Mergers Friendly And Hostile

Resurgent commodity prices usually translate into a perked-up pace of M&A and other corporate wheeling and dealing in the junior sphere, and the 41st trading week of the year was no different.

• The surprise of the week was the friendly, all-share bid by Pan American Silver for Aquiline Resources and its large, undeveloped Navidad silver project in Argentina’s Patagonia region.

Aquiline shareholders had already enjoyed watching their shares quadruple in value over the past three months. And now it’s getting even better, as they have a opportunity to trade their ownership in a still-risky project that has been dogged by both metallurgical problems and bans on open-pit mining and cyanide, for a 19% shareholding in a far larger and more-experienced silver-focused intermediate miner with a strong balance sheet and an uncanny ability to build new mines and deliver production growth year after year.

Having just opened its Manantial Espejo silver mine in Argentina’s Santa Cruz province, Pan American repeatedly stressed that it is quite confident the current Chubut government has the political will to change the province’s laws to allow for conventional mining of Navidad.

• Buying a relatively inexpensive project tangled up in anti-mining laws in hopes that they will change later on has worked out this week for Sheldon Inwentash’s Mega Uranium. The Toronto-based junior reported that the Western Australia Department of Mines and Petroleum has granted its subsidiary a mining lease for its Lake Maitland uranium project there.

It represents the first mining lease granted for a uranium project in Western Australia since the new state government in November 2008 removed the long-standing ban on uranium mine development in Western Australia.

• After two months spent fending off a hostile bid, Canadian Royalties shareholders have been won over by a newly sweetened, $192-million offer from Jien Canada Mining, a 75%-25% partnership between nickel major Jilin Jien Nickel Industry Co. of China and Vancouver-based junior Goldbrook Ventures.

The deal puts to rest Canadian Royalties near-crippling short-term financial problems and sets the stage for renewed development of other nickel assets in Quebec’s Ungava region beyond Xstrata’s Raglan mine.

It also closes the book on the first-ever hostile takeover attempt by a Chinese company on a junior Canadian mining company with primarily Canadian assets.

• Two more juniors feeling the urge to merge were up-and-comers Alexis Minerals and Garson Gold, with Alexis offering a 79.5% premium for Garson, or a deal worth about $33.2 million. Quebecfocused junior gold miner Alexis will pick up Garson’s New Britannia gold mine in Snow Lake, Man.

• Barrick Gold’s characteristic aggressiveness was turned on its own employees this week, as the gold major announced it would chop jobs over the next six months, mostly at head office in Toronto, as power is devolved to regional business units. The company will take a US$30-million hit for the layoffs, or US$375,000 per position, in the third and fourth quarters. Down the road, Barrick says the layoffs and related restructuring will save it US$50 million annually.

• An exploration highlight was the tabling by Vancouver’s International Tower Hill Mines of a substantially larger resource for the rapidly growing Money Knob deposit at the Livengood gold project near Fairbanks, Alaska.

Money Knob now boasts 297 million indicated tonnes of 0.85 gram gold, or 8.1 million contained oz. gold, plus 164 million inferred tonnes at 0.84 gram gold, for another 4.1 million oz. gold.

It’s now one of the top 5 gold deposits in North America solely owned by a junior, and its development will likely follow the path of Kinross Gold’s nearby Fort Knox open-pit mine, which is similarly large and low-grade but benefits from excellent infrastructure in a pro-development state.

• Goldcorp produced the first lead and zinc concentrates at its huge new Penasquito gold-silver-lead-zinc mine in Mexico’s Zacatecas state. While annual production over the minimum 22-year mine life will ramp up to about 500,000 oz. gold, 30 million oz. silver and over 400 million lbs. zinc, Goldcorp paid dearly for the asset via its US$8.4-billion takeover of Glamis Gold in 2006, and it will be interesting to see whether the company ever gets its money back as the years go by.