M&A frenzy

The unofficial last week of summer in Canada and the U.S. was a surprisingly intense period of mergers and acquisitions (M&A) activity.

• Goldcorp once again proved its willingness to swoop in with a friendly smile, open up its wallet and buy more ounces in the ground.

This time around, the target is Aussie-based junior Andean Resources and its Cerro Negro gold-silver project in Argentina, and the offer price is about $3.6 billion in shares and cash, or a 35% premium to earlier trading.

Goldcorp decisively took the wind out of the sails of competing suitor Eldorado Gold, which hours earlier had tabled its own non-friendly all-share bid, which was withdrawn only five days later. It was quite something to see such a dynamic company as Eldorado crumble and fold so quickly.

The wholly owned Cerro Negro project is in the mining-friendly Santa Cruz province and hosts high-grade probable reserves of 2.1 million oz. gold and 20.6 million oz. silver, and is amenable to low-cost open-pit mining.

• Nevada’s lively gold scene saw its own M&A action, with Fronteer Gold tabling a friendly cash-and-share offer for AuEx Ventures that values the latter at $281 million, or a 50.9% premium on previous trading. Specifically, Fronteer is offering 0.645 of a share, 66¢ in cash, 0.5 of a share in a new exploration company for each AuEx share, plus one board seat.

Fronteer and AuEx are already 51-49 partners, respectively, at the promising Long Canyon gold project in Nevada. Fronteer also picks up AuEx’s diverse portfolio of gold projects in the region, including AuEx’s 49% interest in the West Pequop project, which is 51%- owned and operated by Agnico-Eagle Mines.

The deal still requires approval by two-thirds of AuEx’s shareholders, who will vote at the end of October.

This one’s so cozy, it’s hard to see a competing offer coming forward.

• Northwestern Ontario’s gold seekers had their own gold merger, with Vancouver-based Kodiak Exploration and Montreal’s Golden Goose Resources deciding to merge under the Kodiak banner to better tackle their gold projects on Lake Superior’s North Shore.

Golden Goose’s prime asset is its Magino gold mine project, located 40 km northeast of Wawa, Ont., where resources at the past-producer are in the neighbourhood of half a million oz. gold, while Kodiak has its intriguing gold exploration assets in the Beardmore- Geraldton gold belt, including its flagship Milestone project and its Hercules deposit.

Kodiak says the merger will leave it with companywide measured and indicated resources of 564,640 oz. gold and inferred resources of 1.3 million oz. gold.

Tapping into its $20-million treasury, Kodiak plans to jump right in and launch a 20,000-metre near-surface drilling program at Magino in order to develop a deposit that could be quickly mined by open pit.

• The day after Labour Day, Stillwater Mining unveiled a friendly offer to acquire Toronto-based platinum group metals (PGM) junior Marathon PGM.

Stillwater — the only U.S. producer of palladium and platinum, and the largest primary producer of platinum group metals outside of South Africa and Russia — is offering 0.112 of a share and C$1.775 in cash for each Marathon PGM share. Marathon PGM’s non-core gold assets and up to C$6 million in cash will be spun out into a separate company whose shares will be divvied out amongst existing shareholders.

This translates into a US$118-million offer, or C$3.55 per Marathon PGM share, split 50-50 between shares and cash. It’s an 89% premium to Marathon PGM’s share price prior to the deal being announced.

Marathon PGM’s key asset is Marathon PGM-copper project, situated 10 km north of the town of Marathon on Lake Superior’s North Shore, where in-pit reserves are pegged at 91.4 million tonnes grading 0.832 gram palladium per tonne, 0.237 gram platinum per tonne, 0.085 gram gold per tonne, 0.25% copper and 1.44 grams silver per tonne. In terms of contained metals, the reserve is 2.4 million oz. palladium, 696,000 oz. platinum, 251,000 oz. gold, 497 million lbs. copper and 4.2 million oz. silver.

The current resource could conceivably support mining about 200,000 oz. per year of platinum and palladium for up to 12 years, but there’s lots of upside for Stillwater to explore as it probes the extensions of known ore zones and satellite mineralized zones.

Stillwater says the acquisition and the swift development of the Marathon PGM-copper project will allow it to boost its platinum and palladium production by 40% within three years, building on output from its flagship assets in Montana.