This story is not finished yet: there are too many benefits for this merger on the table to ignore it even for the egos involved. This deal will signify the new chapter in this Gold Bull market, which is climbing The Wall of Worry now. The chart above shows you why.
"As you remember, we were looking for M&A activity in Gold and Commodities to pick up in order to confirm the major Bottom built up last year. Now we have the very important confirmation about that bottom from the industry insiders. Announced deals with Las Bambas - being bought by Chinese companies and these talks about the merger between Barrick Gold and Newmont Mining signify the very important point in the cycle. It is cheaper "to dig" for Gold and Copper on the Exchange than in the ground. Depressed market valuations of the resources represented by the discounted share prices of miners provide the best entry points in the decades for the commodity markets. It is not only our talk any more - it is the flash news from the top boardrooms in the mining business. It is the money talk by the Insiders. "Don't discount this merger talks in the future!"
"TNR Gold has published its new Shotgun Gold presentation. After the news about Barrick Gold and Newmont Mining talks about the merger we are looking for the major bottom in the mining cycle. The best projects will find its way now to the investors' radar screens."
Barrick Gold Corp. ABX.T +1.14% has sent an email outlining revised terms toNewmont Mining Corp. NEM +3.51% for a merger between the two gold mining giants that stalled last week, according to people familiar with the matter.
The two sides had disagreed over plans for a spinoff of some assets and have been ininformal contact in recent days to iron out their differences, according to these people.
A deal is far from certain. For a start, Toronto-based Barrick has yet to receive a response from its U.S. rival after the email was sent to Newmont's senior management on Tuesday, these people said.
Formal high-level talks weren't expected to continue until at least after Newmont's annual general meeting, which happened Wednesday, according to people familiar with the matter.
Merging the companies, which have a combined market value of more than $30 billion, would create a natural-resources giant with mines ranging from Indonesia to Africa and throughout North and South America.
The two sides have tried to come together at least three times before, leading some analysts to question whether they will complete a deal this time.
On Tuesday, Barrick Chairman Peter Munk said that it was "difficult to find a reason" for his company not to merge with Newmont in a deal that he said would provide cost savings given the proximity of the companies' mines in Nevada.
In coming together, both sides are looking at savings of $1 billion, people familiar with the matter said. Most analysts believe that would be closer to $500 million.
The two sides had clashed over how specific they should be, when announcing a deal, over which assets should go into the new spinoff, people familiar with the matter said."
ZeroHedge presents Gold Miners Sector and Gold supply chain as we are searching for the answer: where the Gold will come from in the future? A lot of miners are at the break-even levels with this level of Gold price and are cutting back on new project development and exploration. Juniors are cut off from the capital markets and only the strongest will survive. With record amount of Gold flowing from West to the East and China now being the top consumer of Gold we have the almost perfect set up for the much higher Gold prices. Junior miners with the best stories can represent the life time buying opportunity in these markets. Goldcorp hostile bid for Osisko is the very good indication of the major bottom in the market.
Among our "Golden Nuggets" McEwen Mining has received the last permit for its El Gallo 2 minedevelopment in Mexico. Rob McEwen has addressed these developments recently, presenting his progress in Mexico, Argentina and Nevada. He has discussed at length the questions of resource nationalism and miss-guided "rear view mirror" mining sector policies around the world in his recent interview. Safe mining jurisdictions like Alaska in case with TNR Gold Shotgun deposit will gain the more attraction from the industry in the new cycle.
"With general equity markets sliding into the territory which will challenge Bernanke's Happy Exit with Tapering, time is to listen to those who have seen and have done it. Rob McEwen is dissecting the recent market situation in Gold and M&A activity, which will make the best stories in the market to move very fast from the bottom. McEwen Mining has bottomed at $1.65 in December and has closed at $2.63 last Friday. Los Azules Copper project will be the one of the coming M&A stories this year, which will move valuations of McEwen Mining and TNR Gold. TNR Gold holds shares of McEwen Mining after the settlement on Los Azules. Rob McEwen has announced on Twitter about the commencement of drilling in Nevada now. With Gold crossing $1270 and closing just below it we have a very exciting time for the best stories in junior mining these days."
The following infographic focuses on what is probably the key issue for current state of the physical gold-strapped market: which gold miners hold the most (physical, not paper) supply.
Readers will note that a key tangent of the above infographic is the presentation of which miners need to add new reserves, or otherwise boost their asset base quickly, ostensibly through M&A - information that may be useful if and when the inevitable wave of consolidation in the miner space finally takes place. To provide a more in depth perspective on that issue, here is Jeff Desjardins from Visual Capitalist with additional insight.
Which Gold Miners Must Replenish Their Reserves Through M&A?
We often hear that large gold producers are usually not the best explorers. As such, when it comes time to replenish or grow their resource base, they must look to M&A.
With the recent offer from Goldcorp to buy Osisko for $2.6 billion, we wanted to do the math and see how much gold the majors and mid-tiers actually have in the ground. In addition, we wanted to find how much of it was in undeveloped projects vs. current producing mines.
Two months ago, using data from the 2013 Gold Deposit Rankings, we completed a rough approximation of total gold for each major. However, this time we took it a step further and conducted a much more rigorous analysis. We looked at each major and mid-tier in depth, took into account joint ventures, and calculated what percentage of their gold is in undeveloped projects. Presumably, it is the companies that have nothing in the pipeline that will want to acquire more gold assets. This is especially true, given that the target companies for potential takeover offers are trading at some of their lowest valuations in years.
Note: because the 2013 Gold Deposit Rankings only deals with gold deposits above 1 million oz and with certain cutoff specifications, we haven’t included small ones.
To start at a high level, here is the breakdown between how many mines are owned by big producers vs. junior miners.
Of the 2.02 billion oz Au that majors and mid-tiers have, it turns out 71.3% of projects in their portfolios are already in production.
This means that big producers have less than 30% of their total reserves and resources contained in undeveloped projects. On average, while each undeveloped project is slightly higher grade (1.27 g/t vs. 1.11 g/t), they contain less overall gold.
In fact, each average project in the pipeline has 38% less gold than those in production:
Projects in the pipeline are both fewer and smaller in size. However, what is really interesting is that we have not even yet looked at development hurdles such as permitting or jurisdiction risk. Take the Pebble Project – this is the biggest gold project in the world (even though it is primarily copper). It holds 107 million oz of gold, and it is currently stalled by the EPA.
Of the 76 projects in the pipeline for majors and mid-tiers, how many of them will never go into production? How many of them will run into significant development challenges like Barrick’s Pascua Lama project? The math says that majors and mid-tiers have less than 30% of their gold in undeveloped projects, but this number could be even less based on these considerations.
That all said, let’s look at what is available in the junior market – this is where majors and mid-tiers would go to fill their pipeline of projects:
There are many projects, but at a much lower grade and size. About 20% are in production and 80% are in development.
The question is now: which majors are going to be the most likely to acquire new projects? In this chart, I’ll show the resources and reserves for each company. For a more detailed chart, see the infographic done through Visual Capitalist.
Last, but not least, here are four other companies besides Goldcorp that we think may be looking to boost their asset base: Gold Fields, Newcrest, Newmont, and Kinross.
Newcrest (ASX: NCM)
Cash: $69 million (June financials)
Resources currently in production: 86%
Resources in pipeline: 14%
Avg. grade of pipeline: 0.86 g/t
Gold Fields (NYSE: GFI)
Cash: $1.2 billion
Resources in production: 89%
Resources in pipeline: 11%
Avg. grade of pipeline: 0.63 g/t
Newmont Mining (NYSE: NEM)
Cash: $1.5 billion
Resources in production: 78%
Resources in pipeline: 22%
Avg. grade of pipeline: 1.02 g/t
Kinross Gold (NYSE: KGC)
Cash: $950 million
Resources in production: 66%
Resources in pipeline: 34%
Avg. grade of pipeline: 1.12 g/t
Note: The recent writedown of the Tasiast project may make Kinross wary of M&A for the time being."
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These new documents are providing further information about the state of the pretrial argument advanced by TNR Gold litigators George Macintosh, QC and Sean Hern - partners from Farris. According to the document former CEO of Minera Andes Allen Ambrose will be in a discovery again on September 20th, 2012. Interestingly enough, he has sold 1.7 million worth of McEwen Mining shares in February 2012, before all "problems" in Argentina were announced by Mr McEwen at his conference call in May 2012, but we are sure that it is a pure coincidence if any.
"We guess, that at some stage Mr Allen Ambrose - former CEO of Minera Andes, will be questioned during the Los Azules litigation on what exactly were his intentions explained in his emails presented by TNR Gold litigation counsel in Amended Claim.
Allen Ambrose emails:
24. "Next we should look at our alternatives to take out the Solitario (TNR Gold - S) agreement..."TNR Gold vs Minera Andes (McEwen Mining now) and MIM (Xstrata now). From Page 11 Part 3: Legal Basishttp://bit.ly/xhdqag"
What is at stake in this litigation is very well presented in the latest presentation of McEwen Mining on the pages related to Los Azules. Resource was increased recently to 15.4 billion lb of Copper and Los Azules is among the largest undeveloped copper deposits in the world.
Valuation of this asset will be very important in this litigation and Argentina is the place where the situation is still quite fluid - maybe that is why TNR Gold is claiming back its former properties and announced that it is looking forward to develop it in Argentina. From McEwen Mining Maps the high grade copper core appears to be situated on former TNR Gold properties. Below you can find the long history of this litigation. MORE
"Kirill Klip, Chairman of TNR commented that: “Although the price being proposed for the Company was materially higher than TNR’s current trading price, in our view it fell far short of reflecting the value of the Company and, in particular, the value of the Company’s claims in the current Los Azules litigation with Minera Andes Inc.”
In addition to returning 210.5m gold grades averaging 1.29 g/t, including 27.4 m of 2.3 g/t Au, drill hole 06-43 significantly changed the Company's understanding of structural control at Shotgun Ridge and demonstrated that mineralization is still open at depth (Technical Report on the Shotgun-Winchester Project, SW Alaska, 2008).
"Drill hole 06-43 has clearly been the most encouraging hole at Shotgun Ridge. We are optimistic that the current drilling program will continue to increase this mineralized zone at depth which will be reflected in the subsequent resource estimate" comments John Harrop, VP Exploration"
Please, do not forget, that we own stocks we are writing about and have position in these companies. We are not providing any investment advise on this blog and there is no solicitation to buy or sell any particular company
Here we will provide some additional public information on Los Azules litigation, so that you can have the full picture and decide why McEwen Mining is so worried, why now and what actually they are talking about:
Rob McEwen:
"We are blessed with having a number of world class properties, properties of long life and such size that they are of interest to the large number of players - particularly, Los Azules Copper project, where we have encouragement in drilling this year. We have discussions about partial or full sale of this property, which could provide some or all of the funding we need to carry on our business. These discussions have been going on for a while now, but we will certainly step up that tempo..."
Answering one of the questions, whether McEwen Mining has to wait until the end of the litigation or sell only part of the property Rob McEwen said: "It will be the sale of all property and it does not have to wait the end of the litigation."
In the end of the conference call TNR Gold litigation is mentioned with the Merger Offer proposal from unnamed party and Rob McEwen has pointed, as usual, to the TNR Gold share price - this attention to the junior market is also very interesting in light of the all recent developments.
Timing of a very fortunate Sales of McEwen Mining shares by Former CEO of Minera Andes Mr Allen Ambrose becomes particularly interesting in light of all recent warnings for McEwen Mining shareholders about "Argentina Situation".
"Maybe this is where the real problem is - Chief Owner, finally, shares with Other Owners the information and it is too much to handle for them at once? Los Azules litigation case went through an interesting transformation this year - from being the "lawsuit without merit" to the McEwen Maps outlining the High Grade Core of Los Azules being located on former TNR Gold properties, which junior is claiming to be returned back.
Los Azules resource will, hopefully, grow further - latest estimate for 12.5 billion lb of Copper in all categories was done in 2010."
With global demand for copper expected to outstrip supply, and the price of the red metal down from its highs of nearly $4 earlier this year, now may be a good time to move aggressively in the market. There are already signs that copper producers both large and small plan to forge new alliances and press ahead with buyouts in anticipation of greater demand.
Total global merger and acquisition activity in the mining sector rose 130 percent in the first quarter of this year from the previous quarter to reach US$90 billion, according to KPMG’sMining M&A Quarterly Newsletter. Granted, that was mostly a result of the proposed merger between Glencore International (LSE:GLEN) and Xstrata (LSE:XTA), which was announced in February; the deal will be the largest mining transaction in history if it goes ahead, and may significantly shift the industry’s landscape in the future. After all, it would create the third-largest copper group in the world and become the fourth-largest diversified mining company after BHP Billiton(ASX:BHP), Vale (NYSE:VALE), and Rio Tinto (ASX:RIO). Yet even without that mega-merger, there were over 81 mining transactions in the latest quarter, compared to under 50 in the fourth quarter of 2011, KPMG found.
Looking solely at copper mergers, there were a total of ten transactions during the latest quarter for a combined total deal value of $13 billion. The most high profile was Rio Tinto’s move to become the majority shareholder in Ivanhoe Mines (NYSE:IVN,TSX:IVN), which operates the Oyu Tolgoi copper mine in Mongolia. Oyu Tolgoi is slated to begin initial production by the end of this year, and commercial production is projected to begin by the first half of 2013.
Hopes may be high for Oyu Tolgoi, which will be one of the world’s largest copper mines, and other mega-projects, but some analysts argue that this is not the best time for companies to be making aggressive moves. Indeed, both Rio Tinto and BHP suggested this month that they may be scaling back their investment plans amid increasing worries about a further global economic downturn. BHP’s chairman, Jacques Nasser, stated that the company is rethinking its expansion plans “every day,” while Rio Tinto’s CEO, Tom Albanese, said “increasing costs are an industry-wide problem…[w]e must ensure we are proactively tackling issues now that may impact productivity in years to come.”
Still, 2011 was a strong year for copper M&A activity. According to the Metals Economics Group’s Strategic Report, released this month, copper deals dominated base metals acquisitions spending, and accounted for the bulk of the 47 percent increase in the total base metals spending of $29 billion in 2011. Looking at the geographic breakdown of 2011′s global mining acquisitions, of the 51 percent of acquired projects Canada accounted for 25 percent market share followed by the US with 15 percent and Australia.
Looking ahead, corporate deals in the copper sector may remain strong, but more action could take place outside of the obvious locations such as North America and Australia. PwC expects a record year of mining M&A driven by cash-rich senior and intermediate mining groups, with Africa becoming a “more viable M&A geography with growth market buyers in particular, driving substantial acquisition volumes.” PwC also expects M&A deals to be robust despite a 21 percent drop in copper prices in 2011 as the spot price of copper nonetheless averaged $4 a pound, 17 percent higher than the 2010 price and 24 percent higher than in 2007. Indeed, Morgan Stanleypointed out that Chinese demand for copper will support prices in the latter half of the year, stating that “we think the timing of a rebound in copper prices will be in large part determined by the speed at which China churns through its domestic inventory, which will necessitate a return to the import market…[f]urthermore, with the majority of known copper inventory concentrated in the U.S. and East Asia, demand weakness outside of these regions will be offset by supply tightness.”
Meanwhile, demand is expected to outstrip supply, with inventories remaining low, especially as labor strikes at major mines worldwide continue to disrupt output. In addition, it is taking longer to produce lower-quality copper, which is encouraging companies both large and small to forge partnerships and pursue buyouts to meet ever-growing demand from consumers in developing economies in particular, PwC said.
Conflict among major copper producers
The drama among major producers is also likely to continue. As investors await the closure of the Xstrata-Glencore deal, they will also be keeping close tabs on the ongoing conflict between Anglo American (LSE:AAL) and Codelco as the latter continues to press its right to exercise the option to acquire a 49 percent stake in Anglo American Sur. In late 2011, Anglo American agreed to sell a 24.5 percent stake in its Chilean unit to Japan’s Mitsubishi Corp. (TSE:8058) for $6.7 billion. As a result, Anglo American has argued that Codelco can now only have the remaining 24.5 percent stake in the company. When and how a settlement will be reached between the two sides remain in question.
Such legal disputes, however, are not uncommon and are unlikely to reverse the tide of copper companies looking to strengthen their position with another group, either through a merger or a buyout. This month, for instance, TNR Gold (TSXV:TNR) received an offer from an unnamed company to merge with TNR and acquire TNR’s copper and gold properties in Argentina. However, TNR is in dispute with McEwen Mining (NYSE:MUX) over the title to a significant part of the Los Azules property; a trial to settle the issue will start in November and should last for about six weeks.
TNR’s Chairman, Kirill Klip, stated that “the Los Azules project is considered to represent one of the largest undeveloped copper projects in the world but the current legal uncertainty over its legal ownership is detracting from the value of the project for shareholders of both TNR and McEwen Mining.”
Even with stumbling blocks, the quest to secure a steady copper supply in the coming years may continue to fan the flames of more M&A activity from both major and junior miners in the near future.
Securities Disclosure: I, Shihoko Goto, hold no direct investment interest in any company mentioned in this article."
VANCOUVER, BRITISH COLUMBIA, May 11 (MARKET WIRE) --
TNR Gold Corp. (the "Company") (TSX VENTURE:TNR) has received an
unsolicited proposal from a third party to merge with TNR and to acquire
TNR's wholly owned subsidiary Compania Minera Solitario Argentina S.A.
("Solitario"). The Company has called a meeting of the TNR Board of
Directors to determine whether the proposal is sufficiently attractive to
commence exclusive negotiations with the third party, and also to
consider its other strategic alternatives.
TNR and Solitario are currently in litigation with Minera Andes Inc. (and
indirect subsidiary of McEwen Mining Inc.) and MIM Argentina
Exploraciones S.A. The litigation (the "Los Azules Litigation") involves
a challenge to title to a substantial portion of the mineral properties
constituting the Los Azules Project in San Juan Province of Argentina.
Specifically, TNR is challenging the title of Minera Andes Inc. and
certain of its subsidiaries to the mineral properties constituting the
northern half of the Los Azules project (the "Solitario Properties"). TNR
is seeking return to it of a 100% interest in the Solitario Properties or
damages; and, effectively, in the alternative, recognition of TNR's right
to back-in to a 25% interest in the properties; together with recognition
of TNR's interest in the related Escorpio IV property. A trial in the
Courts of British Columbia is set to commence in November, 2012 and last
for approximately six weeks.
McEwen Mining is continuing a significant expansion drilling program at
Los Azules, but has announced that it is focusing, and will continue to
focus, its exploration efforts on the portion of the Los Azules mineral
claims that are not subject to the ongoing litigation.
Kirill Klip, Chairman of TNR commented that: "The Los Azules project is
considered to represent one of the largest undeveloped copper projects in
the world but the current legal uncertainty over its legal ownership is
detracting from the value of the project for shareholders of both TNR and
McEwen Mining. The third party proposal which we have received to
purchase TNR, together with the fact that McEwen Mining has decided to
limit its drilling activity to non-disputed mineral claims only are
further validation of the value of TNR, its title claims and its
prospects for success in the upcoming Los Azules litigation."
The Los Azules Project is located in western San Juan Province within a
belt of porphyry copper deposits that straddles the Chilean/Argentine
border. This belt contains some of the world's largest copper deposits,
including Codelco's El Teniente and Andina mines, Anglo American's Los
Bronces mine, Antofagasta PLC's Los Pelambres mine and Xstrata's El
Pachon project, among others.
Shareholders and other interested parties are invited to review the Court
filings relating to the Los Azules Litigation which are available from
the BC Supreme Court registry database (BC Online) and are hosted on
TNR's webpage at www.tnrgoldcorp.com/s/LosAzules.asp.
ABOUT TNR GOLD CORP.
Over the past twenty-one years TNR, through its lead generator business
model, has been successful in generating high quality exploration
projects around the globe. With the Company's expertise, resources and
industry network, it is well positioned to aggressively identify, source,
explore, partner and continue to expand its project portfolio.
TNR's recently listed subsidiary, International Lithium Corp. (TSX
VENTURE:ILC), demonstrated the successful application of TNR's business
model in which TNR shareholders benefited from a unit distribution upon
spin-out of TNR's lithium and rare metals projects. TNR remains a large
shareholder in ILC at 25.5% of outstanding shares.
At its core, TNR provides significant exposure to gold and copper through
its holdings in Alaska and Argentina; and teamed with the recent
acquisitions of rare-earth elements and iron ore projects in Canada
confirm TNR's commitment to continued generation of in-demand projects,
while diversifying its markets and building shareholder value.
On behalf of the board,
Gary Schellenberg, President - TNR Gold Corp.
Statements in this press release other than purely historical
information, historical estimates should not be relied upon, including
statements relating to the Company's future plans and objectives or
expected results, are forward-looking statements. News release contains
certain "Forward-Looking Statements" within the meaning of Section 21E of
the United States Securities Exchange Act of 1934, as amended.
Forward-looking statements are based on numerous assumptions and are
subject to all of the risks and uncertainties inherent in the Company's
business, including risks inherent in resource exploration and
development. As a result, actual results may vary materially from those
described in the forward-looking statements. In particular, there are no
assurances that the third party proposal recently received by the Company
will develop into a formal offer for the Company, or that any such formal
offer would be attractive to, or result in the sae of, the Company. There
are no assurances that the Company will decide to commence a formal sale
process or that, if commenced, such sale process would result in an
attractive offer and sale of the Company. There are no assurances that
the Company will achieve a favourable outcome in the Los Azules
litigation.
CUSIP: #87260X 109
SEC 12g3-2(b): Exemption #82-4434
Neither the TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Contacts:
TNR Gold Corp.
Gary Schellenberg
President
(604) 687-7551 or 1-800-667-4470
(604) 687-4670 (FAX)
info@tnrgoldcorp.com
www.tnrgoldcorp.com"
TNR Gold Vs. McEwen Mining:
Los Azules
"World's Sixth Largest Undeveloped Copper Deposit"
Note: we are not sure that this particular Judge will be involved in this court hearing.
Disclaimer (loosely based on investment bankers' small print): please read our full disclaimer, nothing on this website or any links provided should be relied upon in any way and nobody will accept any responsibility in any case.
We are very pleased to see this development: acknowledgement of the ongoing litigation, its risks, property involved and proper representation of all necessary information for the shareholders. Annual General Meeting to be held by McEwen Mining on Thursday May 17, 2012 at 4:00 will provide a good opportunity to ask all questions about this developing story with "World's Sixth Largest Undeveloped Copper Deposit" - as Rob McEwen has called it.
McEwen Mining reports:
"A total of 2,835 meters were drilled this season in eight holes. A drill hole location map, a table of assay results and a cross section of the Los Azules resource are provided in Exhibits 1, 2 and 3. All of the drill holes from this season were completed on mineral claims that are not subject to ongoing litigation."
Page 5 provides, finally, McEwen Mining map outlining High Grade Core Copper Zone on TNR Gold's former properties called "100% Held mineral rights (subject to litigation) and surface ownership".
We guess, that at some stage Mr Allen Ambrose - former CEO of Minera Andes, will be questioned during the Los Azules litigation on what exactly were his intentions explained in his emails presented by TNR Gold litigation counsel in Amended Claim.
Allen Ambrose emails:
24. "Next we should look at our alternatives to take out the Solitario (TNR Gold - S) agreement..."TNR Gold vs Minera Andes (McEwen Mining now) and MIM (Xstrata now). From Page 11 Part 3: Legal Basis http://bit.ly/xhdqag
Please, do not forget, that we own stocks we are writing about and have position in these companies. We are not providing any investment advise on this blog and there is no solicitation to buy or sell any particular company here. Always consult with your qualified financial adviser before making any investment decisions.
