Post by Catdaddy on Oct 14, 2007 11:55:56 GMT -5
Mining firms find few gems among takeover targets
www.reuters.com/article/reutersEdge/idUSN1220657920071012
Fri Oct 12, 2007 3:54pm EDT
By Susan Taylor - Analysis
OTTAWA (Reuters) - Deal-hungry miners looking to restock diminishing reserves have a full menu of companies and properties to choose from, but there is a scant selection of mouth-watering acquisition targets.
With just a handful of Canadian companies boasting big, new deposits, with permits in place, mining prospects that were once passed over may be attracting a second look.
"A lot of the stuff out there has been around forever, and so the companies have looked at these things dozens of times," said Haywood Securities mining analyst Kerry Smith.
"The only thing that's changed now is the metal prices are a lot higher ... So the question is, can you count on a price going forward that will allow you to get a decent return after you factor in the acquisition costs."
Further, such deals often hinge on improved political conditions or permit approval.
Newmont Mining (NEM.N: Quote, Profile, Research) said this week it will spend C$1.5 billion in cash to buy Canadian explorer Miramar Mining (MAE.TO: Quote, Profile, Research) and its Hope Bay project in the northern Canadian territory of Nunavut.
"Newmont held back on Miramar for political and tenure reasons. With the recommendation from the Nunavut Water Board in favor of Hope Bay, it didn't take long for Newmont to act," Dundee Securities analyst Mark Smith said in a note.
"Investors may want to look at Aurelian (ARU.TO: Quote, Profile, Research) as the next 10 million plus ounce acquisition target -- there are very few left," he added.
All the majors are interested in Aurelian, a small gold miner, Smith said, but are likely awaiting a signal from the government of Ecuador on upcoming new mining legislation.
"Gold companies tend to have shorter reserve or mine lives, so they're always on the treadmill of trying to replace their ounces of production," Smith said.
ATTRACTIVE TARGETS
If several juniors can resolve permit or political issues, they could quickly become attractive targets for deep-pocketed top-tier miners.
"These companies are awash with cash," said Caldwell Securities portfolio manager John Kinsey. He expects the acquisition pace to pick up speed because it is more costly, time-consuming and riskier to get new mines into production.
Gabriel Resources (GBU.TO: Quote, Profile, Research), for example, faces environmental permitting delays for its massive Rosia Montana gold project in Romania. It counts Newmont as its biggest shareholder.
Crystallex (KRY.TO: Quote, Profile, Research) said it has "absolutely no" idea when it will get the environmental permits it needs for its long-delayed Las Cristinas gold mine in Venezuela.
Other miners seen as takeover candidates include explorer MineFinders Corp (MFL.TO: Quote, Profile, Research). Long tagged a target, it is constructing a gold and silver mine in Chihuahua, Mexico.
There is speculation around Comaplex Minerals (CMF.TO: Quote, Profile, Research), which explores for metals and diamonds in Canada's Northwest Territories and Nunavut. Its stock has climbed about 33 percent in the last month.
Mid-tier miner HudBay (HBM.TO: Quote, Profile, Research) is viewed as a possible suitor for smaller Breakwater Resources (BWR.TO: Quote, Profile, Research) -- which has four zinc-producing mines -- particularly if Dundee Corp (DCa.TO: Quote, Profile, Research) decides to sell its 24 percent stake.
"I just think the market always assumes everybody's going to buy everybody else," Smith said. "There's never as many as the market would like."
www.reuters.com/article/reutersEdge/idUSN1220657920071012
Fri Oct 12, 2007 3:54pm EDT
By Susan Taylor - Analysis
OTTAWA (Reuters) - Deal-hungry miners looking to restock diminishing reserves have a full menu of companies and properties to choose from, but there is a scant selection of mouth-watering acquisition targets.
With just a handful of Canadian companies boasting big, new deposits, with permits in place, mining prospects that were once passed over may be attracting a second look.
"A lot of the stuff out there has been around forever, and so the companies have looked at these things dozens of times," said Haywood Securities mining analyst Kerry Smith.
"The only thing that's changed now is the metal prices are a lot higher ... So the question is, can you count on a price going forward that will allow you to get a decent return after you factor in the acquisition costs."
Further, such deals often hinge on improved political conditions or permit approval.
Newmont Mining (NEM.N: Quote, Profile, Research) said this week it will spend C$1.5 billion in cash to buy Canadian explorer Miramar Mining (MAE.TO: Quote, Profile, Research) and its Hope Bay project in the northern Canadian territory of Nunavut.
"Newmont held back on Miramar for political and tenure reasons. With the recommendation from the Nunavut Water Board in favor of Hope Bay, it didn't take long for Newmont to act," Dundee Securities analyst Mark Smith said in a note.
"Investors may want to look at Aurelian (ARU.TO: Quote, Profile, Research) as the next 10 million plus ounce acquisition target -- there are very few left," he added.
All the majors are interested in Aurelian, a small gold miner, Smith said, but are likely awaiting a signal from the government of Ecuador on upcoming new mining legislation.
"Gold companies tend to have shorter reserve or mine lives, so they're always on the treadmill of trying to replace their ounces of production," Smith said.
ATTRACTIVE TARGETS
If several juniors can resolve permit or political issues, they could quickly become attractive targets for deep-pocketed top-tier miners.
"These companies are awash with cash," said Caldwell Securities portfolio manager John Kinsey. He expects the acquisition pace to pick up speed because it is more costly, time-consuming and riskier to get new mines into production.
Gabriel Resources (GBU.TO: Quote, Profile, Research), for example, faces environmental permitting delays for its massive Rosia Montana gold project in Romania. It counts Newmont as its biggest shareholder.
Crystallex (KRY.TO: Quote, Profile, Research) said it has "absolutely no" idea when it will get the environmental permits it needs for its long-delayed Las Cristinas gold mine in Venezuela.
Other miners seen as takeover candidates include explorer MineFinders Corp (MFL.TO: Quote, Profile, Research). Long tagged a target, it is constructing a gold and silver mine in Chihuahua, Mexico.
There is speculation around Comaplex Minerals (CMF.TO: Quote, Profile, Research), which explores for metals and diamonds in Canada's Northwest Territories and Nunavut. Its stock has climbed about 33 percent in the last month.
Mid-tier miner HudBay (HBM.TO: Quote, Profile, Research) is viewed as a possible suitor for smaller Breakwater Resources (BWR.TO: Quote, Profile, Research) -- which has four zinc-producing mines -- particularly if Dundee Corp (DCa.TO: Quote, Profile, Research) decides to sell its 24 percent stake.
"I just think the market always assumes everybody's going to buy everybody else," Smith said. "There's never as many as the market would like."
