This Is Just The Start Of Consolidation In The Mining Sector - Great Panther CEO
(Kitco News) - Consolidation of smaller mining companies in the current low price environment will be beneficial for the sector as a whole, according to one mining executive.
Jim Bannantine, president and CEO of Great Panther Silver
In a telephone interview with Kitco News, Jim Bannantine, president and CEO of Great Panther Silver (NYSE: GPL, TSX: GPR), said that he thinks investors are only seeing the start to more mergers within the mining space as companies are beginning to take advantage of low valuations in the marketplace.
Bannantine’s comments come a week after Great Panther announced the acquisition of Beadell Resources and its Tusano Gold mine in Brazil.
“One of my greatest fears has been that one day I would wake up and find the window for making deals closed,” he said. “That window is still open and I think we will see a lot more deals being made.”
Bannantine added that more M&A activity could be what finally brings investors back to the marketplace.
Bannantine said that the acquisition of Beadell has been the culmination of a 14-month intensive search. He explained that Great Panther has been actively looking for opportunities to expand its production pipeline and will now have three producing mines in the Americas with a fourth expected to come back on line by late 2019.
The company plans to be a mid-tier producer, producing 250,000 ounces of gold and silver by 2020. Bannantine added that he sees the mid-tier sector as the sweet spot in the mining sector.
“The companies are big enough to mitigate the risks faced by smaller mines, but they are still small enough to see strong growth,” he said.
“Particularly in our company, we will still be on the small side of the intermediate space so there is still plenty of growth before us,” he added. “This acquisition gives us a great growth profile that we can build on.”
Not only does Great Panther’s latest purchase potential push the company into a new mining category, but it also adds further diversification for the company, Bannantine said. Great Panther is primarily a silver producer with its mines in Mexico.
Beadell’s Tucan mine has a resource of about 3.7 million ounces of gold.
Under the agreement announced last week, which is valued at $105 million, Beadell investors will receive 0.0619 common shares of Great Panther for each ordinary share of Beadell. The offer represented a 51% premium from the Sept. 21 closing price.
Upon completion of the transaction, existing Beadell and Great Panther shareholders are expected to own approximately 38% and 62%, respectively, of the combined company.
Great Panther was actually the first company to announce an acquisition during the Denver Gold Form, but the news was overshadowed after Barrick Gold Corp (NYSE: ABX, TSX: ABX)and Randgold said they would merge to form the world’s largest gold mining company with a market of around $18 billion.