Takeover Tsunami Ahead—But Who Will Get Premium Bids?

I dislike using such a shopworn phrase as “perfect storm,” but that’s exactly what may be brewing for certain junior resource companies: gold and silver plays with takeover potential.

I see three powerful forces combining to make this so:

1. There was major consolidation at the top of the food chain last year. Barrick Gold bought Randgold. Newmont bought Goldcorp. The two biggest kids on the block have been digesting their acquisitions ever since. That’s put a greater priority on monetizing non-core assets to clean up balance sheets and rationalize portfolios than on making new acquisitions. With less pressure from the top, I think we’ve seen less merger and acquisition (M&A) activity than we’d otherwise have seen.
    
2. The COVID-19 shutdowns have forced all affected producers—which have high fixed costs—to react immediately, strongly, and very defensively. As they always seem to do, the first thing producers cut when they’re worried is exploration. A new S&P Global Market Intelligence report is already citing a 29% drop in exploration budgets this year. I don’t blame them. When an entire country—or several—shuts down your mines, you have to cut costs. But mining is, by its nature, a self-depleting business. If producers don’t explore, they mine themselves out of business. It’s either that or buy resources from explorers who make economic discoveries.
    
3. Due to the shutdowns, some exploration companies had to slow down or suspend activity temporarily. They’re all ramping back up again. Spring in the Northern Hemisphere is actually a time when many exploration camps wind down for a time anyway. The companies need to go over winter results and formulate plans for summer exploration. In some places, work is impossible while winter ice is breaking up and everything turns to mud. Point is, I think most explorations companies are going to do just as much work this year as they would have without the COVID-19 shutdowns.
    

These three factors bring me to one clear conclusion: successful explorers will have assets that larger companies will be very keen to acquire in the post-COVID-19 world.

Why does this matter?

Because takeover bids are usually at a high premium for shareholders of the company being bought. In a bear market, this can turn a loss into a last-minute gain. In a bull market, it can turn a somewhat positive outcome into a spectacular win.
 

Most takeover offers seem to range from a 30–50% premium. For example, Wallbridge Mining just paid a 46% premium for Balmoral Resources. But sometimes it’s much higher:

• In 2017, Sandstorm Gold took over Mariana Resources at an 88% premium over the 20-day volume-weighted average price (VWAP).
   
• In 2016, Seabridge Gold bought Snip Gold at a 115% premium to the 30-day VWAP (which was 124% over the share price the day before the announcement).
   
• In 2018, First Majestic took Primero over at a whopping 200% premium to the 20-day VWAP.
   

Great—for those who get in before the takeover offer.

This means we need to know…

What makes for a good takeover target?

I covered this in an article I wrote in February, just before COVID-19 stopped the world in its tracks.

I said then that a tsunami of takeovers was coming, but not right away. We had time to build positions in the right stocks. I was right.

I tip my hat to those who bought great takeover targets during the March meltdown—I think you’ll do very, very well.

Today, I still wouldn’t say my expected wave of takeovers is urgently imminent.

That’s a good thing, because it means we still have time to buy with discipline, if we start now.

When might pay-day arrive? Well, the best of these stocks will go up with gold and silver anyway. But with many producers having slashed their exploration budgets, I think the surge in takeovers is coming closer. The perfect storm will be all the more powerful when it arrives.

In saying this, I’m speaking of the gold and silver space. But in due course, producers will need to acquire companies with major new discoveries in the industrial mineral space as well.

This strategic consideration—preparing now for a massive increase in M&A activity—is all yours, free of charge.

I should mention, however, that takeover potential is something I include when I cover stocks in My Take. That’s our growing database of summary analyses of companies in the news or requested by readers.

Please see the list below of all 252 companies covered in My Take, as of this morning’s edition. The dates shown are the dates of most recent coverage—more than 50 takes were updated just today. If any stock you’re interested in is on the list, my take could help you out.

And if there are some you are interested in that are not yet on the list, we do take requests.

My Take is only $50 per month, and you can cancel any time you like. That’s not much to ask for quality guidance on hundreds of companies. You could pay more for a one-time report on just a handful of stocks. Click here if you’d like to try My Take out.

 

My Takes

1. 1911 Gold (AUMB.V, HAVXF) — NEW
2. A-Cap Energy (ACB.ASX) — UPDATE
3. Aben Resources (ABN.V, ABNAF) — 3/2020
4. Abitibi Royalties (RZZ.V, ATBYF) — UPDATE
5. AbraPlata (ABRA.V, ABBRF) — NEW
6. Adavale Resources (ADD.ASX) — UPDATE
7. Africa Oil (AOI.TO, AOIFF) — UPDATE
8. Aftermath Silver (AAG.V, AAGFF) — 3/2020
9. Agnico Eagle (AEM, AEM.TO) — UPDATE
10. Alamos Gold (AGI, AGI.TO) — UPDATE
11. Alexco Resource Corp. (AXU, AXU.TO) — UPDATE
12. Allegiant Gold (AUAU.V, AUXXF) — UPDATE
13. Alligator Energy (AGE.ASX) — 5/2020
14. Almaden (AAU, AMM.TO) — 12/2019
15. Altius Minerals (ALS.TO, ATUSF) — 01/2020
16. America’s Gold & Silver (USA.TO) — UPDATE
17. Anaconda Mining (ANX.TO, ANXGF) — UPDATE
18. Anfield Energy (AEC.V, ANLDF) — 5/2020
19. Appia Energy (API.C) — 5/2020
20. Arizona Silver (AZS.V, AZASF) — 3/2020
21. Artemis Gold (ARTG.V, ARGTF) — NEW
22. Ascot Resources (AOT.V, AOTVF) — 5/2020
23. ATAC Resources (ATC.V, ATADF) — UPDATE
24. Atico Mining (ATY.V, ATCMF) — NEW
25. Aura Energy (AEE.ASX) — UPDATE
26. Aurania Resources (ARU.V, AUIAF) — 11/2019
27. Aurcana (AUN.V, AUNFF) — 02/2020
28. Aurion Resources (AU.V, AIRRF) — UPDATE
29. Auryn Resources (AUG, AUG.TO) — UPDATE
30. Avino Silver (ASM, ASM.TO) — 01/2020
31. Azarga Uranium (AZZ.TO, AZZUF) — 5/2020
32. Azucar Minerals (AMZ.V, AXDDF) — 11/2019
33. Azure Minerals (AZS.ASX, AZRMF) — UPDATE
34. B2Gold (BTG, BTO.TO) — UPDATE
35. Balmoral Gold (BAR.TO, BALMF) — 5/2020
36. Barrian Mining (BARI.V) — 01/2020
37. Barrick Gold (GOLD, ABX.TO) — 5/2020
38. Bannerman Resources (BMN.ASX, BNNLF) — 5/2020
39. Bear Creek Mining (BCM.V, BCEKF) — 11/2019
40. Berkeley Energia (BKY.ASX) — 5/2020
41. BHP (BHP.ASX) — 5/2020
42. Blackrock Gold (BRC.V, BKRRF) — 3/2020
43. Blue Sky Uranium (BSK.V, BKUCF) — 5/2020
44. Bluestone Resources (BSR.V, BBSRF) — UPDATE
45. Bonterra Resources (BTR.V, BONXF) — 01/2020
46. Boss Resources (BOE.ASX) — 5/2020
47. Brixton Metals (BBB.V, BBBXF) — UPDATE
48. Calibre Mining (CXB.TO, CXBMF) — 5/2020
49. Cameco (CCJ, CCO.TO) — UPDATE
50. CanAlaska Uranium (CVV.V, CVVUF) — 5/2020
51. Cartier Resources (ECR.V, ECRFF) — UPDATE
52. Cauldron Energy (CXU.ASX) — 5/2020
53. Centerra Gold (CG.TO, CAGDF) — 11/2019
54. Chesapeake Gold (CKG.V, CHPGF) — 01/2020
55. Coeur Mining (CDE) — 8/2019
56. Colorado Mining (CXO.V, CLASF) — 5/2020
57. Columbus Gold (CGT.TO, CGTFF) — UPDATE
58. Commerce Resources (CCE.V, CMRZF) — 11/2019
59. Compass Gold (CVB.V, COGDF) — 02/2020
60. Continental Gold (CNL.TO, CGOOF) — 10/2019
61. Coral Gold Resources (CLH.V, CLHRF) — 3/2020
62. Cornerstone Capital (CGP.V, CTNXF) — UPDATE
63. Corvus Gold (KOR.V, CORVF) — NEW
64. CNNC International (2302.HKG) — 5/2020
65. Deep Yellow (DYL.ASX, DYLLF) — 5/2020
66. Defiance Silver (DEF.V, DNCVF) — 11/2019
67. Denison Mines (DNN, DML.TO) — 5/2020
68. Detour Gold (DGC.TO, DRGDF) — 10/2019
69. Discovery Metals (DSV.V, DSVMF) — UPDATE
70. Dolly Varden Silver (DV.V, DOLLF) — 3/2020
71. Dynacor Gold (DNG.TO, DNGDF) — 3/2020
72. East Asia Minerals (EAS.V, EAIAF) — 5/2020
73. Eastmain Resources (ER.TO, EANRF) — 10/2019
74. Eclipse Gold Mining (EGLD.V, EGLPF) — 4/2020
75. Eldorado Gold (EGO, ELD.TO) — UPDATE
76. Ely Gold Royalties (ELY.V, ELYGF) — UPDATE
77. EMX Royalty Corp. (EMX, EMX.V) — UPDATE
78. enCore Energy (EU.V, ENCUF) — 5/2020
79. Endeavour Mining (EDV.TO, EDVMF) — UPDATE
80. Endeavour Silver (EXK, EDR.TO) — 12/2019
81. Energy Fuels (UUUU, EFR.TO) — 5/2020
82. EnviroLeach Technologies (ETI.C, EVLLF) — UPDATE
83. Equinox Gold (EQX, EQX.TO) — 02/2020
84. Equity Metals (EQTY.V, NNADF) — NEW
85. Erdene Resources (ERD.TO, ERDCF) — 3/2020
86. Evrim Resources (EVM.V, EMRRF) — 01/2020
87. Excellon Resources (EXN.TO, EXLLF) — NEW
88. Excelsior Mining (MIN.TO, EXMGF) — NEW
89. Falco Resources (FPC.V, FPRGF) — UPDATE
90. Fiore Gold (F.V, FIOGF) — UPDATE
91. Fission Uranium (FCU.TO, FCUUF) — 5/2020
92. Fission 3.0 (FUU.V, FISOF) — 5/2020
93. First Majestic (AG, FR.TO) — 5/2020
94. First Mining (FF.V, FFMGF) — UPDATE
95. Fortuna Silver Mines (FSM, FVI.TO) — UPDATE
96. Forum Energy Metals (FMC.V, FDCFF) — NEW
97. FPX Nickel (FPX.V, FPOCF) — 02/2020
98. Franco-Nevada (FNV, FNV.TO) — UPDATE
99. Freegold Ventures (EVL.TO, FGOVF) — NEW
100. Freemont Gold (FRE.V, USTDF) — NEW
101. Freeport MxMoRan (FCX) — 4/2020
102. Fresnillo (FRES.LSE) — 01/2020
103. Galiano Gold (formerly Asanko) (GAU, GAU.TO) — UPDATE
104. Gatling Exploration (GTR.V, GATGF) — UPDATE
105. GFG Resources (GFG.V, GFGSF) — UPDATE
106. Giga Metals (GIGA.V, HNCKF) — 02/2020
107. Global Atomic (GLO.TO) — 5/2020
108. GMACO Global Gold, Natural Resource & Income Fund (GGN) — 4/2020
109. GoGold Resources (GGD.TO, GLGDF) — UPDATE
110. Gold Resource Corp. (GORO) — 01/2020
111. Gold Standard Ventures (GSV, GSV.TO) — UPDATE
112. Goldcliff Resource Corp. (GCN.V, GCFFF) — NEW
113. Golden Minerals (AUMN, AUMN.TO) — NEW
114. Golden Tag Resources (GOG.V, GTAGF) — 4/2020
115. Golden Valley Mines (GZZ.V, GLVMF) — 4/2020
116. GoldMining (GOLD.TO, GLDLF) — UPDATE
117. GoldSpot Discoveries (SPOT.V, GDDCF) — UPDATE
118. Goliath Resources (GOT.V, GGTHF) — 12/2019
119. GoviEx Uranium (GXU.V, GVXXF) — 5/2020
120. GR Silver (formerly Goldplay) (GPLY.V) — UPDATE
121. Great Bear Resources (GBR.V, GTBDF) — UPDATE
122. Great Panther (GPL, GPR.TO) — UPDATE
123. Group Ten Metals (PGE.V, PGEZF) — UPDATE
124. GT Gold (GTT.V, GTGDF) — 3/2020
125. Hannan Metals (HAN.V, HANNF) — 3/2020
126. Harte Gold (HRT.TO, HRTFF) — 4/2020
127. Hecla Mining (HL) — 4/2020
128. HighGold Mining (HIGH.V, HGGOF) — UPDATE
129. HIVE Blockchain Technologies (HIVE.V, HVBTF) — 02/2020
130. IAMGOLD (IAG, IMG.TO) — 4/2020
131. Impact Silver (IPT.V, ISVLF) — 01/2020
132. Integra Resources (ITR.V, IRRZF) — 01/2020
133. Ivanhoe Mines (IVN.TO, IVPAF) — 11/2019
134. Japan Gold (JG.V, JGLDF) — 4/2020
135. Jervois Mining (JRV.ASX, JRV.V, JRVMF) — 3/2020
136. K92 Mining (KNT.V, KNTNF) — UPDATE
137. Kirkland Lake Gold (KL, KL.TO) — UPDATE
138. Klondike Gold (KG.V, KDKGF) — UPDATE
139. Kootenay Silver (KTN.V, KOOYF) — UPDATE
140. Laramide Resources (LAM.TO, LMRXF) — 5/2020
141. Leagold Mining (LMC.TO, LMCNF) — 12/2019
142. Liberty Gold (LGD.TO, LGDTF) — UPDATE
143. Lion One Metals (LIO.V, LOMLF) — UPDATE
144. Lucara Diamond (LUC.TO, LUCRF) — 10/2019
145. Lumina Gold (LUM.V, LMGDF) — 11/2019
146. Luminex Resources (LMNX) — 4/2020
147. Lundin Gold (LUG.TO, FTMNF) — 3/2020
148. MAG Silver (MAG, MAG.TO) — 8/2019
149. Mako Mining (MKO.V, MAKOF) — 5/2020
150. Mandalay Resources (MND.TO, MNDJF) — 4/2020
151. Maple Gold Mines (MGM.V, MGMLF) — 12/2019
152. Marathon Gold (MOZ.V, MGDPF) — 10/2019
153. Maritime Resources (MAE.V, MRTMF) — 3/2020
154. Maverix Metals (MMX, MMX.TO) — 02/2020
155. McEwen Mining (MUX, MUX.TO) — 12/2019
156. Metalla Royalty (MTA.V, MTAFF) — 11/2019
157. Metallic Minerals (MMG.V, MMNGF) — 3/2020
158. Metallis Resources (MTS.V, MTLFF) — 4/2020
159. Midas Gold (MAX.TO, MDRPF) — 12/2019
160. Midland Exploration (MD.V, MIDLF) — 12/2019
161. Millrock Resources (MRO.V, MLRKF) — 12/2019
162. Minco Silver (MSV.TO, MISVF) — 11/2019
163. Minera Alamos (MAI.V, MAIFF) — 11/2019
164. Mineral Mountain (MMV.V, MNRLF) — 4/2020
165. Mineworx Technologies (MWX.V, MWXRF) — 9/2019
166. Mirasol Resources (MRZ.V, MRZLF) — 10/2019
167. Nevada Copper (NCU.TO, NEVDF) — 4/2020
168. Nevada Exploration (NGE.V, NVDEF) — 8/2019
169. New Gold (NGD, NGD.TO) — 3/2020
170. New Pacific Metals (NUAG.V, NUPMF) — 10/2019
171. NewRange Gold (NRG.V, NRGOF) — 02/2020
172. Newmont (NEM, NGT.TO) — 5/2020
173. NexGen Energy (NXE, NXE.TO) — 5/2020
174. Nighthawk Gold (NHK.TO, MIMZF) — 3/2020
175. Northern Dynasty (NAK, NDM.TO) — 3/2020
176. Northern Vertex Mining (NEE.V, NHVCF) — 10/2019
177. NovaGold Resources (NG, NG.TO) — 4/2020
178. Novo Resources (NVO.V, NSRPF) — 8/2019
179. OceanaGold (OGC.TO, OCANF) — 01/2020
180. Osino Resources (OSI.V, OSIIF) — 01/2020
181. Osisko Mining (OSK.TO, OBNNF) — NEW
182. Osisko Royalty (OR, OR.TO) — 11/2019
183. Paladin Energy (PDN.ASX, PALAF) — 5/2020
184. Pan American Silver (PAAS, PAAS.TO) — 9/2019
185. Peninsula Energy (PEN.ASX) — 5/2020
186. Plateau Energy Metals (PLU.V, PLUUF) — 5/2020
187. Premier Gold (PG.TO, PIRGF) — 4/2020
188. Pretium Resources (PVG, PVG.TO) — 3/2020
189. Probe Metals (PRB.V, PROBF) — 5/2020
190. Prophecy Development (PCY.V, PRPCF) — 10/2019
191. Pure Gold (PGM.V, LRTNF) — 10/2019
192. Quebec Precious Metals (CJC.V, CJCFF) — 12/2019
193. Radisson Minerals (RDS.V, RMRDF) — 4/2020
194. Rare Element Resources (REEMF) — 02/2020
195. Regulus Resources (REG.V, RGLSF) — 12/2019
196. Renaissance Gold (REN.V, RNSGF) — 10/2019
197. Revival Gold (RVG.V, RVLGF) — 5/2020
198. Reyna Silver (Not trading yet) — 5/2020
199. Rise Gold (RISE.C, RYES) — 3/2020
200. Riverside Resources (RRI.V, RVSDF) — 9/2019
201. RoxGold (ROXG.TO, ROGFF) — 4/2020
202. Royal Gold (RGLD) — 01/2020
203. Royal Nickel (RNX.TO, RNKLF) — 5/2020
204. Sabina Gold and Silver (SBB.TO, SGSVF) — 10/2019
205. Sandfire Resources America (SFAFF) — 10/2019
206. Sandspring Resources (SSP.V) — 9/2019
207. Sandstorm Gold (SAND, SSL.TO) — 11/2019
208. Scottie Resources (SCOT.V, SCTSF) — NEW
209. Seabridge Gold (SA, SEA.TO) — 10/2019
210. Silver Bull Resources (SVB.TO, SVBL) — 01/2020
211. Silver Lake Resources (SLR.ASX, SVLKF) — 4/2020
212. Silver One Resources (SVE.V, SLVRF) — 3/2020
213. Silvercorp (SVM, SVM.TO) — 12/2019
214. SilverCrest Metals (SILV, SIL.TO) — 11/2019
215. Skeena Resources (SKE.V, SKREF) — 3/2020
216. Skyharbour Resources (SYH.V, SYHBF) — 5/2020
217. Solaris Resources — 01/2020
218. Sprott, Inc. (SII.TO, SPOXF) — 5/2020
219. Sprott Physical Gold and Silver Trust (CEF, CEF.TO) — 4/2020
220. SSR Mining (SSRM, SSRM.TO) — 3/2020
221. Southern Silver (SSV.V, SSVFF) — 3/2020
222. Sun Metals (SUNM.V, SMTTF) — 3/2020
223. St Barbara (SBM.ASX, STBMY) — 4/2020
224. Standard Uranium (STND.V) — 5/2020
225. Steppe Gold (STGO.V) — NEW
226. Strategic Metals (SMD, SMDZF) — 4/2020
227. TerraX Minerals (TXR.V, TRXXF) — 02/2020
228. Texas Mineral Resources (TMRC) — 3/2020
229. Thunderstruck Resources (AWE.V, THURF) — 12/2019
230. TMAC Resources (TMR.TO, TMMFF) — 4/2020
231. Tonogold Resources (TNGL) — 01/2020
232. Torchlight Energy (TRCH) — 02/2020
233. Transition Metals (XTM.V, TNTMF) — 01/2020
234. Trilogy Metals (TMQ, TMQ.TO) — 3/2020
235. Triumph Gold (TIG.V, TIGCF) — 11/2019
236. Tudor Gold (TUD.V, TDRRF) — 01/2020
237. U3O8 (UWE.TO, UWEFF) — 5/2020
238. Ucore Rare Metals (UCU.V, UURAF) — 01/2020
239. UEX Corp. (UEX, UEXCF) — 5/2020
240. Ur-Energy (URG, URE.TO) — 5/2020
241. Uranium Energy Corp. (UEC) — 5/2020
242. Uranium Royalty Corp (URC.V, URCCF) — 5/2020
243. Velocity Minerals (VLC.V, VLCJF) — 12/2019
244. Victoria Gold (VIT.V, VITFF) — 10/2019
245. Victory Metals (VMX.V) — 01/2020
246. Vimy Resources (VMY.ASX) — 5/2020
247. Viva Gold (VAU.V, VAUCF) — NEW
248. Vizsla Resources (VZLA.V, VIZSF) — 3/2020
249. Wallbridge Mining (WM.TO, WLBMF) — 3/2020
250. Weaton Precious Metals (WPM, WPM.TO) — 10/2019
251. Wesdome Gold Mines (WDO.TO, WDOFF) — 02/2020
252. Western Uranium and Vanadium (WUC.C, WSTRF) — 5/2020
253. Westhaven Ventures (WHN.V, WTHVF) — 11/2019
254. White Gold (WGO.V, WHGOF) — 10/2019
255. Xtierra (XAG.V) — 11/2019
256. Yamana Gold (AUY, YRI.TO) — 11/2019