Kinross Gold (K.TO, KGC) has finally decided what it wanted to do with its working capital position of almost $2B; it wrote a $610M cheque to Barrick Gold (ABX.TO, ABX) to acquire 100% of Bald Mountain and 50% of Round Mountain. It definitely looks like the senior producers are falling back to the ‘safer’ regions to operate.
And that could be important for other companies in Nevada. For NuLegacy Gold (NUG.V), the Barrick-Kinross deal is an interesting one as it’s showing Barrick is selling what it’s saying to be ‘non-core properties’, and as expected the Pipeline mine, Cortez Hills mine and Goldrush project are still considered to be core assets for this company. Keeping this in mind, why would Barrick NOT be interested in retaining a 70% stake in NuLegacy’s Iceberg project? It would only make sense for Barrick Gold to exercise the option to earn a 70% stake in the property by completing $15M in exploration expenses at Iceberg. And even should Barrick choose not to spend any more cash at Iceberg, NuLegacy would be in a strong position to come to an agreement with Barrick whereby Barrick would sell its 30% stake to NuLegacy. After all, why would Barrick want to keep a 30% stake in a non-core property? Stay tuned, as we are expecting a formal decision from Barrick Gold by the end of this year.
Kinross Gold entering the Nevada scene could be important for for instance Columbus Gold (CGT.V). As we discussed in our previous report, we are really impressed with the Eastside project in Nevada, and Kinross could be a great partner to jointly develop this asset as we truly respect this company’s technical expertise. As Kinross didn’t have any decent presence in Nevada (it only owned 50% of Round Mountain before the current transaction), we weren’t really hopeful to see Kinross teaming up with Columbus Gold, but the odds have improved now. And of course, Columbus Gold could still do everything all by itself, but we can’t imagine Kinross gold entering Nevada without trying to fill its exploration and development pipeline.
And of course, after its most recent drill holes, Gold Standard ventures (GSV.V, GSV) will very likely also have popped up on Kinross’ radar. Gold Standard has drilled two very intriguing holes which contained long intercepts which could be considered to be ‘high-grade’ for a near-surface oxide gold deposit. Gold Standard Ventures will probably be on a lot of Christmas shopping lists!
It’s good to see some M&A happening, and we’re intrigued by the fact Kinross is increasing its exposure to Nevada as we are confident this will reflect well on a lot of junior exploration companies operating in the same state.
Disclosure: The author holds a long position in NuLegacy Gold and Columbus Gold. Columbus Gold is a sponsor of this website. Please see our disclaimer for current positions.
