M&A fever among junior mining stocks

17 January 2021

Large gold mining companies are approaching the end of their minable reserves – the so-called "reserve cliff". These large corporations will increasingly use their record levels of cash to rebuild their reserves. What's the easiest way to do so quickly? Acquire junior mining companies!

A recent bidding war is indicative of what's to come.

Cardinal Resources (ISIN: AU000000CDV9) had explored and developed a 5m ounce reserve in Ghana, Africa. When a bid was made for the company, no less than THREE other bidders entered the fray. One of them was a Chinese company with state-backed funding to mop up the strategic metal around the world.

Nine months later, the Chinese emerged victorious. The biggest beneficiaries were the company's shareholders, who made between three and four times their money.

There is a lot of pent-up demand for M&A in the gold sector. It's almost certain there will be plenty of similar situations unfolding over the next one to two years.

The question is, how to find such opportunities before the market wakes up to them?

Fear not, Undervalued-Shares.com is here to help!