Spring Air Brings A Whiff Of Takeover Fever To The Junior Gold Sector

By Barry Fitzgerald | More Articles by Barry Fitzgerald

Folks are wondering if Ramelius’ (RMS) switch to Pac-Man mode this week signals the start of a wave of merger and acquisition activity in the junior gold space.

In the space of a couple of days, the $240 million Ramelius has launched a hostile $54 million scrip bid for Explaurum (EXU) and has secured an agreement to acquire the Marda gold project from its owner’s liquidator for $13m.

It would be nice to think that Ramelius is leading the way in a consolidation of the junior gold space. But the pitch with both acquisitions – Explaurum is far from certain – is that they are all about providing truckable feed for its Edna May gold operation.

Explaurum and Marda come with resource bases of 675,000oz and 333,000oz respectively. Both have lesser reserves grading all of 2g/t gold yet the ores would have to be trucked 150km and 190km respectively.
So it seems a bit of a stretch to think the twin moves are all about feeding Edna May. Just as likely a motivation is that Ramelius is simply after another growth story, with Explaurum in particular capable of achieving stand-alone status as well as delivering exploration upside in WA’s under- explored wheatbelt region.

Whatever the motivation, there are plenty of other juniors in a similar boat to Explaurum in that they currently have a sub-1Moz resource – or bigger in some cases – which could grow with more exploration to underpin standalone developments. Read more + 

Barry Fitzgerald

About Barry Fitzgerald

Barry Fitzgerald has covered the resources industry for 30 years. His column highlights the issues, opportunities and challenges for small and mid-cap resources stocks - most recently penned his column for The Australian newspaper and before that, The Age.

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