Junior Gold Mining M&A - Alamos Gold to Buy Esparanza Resources

Alamos Gold announced a friendly takeover of Esparanza Resources for approx C$69m having been recently beaten to the much larger Aurizon by Hecla.
Run by the ex Minefinders team (acquired by Pan American Silver) they could have sat on cash ($36m at end 2012) so what has prompted an immediate sale?
Again only a few very recent buyers will be making a profit on Esparanza even though the stock was up over 30%......MORE



Esparanza had previously made deals with Pan American Silver , a $35m financing at $1.70 / share only months ago and a deal on other PAAS properties so there seems some possibility of a counter offer, discussed here at IKN who seems unimpressed by the company. Rick Rule has been more positive some time ago, but the sale suggests they have been unable to progress financing and there have been recent permitting problems

Unsure how long the latest EPZ presentation will stay up - HERE

The focus was a relatively small but low capex and low operating cost open pit in Mexico. This matrix shows NPV 7% from the 2011 PEA valuing the acquisition on around $1050 gold, although cost inflation is likely to have moved the metrics.

But they couldn't find the additional financing

Bernanke - Highly Accomodative Policy Needed for the Foreseeable Future

After all the happy talk

http://www.cnbc.com/id/100877586

Chairman Ben Bernanke said on Wednesday that the U.S. economy continues to need highly accommodative monetary policy. Answering questions at a conference sponsored by the National Bureau of Economic Research Bernanke said that when looking at the Fed's dual mandate on employment and inflation more work needed to be done. He said the 7.6 percent unemployment rate probably "overstates the health of the labor market" and that inflation remains below the Fed's 2 percent target. Moreover, fiscal policy remains "quite restrictive," Bernanke said.

And just after Goldman and JP Morgan had called a bottom in commodities
http://www.forbes.com/sites/timtreadgold/2013/07/02/jp-morgan-mimics-the-goldman-sachs-view-of-an-improving-commodity-outlook/

Gold Did This

Dollar Did This

Problems with Technical Disclosures - Ontario Securities Review

Report detailing problems with technical reports and disclosures.

Mineweb summary - HERE

Full OSC Review - HERE

Tocqueville Q2-13 Letter - John Hathaway

Linked HERE

We observe profound internal change within the industry which suggests to us that the strongest companies will deliver compelling upside performance when the metals markets turn. These changes include substantial scale backs of capital spending and other measures to preserve cash and reduce expenses. As managers, we are focusing on companies with the strongest financials and best assets.

short positions of these traders are higher than at the bottom in 2008 (chart below), after which gold rallied 167% and mining shares 256% (basis XAU)

The Forces That Will Drive the Next Bull Market in Gold and Silver - Larry Edelson

Edelson has been a long term gold bull but rightly very bearish since 2011 expecting a "normal" 2 year correction of the long bull run, he took criticism in 2011 for becoming bearish ahead of the top.
He puts forward a strong case for the key drivers of the bull going forwards and suggests some new correlations. He suggests that war cycles are a key driver going forwards. Money printing will be less significant as the financial holes are so large they cannot be filled and that realisation, and defaults and bail ins, will drive the flight to safety. He sees inflation is some way off, 2015-6,  but the hoarding of supply will drive prices up in precious metals.
Linked - HERE

In other recent articles he has looked to find major support  at $1028 - HERE

If you’re counting solely or largely on central bank money-printing to drive gold and silver prices through the roof in the next leg up, then you’ll miss the real reasons the metals will go higher. Money-printing will be a force, but it will not be nearly as strong a force as it was in the metals’ first leg up from 2000 to 2011. The reason is simple: Between the towering inferno of as much as $150 trillion of global debt with weak underpinnings and derivatives bets that now approach more than $1.2 quadrillion in notional value …There is simply no way central banks could ever print enough money to stabilize the global monetary system. So print or not, the next leg up in the precious metals will be driven largely by a breakdown in the global monetary system, not by money-printing. A breakdown in the global monetary system means there will be big banks and financialinstitutions going belly up … sovereign nations, especially in Europe going bust … Washington going bust … and sovereign bond markets collapsing to 10 cents on the dollar. Money-printing will not solve or prevent or even delay those things from happening in the next several years. Gold and silver, once they bottom, will start rising again because savvy investors are finally beginning to realize that their Emperors really do have no clothes, and all the money-printing in the world won’t be able to cover that up.

We face higher inflation in the years ahead. But that part of gold and silver’s next leg up is still a ways off and won’t arrive till late 2015 or early 2016. In fact, we probably face more disinflation in the months ahead. But here’s the catch: Disinflation doesn’t mean gold and silver prices cannot go up.Indeed, they can. The more deflation we get over the next few months, the more bullish it will become for gold and silver. It will mean investors and consumers are hoarding cash and other valuable assets. Hoarding reduces supply, which raises prices. 

Third, are the War Cycles I’ve been warning you about. In previous columns, I’ve told you how the impact of the war cycles is already beginning to show in many different geo-political realms. In Syria, in North Korea, in the Cyprus confiscation of depositor assets, in Russia’s recent military moves in the Mediterranean, in China and Japan’s war of words over the Senkaku Islands, in China’s moves in the South China Sea, and more. This is going to ultimately be the most important force driving precious metals higher. It will coincide with the first force above, the collapse of the world’s monetary system. It will be a nasty set of conditions where governments are at war militarily or financially with each other … And governments are at war with their own citizens — repressing more and more liberties and personal freedoms, chasing down assets to tax and confiscate, and more. In other words, total upheaval of modern society, coupled with a collapse of the global monetary system.

Pierre Lassonde Calls for a 50% rebound in the Miners

One of the most respected leaders in the Gold Mining Industry, Pierre Lassonde, suggests we are within 5% of the bottom and suggests a big bounce into September - See Link HERE

“So my feeling is we are seeing the maximum stress right now.  I think $1,200, plus or minus $30 is where you are going to see the bottom in gold.”.............. I started buying this week.  I think there are a number of gold equities that are absolute bargains.  The liquidity trap has forced a lot of funds to sell.  But money is still leaving the sector.  That’s one of the reasons you are seeing this amount of stress. But I am absolutely 100% convinced that come September gold is going to be 20% to 30% higher than it is today and the stocks are going to be 50% higher.  So what am I doing?  Yes, now is the time to put money to work and that’s what I’m doing.”

Mike Shedlock Buys Basket of Large Gold & Silver Miners

Mike Shedlock is a prolific financial commentator with a deflationist perspective. However he has long had a constructive view on gold during deflation. He notes a recent  "significant" investment in gold and silver miners where he states

I believe precious metal miners represent true value, but I cannot state when the market will come to the same conclusion.

Full details - HERE

Also points to "Acting Man" discussing the "Plague of Gold Bears" - HERE

It is really quite remarkable: for ten years while gold did nothing but go up, most of these these guys were largely silent. Their gold price forecasts were on average dead wrong with unwavering regularity - they kept predicting price declines. Then, as it approached its peak, they suddenly turned bullish and finally raised their price targets (again, on average). Now that it is going through the first major correction since the bull market began, its decline is accompanied by inordinate sound and fury. No other market has produced such a flurry of widely and loudly telegraphed grave dancing.