Juniors Buddy Up

The summertime flurry of merger and acquisition proposals in the junior mining sector grew to a squall during the 28th trading week of the year.

• The biggest of the little deals was Randgold Resources’ $546-million cash-and-share offer for Moto Goldmines, which outpaces Red Back Mining’s $513-million all-share bid tabled in early June. The prize is Moto’s technically superb, multimillion-ounce gold deposits in the Democratic Republic of the Congo’s violent northeast.

The cash portion of Randgold’s offer, which would peak at US$244 million, comes from the coffers of AngloGold Ashanti, which struck a side deal with Randgold to get a half interest in the Moto project should the primary offer be accepted.

• Lower down the corporate food chain was a multitude of deals: Uranium explorer Northern Continental Resources spurned the advances of Denison Mines and accepted a superior takeover offer from Hathor Exploration; Orvana Minerals hiked its all-cash offer for Kinbauri Gold to 75¢ per share from 55¢, bringing the total payout to $44.5 million and putting it into the same league as a merger proposal from ATW Gold; Paramount Gold and Silver and Klondex Mines tabled a friendly $80-million merger that eclipsed Silvercorp’s hostile bid for Klondex; West Coast juniors IMA Exploration, Kobex Resources and International Barytex Resources proposed a three-way merger that would tap into a pooled treasury of $44 million in cash; Dia Bras Exploration unveiled a friendly bid for fellow Mexico-focused junior Exmin Resources, offering 0.2209 of a Dia Bras share for each Exmin share, or a 32.5% premium; and SNS Silver returned the historic Sunshine silver mine in Idaho to Sunshine Precious Metals, as bankruptcy proceedings continue for the mine’s previous owner, Sterling Mining.

• Anglo American announced it was bringing in a new stay-the-course chairman, John Parker from the U. K., to replace the outgoing Mark Moody-Stuart. There had been some talk that the South African government was pushing for a black South African to take on the role, but that was not the outcome.

Parker re-emphasized Anglo’s position that Xstrata’s month-old informal offer of a “merger of equals” is a non-starter. He cited a “clear value gap” as well as “cultural and management-philosophy differences,” and dismissed Xstrata’s come-hither looks as a “great distraction for management.” Parker will also remain chairman of the British energy network provider National Grid, but is resigning as co-chairman of the global paper and packaging company Mondi.

• There was a disturbing stat from one of the world’s largest diamond miners: Rio Tinto reported a 70% drop in second-quarter diamond production.

From its wholly owned Argyle diamond mine in Australia, production for the period was a mere 408,000 carats versus 4.4 million carats during the same period last year. The 86% reduction was due to a maintenance shutdown from March to June 2009. Processing started up again last month. At its 60%-owned Diavik mine in Canada’s Northwest Territories, Rio Tinto’s attributable production slipped to 853,000 carats during the quarter, or a 44% drop, owing to a scaling back of operations. Total mine production fell from 1.79 million carats to 1.42 million carats. Harry Winston Diamond owns the remainder. At its 77.8%-owned Murowa diamond mine in Zimbabwe, total second-quarter mine output was 26,000 carats versus 40,000 carats in the year-ago period.

Rio Tinto comments that both prices and sales volumes for diamonds have been “severely impacted by the economic downturn.”

• At its advanced Prairie Creek silver-lead-zinc project site in the Northwest Territories, Canadian Zinc is providing a shining example of how a mine can be developed in harmony with a national park.

In mid-July, the Vancouver-based junior played host to Chuck Strahl, federal minister of Indian Affairs and Northern Development and interlocutor for Mtis and Non-status Indians, as well as Jim Prentice, the federal environment minister and minister responsible for Parks Canada. The two members of parliament had dropped in to mark the new expansion of Nahanni National Park Reserve, which makes it Canada’s third-largest national park.

The enlarged park covers most of the South Nahanni River watershed and encircles the Prairie Creek mine. However, the company notes that Prairie Creek itself plus 300 sq. km around it are specifically excluded from the expanded park.

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