After Agnico-Eagle (TSX: AET) invested $53 million in exploration companies, New Gold today announced today that it will be buying Rainy River.
We might see more of this coming as the miners have to replace the depleting resources. High quality gold projects are very rare. These production companies have the ability to built and finance the mines are take their opportunities to buyout high quality companies that fits their growth profile.
What is high quality?
1) Grades sufficient to deliver all in cash cost
2) Scale
3) Low Capex
4) exploration upside
5) development logisitics
6) safe jurisdiction
7) management
Simply put, relatively easy to build the mine and easy to operate.
In good markets, exotic jurisdictions and low grades might bring attention but in tough markets like today, the simpler the better.
I don't own any of the companies listed above.
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