No news is good news: Aurizon up 10%
Aurizon Mines (TSE:ARZ) jumped more than 10% on Wednesday despite the absence of fresh news. The cash-rich Quebec miner earlier this month announced a record year for gold production and strong growth prospects.
2012 is expected to be a particularly busy year for gold M&A activity as the majors seek out new supply and most of the companies in the sector throw off cash.
By 1:30pm the Aurizon was trading at $5.42, up 9.7% after earlier trading at $5.47. The number of shares traded had already exceeded the daily average.
The Vancouver-based company said it achieved a record 163,845 ounces in 2011 from its Casa Berdi gold mine in Quebec, up 16% from 2010.
It anticipates 2012 gold production to be in the neighbourhood of 155,000 to 160,000 ounces. Cash costs for the year are expected to be about US$600 per ounce.
Said George Paspalas, CEO: “An estimated $210 million in cash at year end, continued strong cash flow from Casa Berardi into the future, and an undrawn $50 million credit facility provide Aurizon with the flexibility to fund capital and exploration projects whilst maintaining a strong financial position.”
Last week The Gold Report spoke to Rick Mills about gold juniors and the potential for a takeover deal between Aurizon and NioGold:
TGR: Any more juniors that you’d like to talk about?
RM: I really like NioGold Mining Corp. (NOX:TSX.V; NOXGF:OTCPK), which is focused in Quebec. These people at NioGold are smart. They can put land packages together, and they have. And look at the deal that they’ve done with Aurizon Mines Ltd. (ARZ:TSX; AZK:NYSE.A). Aurizon right now can earn 65% interest in NioGold’s Marban Block property, an initial 50% by spending $20M over three years, completing an updated NI 43-101-compliant mineral resource estimate, which will be done this March, and then making a resource payment for 50% of the total gold ounces defined by that resource estimate.
So far, Aurizon has completed a first phase, drilling 50,000m, spending $6M and identifying two new gold zones. The second phase will be a $5M, 34,000m diamond drill program, updated resource estimate and basic technical studies this year. If it sees what it needs to see in the resource estimate—and I don’t see why it won’t, because it already has two new discoveries—it just doesn’t make sense for Aurizon to do a third year, buy those ounces and carry NioGold with it to production. Instead, I would think that Aurizon would buy NioGold out as soon as it gets a feel for what’s there.
TGR: Aurizon certainly has the capability to do that. It’s had so much success with building the resource base at the Joanna gold project. So yes, that’s very logical.
RM: And the thing about NioGold is it is fully cashed up. It has lots of money in the treasury. It is also going to have this resource payment. And it has a discovery right beside Osisko Mining Corp.’s (OSK:TSX) Malartic deposit. It also looks as if NioGold has the extension of the Marban deposits, Marbanite and Norbenite, on its 100%-owned block of ground just north of where Aurizon’s drilling. So, NioGold has immense blue-sky potential as well as the deal with Aurizon.
TGR: With the stock trading at around $0.35, NioGold would seem to be a bargain at this point.