Gold M&A picks up with deals among junior miners

A flurry of new deals announced TORONTO Monday suggests that mergers and acquisitions among junior mining companies, particularly in the gold space, could be heating up after several slow months.

In the biggest mining deal announced so far this year in Canada, the 127-year old Idaho-based Hecla Mining Co. proposed what it estimated as a US$462 million cash-and-share acquisition of Nevada-based Klondex Mines Ltd. — both listed on the TSX Venture exchange.

That deal, as well as Vancouver-based Alio Gold’s proposed $128-million cash acquisition of Vancouver-based Rye Patch Gold, are adding fuel to a junior merger space that has been quiet: Thus far, in 2018, there have been just six mergers in Canada’s metals and mining sector compared to 19 at this time in 2017, according to Financial Post data.

Phillips Baker Jr., chief executive of Hecla, said the deal was unrelated to gold prices or any short term trends. “We have assets that we keep for decades,” Baker said.

If the deal goes through as planned, Hecla would acquire all three Klondex gold mines in Nevada, which have an annual production of around 150,000 ounces. That would raise the company’s annual gold output to around 370,000 ounces, plus 10 million ounces of silver, according to the company.

Klondex shares jumped nearly 60 per cent to $2.86 at close in Toronto on Monday.

In a third deal announced Monday, junior gold exploration firm Anaconda Mining has proposed to pay 14 cents per share for all outstanding shares of Maritime Resources — a 40-per-cent premium to its closing price on Friday.