Erik Wetterling – The Recent Merger And Acquisition Transactions Are A Shot Across The Bow In Precious Metals Sector
Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins me to discuss the impact of merger and acquisition transactions within the gold and silver developers and producers; and how these deals are further consolidating down the multi-ounce resources into fewer and fewer hands. M&A deals can also free up investor funds that were stuck in these companies to then circulate into other junior resource stocks, and this also gets more speculation going as to which companies will be next to be acquired or merge.
We start off reviewing the higher profile acquisition of Osisko Mining Inc. (TSX:OSK) (OTC: OBNNF) by Gold Fields Limited (NYSE: GFI) for a 55% premium. It was interesting to note how many other advanced exploration and development companies with large resources also spiked up double-digits once the transaction was announced, in consideration for how their ounces in the ground should be rerated higher.
Then we looked at a few of the recent mergers between multi-million ounce projects into larger vehicles to attract more attention and better cost of capital; like Treasury Metals Inc. (TSX: TML; OTCQX: TSRMF) and Blackwolf Copper and Gold Ltd. (TSXV:BWCG; OTCQB: BWCGF) consolidating to form NexGold Mining Corp. (TSXV: NEXG) (OTCQX: NXGCF) and Nighthawk Gold Corp. (TSX: NHK; OTCQX: MIMZF) and Moneta Gold Inc. (TSX: ME; OTCQX: MEAUF) combing to form STLLR Gold Inc. (TSX: STLR) (OTCQX: STLRF).
Wrapping up we look at the journey Integra Resources Corp. (TSXV: ITR) (NYSE American: ITRG) has been on with it first merging with Millennial Precious Metals to combine multiple development and exploration projects into a larger entity in the Great Basin of Idaho and Nevada; but then recently announcing the acquisition of Florida Canyon Gold Inc. (TSXV: FCGV) (OTC: FCGVF). This now brings a producing gold asset into their pipeline, from which the revenues will fund future derisking work at their other projects.
*In full disclosure, many of the companies mentioned by Erik in this interview, are positions held in his personal portfolio, and they also may be site sponsors of The Hedgeless Horseman website at the time of this recording.
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“The offer price is a premium of 55% to Osisko Mining’s 20-day volume-weighted average trading price on the TSX for the period ending 9 August 2024.”
So it was a 55% premium to the VWAP on their shareprice, which also directly affects their market cap in sympathy.
A really nice M&A deal for the sector.
I guess 55% on $3+ price is a decent premium. I have a fear of a miner like Emo, which at one time had a similar price to Osisko of over $3 gets a takeout at its current price of 50 cents. 55% would be an insult and probably stock holders would vote it down in mass.
You can’t compare Emo to Osisko! LOL!
You are right … Emo is worth more, particularly when they are finally awarded AZN and also drill out IBW some more.
Total Rubbish! DT
After reviewing your facts and supportive verifiable arguments, looks like Emo is even better than I thought. Get with Dr Jones and bounce your evidence off him. Although “rubbish” has a certain ring about it, it does not change anything.
I probably should know this but when it is said there is a 55% premium is that on market cap or share price or is that the same thing as isn’t market cap a combination of shares times share price. Anyway, just listening to your discussion concerning the consolidation of some developers, sounds better than being taken out at these low prices, because 55% premium may not even come close to recovering the walk down in miners over the last several years. I would rather not see any take outs until they are priced fairly or premiums that represent fair value based on costs of production and fair premium. (I guess I don’t know what 55% premium means.) (I remember getting $23 a share for GBR and was satisfied but that was in a more fairly valued market). Not sure I have had a take out in a suppressed market.