AUGUST 29, 2011
We have a deal in Junior Gold mining space - consolidation will be driving this sector higher. Risk trade is coming back. The deal has valued Northgate Minerals at 45% premium to the average price of the past 20 days.
We are following here another merger in Gold and Silver space and Minera Andes shareholders will have now even more questions to ask the management about valuation in the proposed merger with US Gold.
"Once the panic settles we will see flight to the Real assets, China will not be able to diversify all 1.2 Trillion holdings in US Treasuries, but the gradual transition will be in place - new world currency will be the Hard one based on Gold, Silver, Copper and access to strategic commodities like Oil, Lithium and REE. We are expecting that first the gold Majors will properly reflect the Gold valuation in their market caps and after that liquidity will go downstream into the Gold and Silver Juniors. Copper juniors will be at the mercy of the M&A consolidation game again and Lithium will show its truly strategic status with every uptick in the Oil price again.
James Dines can be right on the money again with his calls this time. And we will be honest with you - we just do not know what to do if political circus will bring US to the abrupt end without the proper glory of the Rome Empire in its final days."
AuRico Gold to Buy Northgate Minerals for $1.48 Billion
The hunt for mining companies continues.
AuRico Gold announced plans on Monday to acquire Northgate Minerals, creating a major gold producer with operations in Mexico, Canada and Australia.
For each share they own, Northgate investors would receive 0.365 of AuRico common stock. At that level, the deal is 45 percent above Northgate’s average price in the past 20 days. Reuters put the value of the deal at $1.48 billion. If the transaction is successful, AuRico shareholders would own 62 percent of the newly formed company and Northgate shareholders 38 percent.
The press release
“The assets, projects and people in our two companies are highly complementary, and we are excited about the many opportunities ahead for us to continue to deliver value to our shareholders,” Rene Marion, chief executive of AuRico, said in a statement.
As commodity prices have soared in recent years, deal makers have set their sights on mining companies across the globe.
Last week, Rio Tinto and the Mitsubishi Corporation raised their offer to acquire all of the Australian miner Coal and Allied Industries, a deal valuing it at $11.6 billion. Macarthur Coal is at the center of a hostile takeover play by Peabody Energy and ArcelorMittal. Glencore, the commodities giant, has been picking up a number of assets, most recently moving to acquire the remaining shares it does not already own of Minara Resources, a nickel producer.
Northgate itself was looking to buy Primero Mining. But in light of the AuRico deal, it canceled the acquisition and paid a $25 million termination fee.
“This transaction gives Northgate shareholders a significant premium to market and an exciting opportunity to participate in a leading intermediate gold company,” Richard Hall, the chief executive of Northgate, said in a statement. “The Northgate team has worked hard to develop a highly successful business in Canada and Australia, and we look forward to further value creation through our combination with AuRico.”