BMR Christmas schedule: Check back tomorrow for 7 @ 7:00 and again next week for Canadian trading Wednesday thru Friday. BMR Morning Musings is now on a Christmas break until next Wednesday, Dec. 28.
1. Gold, up $2 an ounce at $1,133 as of 7:00 am Pacific, briefly came under some slight additional pressure this morning after the Commerce Department reported that the U.S. economy grew faster than initially thought in the 3rd quarter, notching its best performance in 2 years amid solid consumer spending and, of course, a jump in soybean exports…GDP increased at a 3.5% annual rate instead of the previously reported 3.2% pace…growth was the strongest since the 3rd quarter of 2014 and followed the 2nd quarter’s anemic 1.4% pace…meanwhile, in a separate report, orders for durable goods fell by 4.6% in November…that snapped a string of 4 straight monthly increases but was in line with consensus forecasts…in other economic data just released, personal income was flat in November vs. an expected 0.3% increase…
2. Copper exports by the world’s 2nd-largest economy fell 15% year-over-year in November, Chinese customs data show…meanwhile, the International Copper Study Group says Chinese demand rose 7% year-over-year in the first 9 months of 2016, but noted that imports of refined Copper have been waning in recent months…monthly demand in the 3rd quarter was down 5% from the level seen in the 1st half of 2016…
3. The spread between Platinum and Palladium contracted sharply to its narrowest in nearly 15 years earlier this month at $141 an ounce as a result of Palladium’s out-performance…the autocatalyst metal has risen 17% this year, including 22% since a low of $540 in June, while Platinum has gained just 2%…the spread is currently $250, having averaged $465 over the last 30 years…
4. With 2016 quickly coming to a close, Silver is vying with Palladium as this year’s best asset in the precious metals space…the Silver market could continue to see strong gains in 2017 from a pick up in industrial demand as the U.S. and global economies improve, according to analysts at HSBC: “We believe Silver prices will be better bid later in 2017. We also base our expectations on solid fundamentals, as mine supply is likely to contract while industrial and jewelry demand should increase“…one particular sector in which HSBC analysts see potential is solar power, as costs decline and energy demand increases…
5. Canopy Growth (CGC, TSX) has closed its previously announced bought deal financing, raising $60 million through the issuance of 5.6 million shares at a price of $10.60 per share (no warrant)…the company intends to use the proceeds primarily for potential real estate acquisitions and fit-up of growing operations at such locations…in the event such potential acquisitions are not completed, a majority of the funds will be used to expand capacity at the company’s existing sites over the next 12 months…additionally, CGC expects to incur international development expenditures of approximately $2 million primarily to further explore and develop international market opportunities where federally legal to do so…CGC is up 14 cents at $9.03 as of 7:00 am Pacific…the stock has strong technical support around $8.50 in the immediate vicinity of a Fib. retracement level and the rising 50-day SMA…
6. G4G Capital (GGC, TSX-V), one of the top performing Gold juniors the last several months, has changed its name to White Gold Corp. to better reflect its strategic focus on exploration in the White Gold district of the Yukon…beginning tomorrow, the stock will trade under the new symbol “WGO“…as part of its rebranding, the company has also launched a new website (http://www.whitegoldcorp.com)…GGC is up slightly at $1.17 in early trading…
7. Another junior is being gobbled up by a major, a trend that is sure to continue in 2017…IAMGOLD (IMG, TSX), which already owns 23% of Merrex Gold (MXI, TSX-V), is acquiring the balance of MXI in an all-share transaction valued at 20 cents per share or approximately $41 million on a fully-diluted basis…Merrex’s principal asset is the Diakha-Siribaya Project in Mali in which Merrex and IAMGOLD each hold a 50% interest…meanwhile, Orex Exploration (OX, TSX-V), which has 100% ownership of the high-grade Goldboro Gold Project in Nova Scotia, essentially put itself on the block in a news release yesterday…the stock is unchanged at 4.5 cents as of 7:00 am Pacific…
BMR Christmas Posting Schedule…
Tomorrow…7 @ 7:00 plus updated Venture and Gold charts…7 @ 7 then returns next Wednesday, December 28, when Canadian markets re-open…
Christmas message on Saturday, December 24…
To give our staff a Christmas break, no Morning Musings today or tomorrow – resumes next Wednesday, December 28…
Check for separate postings prior to next Wednesday depending on market developments…comments section remains open throughout the Christmas holiday period…
OX – Jon, what price to you think a suitor will offer if it in fact gets taken out?
Comment by Dan1 — December 22, 2016 @ 7:49 am
Merry Christmas and a Happy New Year
Comment by DavidW — December 22, 2016 @ 8:03 am
Partly will depend on the Gold price, Dan1, but $8 million as the current valuation for Goldboro (730,000 ounces of high-grade resources, potentially shovel-ready within 12 months with strong expansion potential) makes this, as the OX NR stated, “a highly undervalued asset and the board and company must find a way to return that value to the shareholders. We will proceed with our fundamental work while examining all strategic alternatives in order to achieve our ambition.”
Comment by Jon - BMR — December 22, 2016 @ 8:15 am
Thanks Jon. You also said you are hearing rumours of more GGI news before the new year. What properties are you expecting? Mexico maybe?
Comment by Dan1 — December 22, 2016 @ 8:22 am
The 3 key situations are the E&L, Red Lion and of course Mexico…I’d be surprised if we don’t see an important update on at least 1 of those fronts within the next week, Dan1, and then a busy January.
Comment by Jon - BMR — December 22, 2016 @ 8:51 am
NRN gets hammered… really bad NR…
Comment by Jeremy — December 22, 2016 @ 10:01 am
Heads up all… CDNX is moving…. 3 pts in 10 min.. is this a beginning of anything??
Comment by Jeremy — December 22, 2016 @ 10:20 am
Venture up for 2 days in a row as we end Tax Loss season….
Comment by STEVEN1 — December 22, 2016 @ 12:58 pm
I was one of the lucky ones to get out of NRN before the drop. Sold some shares a few day ago and the rest at the open today. It was one of those high risk/reward plays that didn’t pan out. Maybe they come up with something with a few more drill holes. They did rush some cores for gold analysis.
Picked up more DBV shares today. Nibbled at a few GGI shares but nobody would bite my bigger bid.
Comment by Dan1 — December 22, 2016 @ 3:00 pm
I was really hoping for NRN to hit as I own CLE but it was becoming obvious that it wasn’t going to happen, funny how the market seems to know. Glad you got out Dan1, with 200 million shares outstanding it certainly may fall further.
Comment by Danny — December 22, 2016 @ 3:43 pm
CXV – looking like a nice bottom play.
PMA – hoping for the deal to get finalized
CEM- bought some more
SIM – breakout?
IMP-interesting move today
Comment by Dennis — December 22, 2016 @ 3:52 pm
The Dec. 5 NR was certainly a good tip-off NRN itself wasn’t expecting to hit at Sequoi, Danny, and nothing from the company even 10 days after that basically cemented it. If you’re into massive sulphides, you know it right away. They had some very interesting geophysics, but…no history to the property, no previous drill holes, so very grassroots and even more risky after the strikeout at Huckleberry. Still has potential, and South32 remains committed, but these early stage things can take time. Fortunately for CLE, they have Uranium and other irons in the fire.
Comment by Jon - BMR — December 22, 2016 @ 4:45 pm
KSK bought out?
Comment by STEVEN1 — December 22, 2016 @ 6:20 pm
Kiska Metals (KSK)being taken over by AuRico (AMI)for a premium to KSK share price for cash and AMI shares valued at $.078
Comment by John — December 22, 2016 @ 6:49 pm
Yes, Steven1, very interesting…AuRico takes out KSK – it’s all about Kliyul….here’s where it gets even more intriguing——GGI with a really attractive large land package and extensive work contiguous to Kliyul (at Red Lion) and expected to deliver news soon/imminently on that….AuRico (or another major player) is going to want a piece of GGI or Red Lion, especially if the rumors we’re hearing about the Red Line are true…
Mr. Chris Richter of AuRico reports
AURICO METALS TO ACQUIRE KISKA METALS
AuRico Metals Inc. and Kiska Metals Corp. have entered into a definitive arrangement agreement, pursuant to which AuRico will acquire all of the issued and outstanding securities of Kiska by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia).
Under the terms of the agreement, the holders of common shares of Kiska, other than AuRico, will receive approximately: (i) 0.0667 of an AuRico common share plus (ii) 1.6 cents in cash for each Kiska share held. Based on AuRico’s Dec. 22, 2016, closing share price, the arrangement values the Kiska shares at approximately 7.8 cents per share. The total value of this arrangement is approximately $9.6-million. The number of AuRico shares to be issued as part of the arrangement is approximately 8.2 million, assuming conversion of Kiska’s in-the-money options and warrants, representing approximately 5.5 per cent of the current issued and outstanding AuRico shares.
Arrangement highlights
Key benefits to Kiska securityholders (defined below):
Premium to Kiska shareholders: The arrangement provides an immediate and significant premium to recent trading ranges of Kiska shares, being a premium of 95 per cent to Kiska’s closing share price on the TSX Venture Exchange on Dec. 22, 2016, and a 70-per-cent premium on the basis of Kiska’s and AuRico’s respective 20-day volume-weighted average prices as of the same date, and also provides shareholders with significantly enhanced trading liquidity;
Complementary high-quality assets: The combined company will have paying royalties focused on Tier 1 jurisdictions, the Kemess development project in British Columbia, which is well advanced with a feasibility study recently released and an environmental assessment certificate expected in the near term, and a large high-quality portfolio of earlier-stage royalties and exploration projects with royalty-generation potential;
Exciting platform: Participation in an exciting new platform, positioned to create securityholder value through the advancement of Kemess, and further development of a strong royalty and project pipeline;
Diversification: The combination of Kiska’s projects and royalties with the advanced-stage Kemess project and AuRico’s five paying royalties provides excellent asset diversification for securityholders;
Growth potential: Enhanced ability to transact on accretive acquisitions, and grow the royalty and project portfolio.
Key benefits to AuRico shareholders:
Royalty diversification and long-term optionality: Kiska’s royalty portfolio consists of six existing royalties, including royalties on the East Timmins and Boulevard properties operated by Kirkland Lake Gold and Independence Gold, respectively. In addition, Kiska’s six wholly owned exploration projects present organic royalty-creation opportunities. All assets are located in North America and are expected to further enhance AuRico’s existing high-quality royalty pipeline.
Near Kemess exploration upside: The arrangement would add several new wholly owned exploration properties, many of which are located in British Columbia, including the Kliyul project which is located approximately 50 kilometres south of AuRico’s 100-per-cent-owned Kemess project. These properties present AuRico with organic royalty-creation opportunities in the context of property partnership or divestitures.
Strong balance sheet and other financial synergies: The arrangement is expected to further strengthen AuRico’s financial position as well as provide administrative and tax synergies going forward.
Chris Richter, president and chief executive officer of AuRico, stated: “This transaction presents a unique opportunity to expand our royalty portfolio with a focus on Canadian assets. We are confident that this transaction represents a significant value-creation opportunity, and we are very pleased to bring this transaction forward to the benefit of both sets of shareholders.”
Grant Ewing, president and CEO of Kiska, stated: “We are excited to enter into this agreement, as it offers Kiska shareholders an immediate and significant premium to the market, and results in excellent diversification for securityholders by combining an early-stage portfolio of royalties and projects with a high-quality suite of paying royalties and an advanced development asset in Kemess.”
Additional information regarding the arrangement
The arrangement agreement includes standard non-solicitation and superior proposal provisions, and Kiska has provided AuRico with certain other customary rights, including a right to match competing offers. Full details of the arrangement will be included in Kiska’s management information circular to be mailed to Kiska securityholders (Kiska shareholders, and the holders of options of Kiska and warrants of Kiska), in due course.
The arrangement is subject to customary closing conditions, including the approval by the Kiska securityholders, as well as court and regulatory approvals. Assuming the timely receipt of such approvals, the arrangement is expected to close in the first quarter of 2017.
A copy of the agreement will be filed under Kiska’s profile on SEDAR.
Support for the arrangement and fairness opinion
Prior to entering into the agreement, the board of directors of Kiska received a verbal fairness opinion from Primary Capital Inc., to the effect that, as of the date thereof, based upon and subject to the assumptions, limitations and qualifications in the fairness opinion, the consideration to be received pursuant to the arrangement is fair, from a financial point of view, to Kiska shareholders (other than AuRico). Kiska expects to receive a written fairness opinion from Primary Capital prior to mailing the management information circular to Kiska Securityholders.
The Kiska board, after receiving financial and legal advice, and following receipt of the fairness opinion, unanimously determined that the arrangement is fair to the Kiska securityholders and that the arrangement is in the best interests of the company, and recommends that Kiska securityholders vote in favour of the arrangement.
In addition, prior to entering into the agreement, AuRico entered into support and voting agreements with Kiska’s management and the Kiska board, collectively holding approximately 7.3 per cent of the issued and outstanding Kiska shares, whereby the locked-up shareholders have agreed to vote their securities in favour of the arrangement at the special meeting of Kiska securityholders.
The AuRico board of directors has unanimously approved the arrangement.
Private placement transaction
In connection with the arrangement, AuRico and Kiska have also agreed that AuRico will subscribe for approximately 12.9 million Kiska shares on a private-placement basis, representing approximately 9.9 per cent of the outstanding Kiska shares after giving effect to the private placement. The Kiska shares will be acquired at a price of 5.5 cents per share, for total gross proceeds to Kiska of approximately $709,500. Completion of the private placement is subject to the satisfaction of certain regulatory requirements but is not contingent on completion of the arrangement.
Kiska securityholder approval
Completion of the arrangement will be subject to customary closing conditions, including receipt of the required approvals at a special meeting of Kiska securityholders expected to be held in February, 2017. The arrangement will be subject to the approval of (i) at least two-thirds of votes cast by Kiska securityholders (voting as a single class and excluding Kiska warrants that will expire in accordance with their terms prior to the meeting); (ii) at least two-thirds of the votes cast by Kiska shareholders (voting together as a single class); and (iii) if required by Multilateral Instrument 61-101 — Protection of Minority Securityholders in Special Transactions, minority approval in accordance with Section 8.1 of MI 61-101.
Advisers and counsel
Osler, Hoskin & Harcourt LLP is acting as legal counsel to Kiska, and Primary Capital Inc. is acting as the exclusive financial adviser to Kiska. Fasken Martineau DuMoulin LLP is acting as legal counsel to AuRico.
About Kiska
Kiska employs the royalty-and-project-generator business model to finance exploration, leverage exploration dollars and data, and preserve shareholder equity. Kiska partners its projects with mining and exploration companies which share its vision and commitment with respect to environmentally and socially responsible mineral exploration and development. Kiska holds a high-quality portfolio of gold and copper projects throughout North America, large technical databases, and an extensive royalty portfolio.
About AuRico
AuRico is a precious metals royalty and mining development company with producing gold royalty assets including a 1.5-per-cent net smelter return royalty on the Young-Davidson gold mine, a 0.25-per-cent NSR royalty on the Williams mine at Hemlo and a 0.5-per-cent NSR royalty on the Eagle River mine — all located in Ontario, Canada. AuRico Metals also has a 2-per-cent NSR royalty on the Fosterville mine and a 1-per-cent NSR royalty on the Stawell mine, located in Victoria, Australia. Aside from its diversified royalty portfolio, AuRico wholly owns the advanced Kemess gold-copper project in British Columbia, Canada.
We seek Safe Harbor.
Comment by Jon - BMR — December 22, 2016 @ 9:45 pm