Resource World Magazine

36 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 1 5 M erger and acquisition (M&A) activity in mining and mineral exploration is reviving and deals have been taking place all over the mineralogical map. For example, in October 2014, Chaparral Gold Corp. [CHL-TSX] agreed to its acquisition by Goldrock Mines Corp. [GRM-TSXV] for $73.4-million. The offer is a 19.6%premium to the closing TSX price of Chaparral shares on October 8. Also in October 2014, B2Gold Corp. [BTO- TSX] acquired all of the issued ordinary shares of Papillon Resources Ltd. According to an announce- ment, the merged entity will focus on furthering the development of the Fekola Project in Mali, optimizing B2Gold's existing Masbate, Limon and La Libertad mines, and completing construction of the Otjikoto Mine in Namibia. B2Gold expects to produce between 395,000 ounces and 420,000 ounces of gold in 2014, and approximately 540,000 ounces of gold in 2015. In an announcement, B2Gold President and CEO, Clive Johnson, said, "We believe this merger will bring great value to all shareholders, and we congratulate Papillon's strong team on advancing the impressive Fekola Project to a robust pre-fea- sibility study." A third October deal had Fortress Minerals Corp. [FST.H-TSXV] entering into an agreement to purchase from Kinross Gold Corp. [K-TSX; KGC- NYSE] a 100% interest in the Fruta del Norte gold project in Ecuador for US $240-million. Upon clos- ing of the acquisition, and subject to shareholder approval, Fortress will change its name to Lundin Gold Inc. Lundin Gold will be the principal gold vehicle of the companies controlled by the Lundin family, with Fruta del Norte as the flagship asset upon which it will build its gold business. In an announcement, Fortress President CEO and director Lukas Lundin said, "Fruta del Norte is one of the most significant gold discoveries in the last 15 years, and we believe tremendous value can be generated through its development." "... We are confident in our ability to rapidly advance the project to a construction decision and obtain the required permits to build this world- class gold asset. This acquisition is the first step in the building of our gold company, Lundin Gold, to carry on our previous successes in the gold indus- try, which included the Alumbrera and Veladero discoveries in Argentina in the 1990s." As deal-making revives, speculators and inves- tors are starting to think about ways in which they can capitalize on all the buying and selling of companies and assets. But Jim Mustard, VP investment, banking and mining with PI Financial Corp., says they shouldn't get carried away yet. "It's important to separate the reality of mergers and acquisitions from the rumors," Mustard said. "For example, M&A deals on iron ore have faded in 2014, as has interest in coal. Now the majority of M&A activity is focused on gold and copper projects." Mustard says fewer mergers and acquisitions that involve companies in the exploration stage have been taking place lately. "But a stable number of advanced stage projects have been the subject of M&As," he said. In the recent past, more than one- half of the industry has been for sale. "But over the past six to 12 months, and cer- tainly in the past quarter, the percentage has gone skyward," he said. "So much of the exploration industry is for sale; and like real estate, it is now about location and quality. There is little or no interest in many higher-risk political regions, and there will be much lower interest until the under- lying commodity prices stabilize, but the low values will attract." INVESTMENT Melanie Shishler, Davies Ward Phillips Vineberg LLP Jim Mustard, PI Financial Corp. meRGeR and acquisition activity on the upswing Many opportunitieS for Savvy inveStorS to get in on SoMe good dealS by Peter Caulfield

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