NEW YORK (Commodity Online): Pan American Corp, the world’s second largest silver miner, has offered $1.5 bn in combined cash and stock deal to acquire Minefinders Corp which could set the trend in mining deals in 2012, accordign to Michael Lombardi, lead contributor to Profit Confidential, a popular online financial newsletter.
“Gold mining stocks and precious metals stocks did not perform very well in 2011, but that doesn’t mean there is no value in them,” says Lombardi. “Usually, when a sector like this is beaten down or forgotten by the market in general, value players come in and buy it up.”
Lombardi points out that large mining companies are sitting on a big pile of cash, ready to be deployed. Barrick Gold Corporation has $3.0 billion in cash, Newmont Mining Corporation over $1.0 billion in cash, and Goldcorp Inc. almost $1.5 billion in cash.
“In 2012, if the value investors in the gold mining industry don’t buy the gold mining stocks aggressively, the large gold mining companies flush with cash will.” says Lombardi.
Lombardi believes this will spur other hedge funds and asset managers to take a look at the mining sector more carefully and cause more funds to flow into the gold mining stocks, driving prices much higher.
“Why buy gold bullion when you can buy a quality gold mining stocks at a discount to the price of gold bullion?” asks Lombardi.
