Six Mining Companies To Watch As M&A Heats Up

An excellent example would be Nordgold N.V. (NORD:LSE), which dislikes having minority partners on any of its projects. Even if there's a lot of opposition from the shareholders of the targeted company, Nordgold pushes through and usually secures 100% ownership of the asset it wants to get its hands on. That's what happened with High River Gold Mines several years ago—Nordgold wanted to own the Taparko-Bouroum and Bissa projects, rather than having High River Gold as a minority partner—and that's what might happen to Columbus Gold Corp. (CGT:TSX; CBGDF:OTCQX) as well.

Nordgold is earning a 50.01% stake in Columbus' Paul Isnard gold project in French Guiana, but it's not unreasonable to think Nordgold will want to own the entire asset. As the after-tax NPV8% of the project is almost half a billion dollars (using a gold price of $1,300/ounce), Columbus Gold is trading at just one-third of the NPV, and making a deal on Paul Isnard might create a win-win situation for both parties involved.

We see a similar situation in Argentina, where Silver Standard Resources Inc. (SSO:TSX; SSRI:NASDAQ) is mulling over entering into a joint venture agreement with its neighbor Golden Arrow Resources Corp. (GRG:TSX.V; GAC:FSE; GARWF:OTCPK). Silver Standard needs to do "something" as the Pirquitas mine will very likely have to close in the near future. There's an agreement on the table where Silver Standard can earn a 75% stake in Golden Arrow's Chinchillas silver-lead-zinc deposit, but Silver Standard rarely deals with joint venture partners, and it might want to simplify the ownership structure by acquiring 100% of Chinchillas to make sure it can mine and operate both projects as efficiently as possible.

Staying in the silver sector, Southern Silver Exploration Corp. (SSV:TSX.V; SSVFF:OTCQB; SEG1:FSE)has also undergone a true metamorphosis. This company was trading as low as $0.03 per share earlier this year, but its share price has increased sixteen-fold (!) before catching its breath in the mid-$0.30s, where it is now. Southern Silver's Cerro Las Minitas in Mexico is shaping up to be larger than originally thought as the current resource estimate already contains 113 million silver-equivalent ounces. Southern Silver's official exploration target is 200 million silver-equivalent ounces, but after seeing the most recent drill results, that target seems to be relatively conservative.

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