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First Kirkland, Now Equinox: Gold Buyouts and Mergers Back on the Menu

Omri Wallach Omri Wallach, Stockhouse
3 Comments| December 16, 2019

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Click to enlarge

When gold prices soared in the later half of 2019, gold majors rose alongside them. Investors wondered when small-cap gold juniors would join in the rally, and now the answer seems clear: as soon as they’re ready.

The delay in high gold prices trickling down to juniors was expected (and just like trickle-down economics, not that effective). A rally from $1,200/oz Au to above $1,500/oz Au largely on the basis of global uncertainties was nice, but no one was certain how long it would last.

Now, however, it seems like higher prices are going to last. Experts have lofty expectations for gold hitting $2,000/oz long term, and Goldman Sachs recently detailed its expectations for at least $1,600/oz by March of 2020.

That means gold majors don’t have to worry about prices dropping back down, and can instead focus on making moves. Just today we saw Equinox Gold Corp. (TSX:EQX, Forum) agree to buyout Leagold Mining Corp. (TSX:LMC, Forum) in a merger worth around $770 million.

And just a few weeks ago we detailed how the recent acquisition of Detour Gold Corp. (TSX:DGC, Forum) by Kirkland Lake Gold Ltd. (TSX:KL, Forum) made sense considering the greater market direction.

Click to enlarge

(Comparing the charts of Gold price/oz on the top against shares of Kirkland Lake on the bottom)

But it seems that Kirkland wasn’t done there. On Dec. 9, quickly rising gold junior Wallbridge Mining Co Ltd. (TSX:WM, Forum) announced that the CEO of Kirkland Lake was joining its Board of Directors. Why? Because a few days earlier, Kirkland Lake had become a 9.9% shareholder in Wallbridge through a $42.5 million private placement.

Wallbridge was coming off a major discovery in late October that more than doubled share prices of the company, and overall the company is up more than 400% year to date. Similar to Great Bear Resources (TSX-V:GBR, Forum), which also posted significant discoveries and saw share prices soar, the target wasn’t on their back until they proved their mettle.

It is clear from the current market conditions and recent behaviour from gold majors that the hunt is on for more potential buyouts and mergers. But just like always, the majors aren’t hunting for small minnows, they’re keeping their eyes open for potential tunas.

Investors should absolutely expect more consolidation once the new year rolls around. They should also keep their eyes open for mid-tier miners like B2Gold Corp. (TSX:BTO, Forum) looking to grow and capitalize on their share of profits from higher gold prices by targeting gold juniors ready for production. Do your due diligence, read those assay results, and you’ll know where to cast your line.


New to investing in Gold? Check out Stockhouse tips on How to Invest in Gold Stocks and some of our Top Gold Stocks.

For more of the latest info on Gold, check out the Gold Trending News hub on Stockhouse.



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Comments

Maybe wait for a few more holes guys. BTU has 1 drill hole
(3)
December 16, 2019

Another great one, and V.BTU currently has a trade halt.
(0)
December 16, 2019

Don't forget V.BTU
(16)
December 16, 2019

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