Monday, January 13, 2014

Gold M&A Is Back: Goldcorp launches $2.6-billion hostile bid for Osisko Mining GLD, TNR.v, MUX, GDX


  We were missing the very important sign of the bottom in Gold and Silver markets - M&A activity with industry insiders bottom fishing for the distressed assets. Today we have an important development confirming observations of Rick Rule in the market place. Big money are looking for deals now. Rob McEwen's new play McEwen Mining is breaking out to the upside today on some volume with Gold crossing $1250 level.

Rick Rule: Money Are coming Into Gold And Silver Now

"Rick Rules discusses the recent bear market in Gold and what is going to happen in the beginning of the new bull phase. Money are coming into the resource sector again. It is the very big money, which are circling this sector now. Who are the investors? You can guess - they are mostly from Asia - China and Korea, new type of long term investors. There are a lot of opportunities in the market now - we have learned from our previous experience and the valuations are very appealing now for the right plays."

Rob McEwen: “The Next Run Will Be Driven By Gold Moving Higher, As Well As New Discoveries” MUX, TNR.v, GDX, GLD

 "Rob McEwen gives his view on the Gold market and what will be the driving force behind the next Bull Run. He is looking for the deals in this market environment and that new discoveries will be driving the successful companies backing them. Meanwhile Gold is under pressure today testing the recent lows. Equity markets are drifting lower and Interest Rates higher. Rob reminds us, that turnaround can be very fast as we saw this summer after Gold has bottomed out and miners were spiking up. Equity markets are very high now and Gold sector is very undervalued, people will start looking at the relative values at these levels."

The Globe and Mail:

Goldcorp launches $2.6-billion hostile bid for Osisko Mining

Goldcorp Inc. has launched a $2.6-billion unsolicited takeover offer for smaller rival Osisko Mining Corp.
The proposed deal is in the form of 0.146 of a Goldcorp share plus $2.26 in cash for each Osisko common share, for a total value of $5.95 per share, Goldcorp said in a news release Monday.
Vancouver-based Goldcorp says the proposed transaction offers a 15 per cent premium over Quebec-based Osisko’s latest closing share price.
But the proposal is a low-ball offer and could well trigger competing bids, says one analyst.
“We don’t think that the current bid fairly reflects the value of the [Osisko] assets and we don’t expect existing shareholders to tender to this hostile offer,” Dundee Capital Markets analyst Joseph Fazzini said in an email Monday.
Montreal-based Osisko’s main asset -- the Canadian Malartic gold mine in the Abitibi region of Quebec -- is “a world-class operation in a world-class jurisdiction and should command a premium that’s more substantial than what’s being offered here,” he said.
“Clearly, Goldcorp is trying to be opportunistic but such a low offer opens up the doors for one or more parties to get involved. Given that we think Goldcorp wants the asset, we wouldn’t be surprised to see them sweeten their bid over time.”
Chuck Jeannes, Goldcorp’s president and chief executive officer, said “Our clear preference remains to engage with Osisko, as we strongly believe in the compelling strategic and financial merits of this transaction to the mutual benefit of both companies’ shareholders.”
Osisko officials were not immediately available to comment.
“From a financial and strategic perspective, this offer represents a compelling transaction that is consistent with our strategy of improving the overall quality of our portfolio,” said Mr. Jeannes.
Goldcorp’s hostile offer comes as the price of gold has dropped more than 35 per cent since the height of the commodity boom. The falling bullion price has forced companies to slash costs, suspend projects and put acquisitions on hold in order to stay solvent.
The proposed takeover of Osisko marks the biggest deal in the mining sector in more than a year.
Canadian gold companies have been looking for acquisitions that are closer to home and that represent less geopolitical risk.
Commerical production at Canadian Malartic began in May of 2011 and the project – the company’s only operating mine – is expected to turn out 500,000 to 600,000 ounces of gold per year over a 16-year lifespan, Osisko says on its corporate website.
Canadian Malartic has proven and probable reserves of 10.1 million ounces of gold, according to Osisko.
Goldcorp already has a gold project in Quebec – Éléonore, slated to start production later this year.
If it goes through, the proposed deal will make Goldcorp the largest gold producer in Quebec.
Goldcorp’s offer to Osisko comes just days after it reported a lower long-term production outlook and said its key Penasquito mine in Mexico would only produced giold for 13 years instead of the previously targeted 19 years.
The offer would benefit Osisko shareholders in many ways, including exposure to Goldcorp’s low-cost, diversified asset portfolio, Goldcorp said.
“This combination offers excellent strategic value as Canadian Malartic and its talented operating team will benefit from Goldcorp’s strong financial position, technical expertise and commitments to safety and sustainability,” said Mr. Jeannes.
Goldcorp’s offer is open until Feb. 19, unless extended or withdrawn, the company said.
A $1.25-billion non-revolving credit facility has been secured with Bank of Nova Scotia, in addition to about $600-million of cash on hand and an undrawn $2-billion credit facility, said Goldcorp.
Goldcorp management is set to discuss the proposed takeover on a conference call later this morning."

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