Issue link: http://resourceworld.uberflip.com/i/638235
f e b r u a r y / m a r c h 2 0 1 6 www.resourceworld.com 25 to meet future long-term debt obligations while still remaining open to cash-flow- accretive acquisition opportunities. Prominent mergers in 2015 included Alamos Gold and AuRico Gold with a transaction value of US $1.5 billion. Another significant merger was the US $1.1-billion deal that saw Tahoe Resources acquire Rio Alto Mining. The transaction aligned the two companies' businesses, resulting in synergies and the formation of a new intermediate precious metals pro- ducer. Both of the above transactions were executed in order to drive future produc- tion and leverage the combined operating and development-stage assets. In October 2015, First Majestic Silver and SilverCrest Mines completed a merger under which First Majestic acquired all of the issued and outstanding common shares of SilverCrest. The First Majestic acquisition of SilverCrest Mines had a transaction value of $154 million. For First Majestic, the acquisition of SilverCrest's Santa Elena Silver Mine, First Majestic's sixth mine in Mexico, will increase its total production by approximately 5 million silver equiva- lent ounces per year. Oban Mining and NioGold Mining recently reached an agreement in which Oban agreed to acquire all the issued and outstanding shares of NioGold. The Oban Mining acquisition of Niogold had a trans- action value of $65.21 million (130.42 M shares outstanding x $0.50/Niogold Share paid by Oban). The surviving entity will have two development-stage projects in Québec and two exploration stage projects in Ontario. As many gold producers generate a loss with every ounce produced or ton pro- cessed at current gold prices, consolidation will offer a reduced All-in Sustaining Cost (AISC) through acquisitions of lower-cost economic projects. Among the juniors, "mineral bank" business models have become the preferred form of project con- solidation through aggressive acquisitions. Value is created by holding the assets then selling them when commodity prices rise. One of the most active mineral banks is Keith Neumeyer's First Mining Finance, which recently acquired Gold Canyon Resources – adding to its growing portfolio of gold deposits in the Americas. Senior producers with strong balance sheets will continue to make strategic purchases, while mergers will continue among small to mid-tier producers to real- ize economies of scale. Select juniors are also consolidating distressed assets which indicate these management groups are cau- tiously optimistic moving forward. The view by many is that in 2016, com- panies and investors will likely continue to experience the result of prior "bull-mar- ket-driven" growth-inspired acquisitions – asset writeoffs. As a result, companies and investors alike may be reluctant to deploy fresh capital until commodity prices improve and positive cash flows return. n