NEW YORK, May 16, 2016 /PRNewswire/ --
Prices for gold have rallied on increased demand for safe haven
investments from equity market turmoil, and these unusual market
conditions have increased expectations for more mergers and
acquisition deals within the gold market. Tahoe Resources Inc.
(TSX:THO), Kaminak Gold Corporation (TSXV:KAM), Goldcorp Inc. (TSX:
G), Market Vectors Junior Gold Miners ETF (NYSEARCA: GDXJ), Brazil
Resources Inc. (TSXV:BRI)
Earlier in February Tahoe Resources Inc. agreed to acquire
Toronto-based miner Lake Shore
Gold Corp. in a $552 million
all-share deal. Then just last week Kaminak Gold Corporation
announced that the company will be acquired by Goldcorp Inc. for a
deal approximately $520million
Canadian.
Goldcorp's strategy of using the infrastructure developed by
smaller exploration companies to then identify and develop their
mining projects. For example, Kaminak's 'The Coffee Gold' project
is located in a suitable territory easily accessible from
Dawson City, Yukon Territory in
Canada, which is located very
close to the Alaskan border, and provides Goldcorp with high
quality development project at low sustaining costs.
Large Gold companies with a strong balance sheet and cash can
afford to buy assets that strengthen their production portfolios.
The fact that the gold sector market share will remain diversified
only supports this strategy. According to research by BMI, the top
10 gold producers account for only 25% of global output.
As a result, Junior Gold Miners
have become quite popular, and shares of the Market Vectors Junior
Gold Miners ETF (NYSEARCA: GDXJ) have increased in value by 94%
year to date. Some junior gold companies have witnessed astonishing
rallies, like Brazil Resources Inc., shares of this company have
surged 240% since January.
Brazil Resources Inc. focuses on the acquisition and development
of projects in emerging producing gold districts in Brazil, Paraguay and other regions of the Americas.
One of the company's new projects, Whistler gold-copper project,
was acquired from Kiska Metals Corp. pursuant to an asset purchase
agreement in August 2015. The
Whistler Project is located in South
Central Alaska approximately 150 km northwest of Anchorage,
with 75% recovery rate for gold and silver, 85% recovery for
copper.
Last week gold jumped back to the high end range as a weakening
dollar and bearish earnings continued to weigh on equity markets.
Gold companies, despite already high returns since the beginning of
the year, still have a bullish underlying trend, as worries
regarding the performance of the stock market create a need for
risk aversion.
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