Agnico merger rumor (thx Tony Lesiak)Jeez - as if consolidation rumours are even needed to push up G...
... and as if a deal with Agnico-Eagle would be accretive to us at this point (except for those tax breaks in the short run perhaps).
Last I checked, Agnico was a chronic underperformer - kudos to Tony Lesiak "putting the 'BS' in UBS Securities". (Feel free to flame this is you see huge upside to such a deal y'all)
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FOCUS ON MID-SIZED MINERS
Analysts expect most of the merger action to be around mid-sized producers like Agnico-Eagle Ltd., Iamgold, Kinross Gold Corp. and the newly enlarged Goldcorp, which has already said it's scouting for an acquisition or two this year.
"A lot of these guys have lived off a quality asset, but to build the business beyond that is very difficult," said Darko Kuzmanovic, who manages the Prudent Global Gold Fund and Prudent Global Natural Resources Fund at David W. Tice & Associates.
"That's why I think it's easier for them to consolidate rather than to take the risk that a Meridian took," he said, referring to Meridian Gold Inc.'s run-in with environmentalists and local residents in Argentina, which shut down its Esquel development.
UBS analyst Tony Lesiak suggests a marriage between the "New Goldcorp" and Agnico-Eagle, as the target's production fits the size Goldcorp-Wheaton are looking for, both firms produce base metals in addition to gold, and Agnico has some useful tax pools.
Kuzmanovic suggests the mid-tiers could buy smaller exploration companies with big in-development projects, but only once these ventures are fully permitted and less risky.
Names that come up include Crystallex International Corp. and its Las Cristinas project in Venezuela, Gabriel Resources Ltd. and its Rosia Montana find in Romania, as well as Minefinders Corp Ltd., Alamos Gold Inc., and Gammon Lake Resources Inc.
The push for relationships could also come from the juniors' side because of the rocketing costs for building mines as steel and energy prices soar, says John Bowles, British Columbia mining practice leader at PricewaterhouseCoopers.
"There are a lot of small companies with big projects and, with prices where they are going, they are looking for partners to develop them," Bowles told Reuters.
Whatever happens, investment bankers, lawyers and journalists are likely to be kept busy again this year.
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