Gold Stocks Steady, M&A Activity Heats Up



GOLD STOCKS NEWS – Gold stocks remained slightly in positive territory in mid-day trading on Monday, as the Market Vectors Gold Miners ETF (GDX) inched up by $0.03 to $45.43 per share.  The GDX – the world’s largest gold stocks ETF – had been up by as much as $0.35, or 0.8%, at $45.75 this morning.  Gold stocks pared their gains, however, alongside COMEX gold futures – which rose by just $5.10, or 0.3% to $1,665.70 after earlier hitting $1,674.80 per ounce.

One of the leading stories in the gold stocks sector this morning was Alamos Gold’s (AGI.TSX) C$780 million hostile bid for Aurizon Mines (ARZ.TSX, AMEX: AZK).  Alamos already owned approximately 16% of Aurizon’s shares prior to the announcement, and is now seeking to acquire 100% via a cash and stock transaction. Alamos Gold operates the Mulatos gold mine in Mexico, while Aurizon Mines owns the Casa Berardi mine in Quebec, as well as seven other properties.

Under the terms of the deal, Alamos is offering Aurizon shareholders the option to receive C$4.65 per share in cash, or 0.2801 of an Alamos share, subject in each case to pro-ration based on a maximum cash consideration of C$305 million and maximum number of Alamos shares issued of 23.5 million.  The offer represents a 40% premium to Aurizon’s closing price on January 9th.

Commenting on the deal, National Bank Financial analyst Paolo Lostritto wrote in a note to clients that “While we view the offer as providing reasonable value, there appears to be room for a subsequent sweetened offer if needed.  However, we note that there are few options for a suitable white knight.”

In early afternoon trading, shares of ARZ.TSX surged by C$1.15, or 33.7%, to C$4.56 while AGI.TSX fell by C$1.65, or 9.8%, to C$15.27 per share.

Another strong performer among gold stocks on Monday was Guyana Goldfields (GUY.TSX), which jumped by C$0.37, or 9.8%, to C$4.13 per share.  The rally was fueled by Guyana’s report of an updated feasibility study on its Aurora project in Guyana, South America.

Following the announcement, TD Securities analyst Daniel Earle raised his price target on GUY.TSX to C$10.00 from C$5.50 and reiterated his Speculative Buy rating.  Scotia Capital analyst Trevor Turnbull also lifted his price target, from C$5.00 to C$7.50, and reiterated his Sector Outperform rating.

Other notable gold stocks moving higher on Monday included GDX components Barrick Gold (ABX) and Eldorado Gold (EGO) – which advanced by 0.3% to $34.34 and by 0.8% to $13.15 per share, respectively.

from GoldAlert by jturbin 

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