Infographic: Which Gold Miners Hold The Most Supply (And Who Must Replenish Through M&A) TNR.v, MUX, GLD, GDX

  

  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 mine development 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.

Rob McEwen: Constantly Changing Mining Laws "A Nasty Habbit".

Rob McEwen On Goldcorp's Hostile Bid, M&A Opportunity And Market Bottoms MUX, TNR.v, GLD, GDX

"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."

Rob McEwen ‏@McEwenMining42s

It is a cold one out in Nevada at the Grass Valley exploration project! View the photos here: https://www.facebook.com/media/set/?set=a.583538461730172.1073741855.144409045643118&type=1 … #MUX #Nevada #gold

TNR Gold Corp. Files Technical Report on Shotgun Gold Project, Alaska TNR.v

TNR Gold Shotgun Gold Presentation.

ZeroHedge:

Infographic: Which Gold Miners Hold The Most Supply (And Who Must Replenish Through M&A)

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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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."