first post here If we low ball this and take 4.4 million ounces and multiply that by $70 per ounce that equals over $2 per share, thats a sweet deal at these prices imo
Trelawney Mining's (CVE:TRR) recent acquisition deal by Iamgold Corp (TSE:IMG) (NYSE:IAG) could signify the start of a series of buys in the junior Canadian gold space.
Many like Trelawney with significant resources and a low-risk profile will likely increasingly be looked at as potential acquisition targets, with the $585 million deal providing a "wake-up call" for gold producers with cash to spend, says mining research analyst Peter Campbell of Jennings Capital.
Last month, Iamgold said it agreed to buy Trelawney for $585 million in cash, adding the Côté Lake gold deposit in northern Ontario to its mining portfolio.
The deal price was 42 percent higher than Trelawney's closing price the day before the transaction was announced, and also came in at slightly north of $70 per ounce in the ground.
Campbell says that the entire junior gold mining sector is undervalued, as just a few years ago, these transactions would have been priced at around $100 per ounce in the ground, when gold was trading at just $800 an ounce.
"The typical thing in my opinion is for gold producers to look for assets far afield, but the Trelawney deal proves that there are great acquisition opportunities right here in their own backyard," Campbell notes.
Canadian junior Trelawney is developing the 516 square kilometre Côté Lake deposit, where the resource is estimated to contain 0.9 million ounces of indicated gold and 5.9 million ounces of inferred gold, with significant exploration and expansion potential near the current resource.
Campbell says the deal was, in his view, agreed at a "firesale price", as the Côté Lake deposit is "no way fixed in size and has the potential to grow substantially to 8 million ounces."
Mineralization at the deposit has been intersected over a strike length of 1,200 metres, a horizontal width of 100 to 300 metres and a depth extent of more than 500 metres.
"Iamgold is getting a sure thing for $70 an ounce versus all the risk and time involved in making a new discovery on its own - and it's probably going to cost Iamgold about the same amount in the end to bring a new project to the same stage as Côté Lake," says Campbell.