As 2018 has been a tough year for junior mining stock speculators, there has been some opportune M&A activity in the market over the past few months. Most recently, we have seen a number of larger buyouts including South32’s US$1.3B deal for Arizona Mining, Orion’s C$537M bid for Dalradian Resources, and just last week, Zinjin Mining’s offer to acquire Nevsun Resources for US$1.41B. The most enticing aspects of these deals are that they were all-cash offers at a high premium to market prices.
Here is a list of my top 3 junior mining stocks developing projects which may be acquired by a global miner:
Wesdome Gold Mines (WDO.TO): This Canada-centric gold producer/developer has 100% control of a pipeline of projects in various stages of development. The most intriguing being the brownfields Kiena Complex in Val d’Or, Quebec, which is a fully permitted former mine with a 930 metre shaft and 2,000 tonne per day mill. The new management team, which was restructured in September of 2017, has focused primarily on the exploration upside of the projects and the share price has benefitted from this strategy by out-performing the sector since that time.
Atlantic Gold (AGB.V) is another Canadian focused, growth-oriented gold producer, which is currently growing gold production in Nova Scotia. The company’s MRC phase one open pit gold mine declared commercial production in March 2018. Phase two of the mine expansion is planned for completion by 2021 and the company plans to ramp up gold production to + 200,000 ounces per year by 2022 at industry lowest quartile cash and all-in-sustaining-costs. The Phase three expansion drill programs, recently completed at the satellite deposits Fifteen Mile Stream and Cochrane Hill, targeted extensions of mineralization and defined/upgraded inferred resources not included in the 2018 PFS to measured and indicated categories.
Pure Gold (PGM.V) is another Canadian developer that is in the process of a definitive feasibility study for the 100% controlled Madsen Gold Project, which is contained in more than 47 square km of contiguous patented mining claims in the prolific Red Lake region of Ontario. Madsen contains a current indicated resource of 1,744,000 ounces of gold (6.24 million tonnes grading 8.7 g/t Au, at a 4g/t cut-off), with an inferred resource of 296,000 ounces of gold (1.16 million tonnes grading 7.9 g/t Au, at 4 g/t cut-off) and is situated close to existing infrastructure. In September 2017, the Company released a Preliminary Economic Assessment (PEA) for an underground mining operation which outlined a long life, high margin mine, with low initial capital requirements and an accelerated timeline to production.
The company is currently in the process of metallurgical, infrastructure, and development studies and the results are expected in the fourth quarter of 2018, with environmental baseline and permitting updates in progress. Drilling and metallurgical results from satellite deposits Wedge, Russet South, and Fork will be incorporated into an updated resource estimate and initial economic study, on track for release in Q4 2018.