tenement at the project, capped at 300,000 ounces of gold.

 

“We have long believed that Waihi represents a strong strategic fit within OceanaGold,” said OceanaGold Managing Director Mick Wilkes in a statement. “Waihi represents a unique opportunity for us to acquire a high quality asset that has demonstrated the propensity to extend mine life for more than two decades in what is still a very prospective, high-quality goldfield.”

 

Beyond those three announcements, there are a few M&A deals that look to be coming to a close this week. Newstrike Capital (TSXV:NES) reported that its shareholders have approved a plan for the company to be acquired by Timmins Gold (TSX:TMM,NYSEMKT:TGD). The deal was announced in February, and Newstrike is seeking court approval for the arrangement by May 1.

 

Tarsis Resources (TSXV:TCC) also completed its acquisition of Estrella Gold (TSXV:EST) to form Alianza Minerals, and will begin trading on the TSX Venture under the symbol ANZ.

 

All in all, there seems to be plenty of action going on in the gold space. Investors will certainly be keeping an eye out for the next deal.