Go Back

Takeover Tsunami Ahead—But Who Will Get Premium Bids?

by Lobo Tiggre
Monday, June 01, 12:00pm, UTC, 2020

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

 

 

 

Think. Speculate.

Facts and insights to navigate the markets. Delivered FREE.

MEMBERSHIP INCLUDES
  • Free digest with fresh investment-related news and ideas on a daily basis.
  • Free reports on investment ideas for speculators.
  • Honest, unbiased trend analysis
  • Heads up on events, appearances, and other educational opportunities.
Education

Forever Free subscription

MEMBERSHIP INCLUDES
  • Monthly Newsletter Subscription
  • Requests
  • Free Access to Blog
  • Books and More
My Take

$500 (SAVE: $100) for 1-year subscription

$50 for monthly subscription

MEMBERSHIP INCLUDES
  • Field Trip Invitations
  • Free Educational Media
  • Free Access to Blog
  • Books and More
  • Monthly Newsletter Subscription
  • Conference Invitations
The Independent Speculator

$2,500 (SAVE: $500) for 1-year subscription

$250 for monthly subscription