Stocks Digest LLC

Stocks Digest LLC

October 08, 2012 10:28 ET

What M&A Trends Could Mean for Junior Miners and Santo Mining Corp. (SANP)

NEWARK, DELAWARE--(Marketwire - Oct. 8, 2012) - For the past few years, gold miners have underperformed the soaring price of gold-despite relatively bullish earnings and profitability. Senior miners are sitting on an extraordinary surplus of cash, such as Newmont Mining (NEM) with $2.03 billion on their balance sheet. At the same time, Kitco.com commented last week that "Some junior miners are cheaper now…than when gold was $600 an ounce." Timing is crucial, and a variety of factors could portend an increase in merger and acquisition activity.

In a recent report, consulting and accountancy firm PWC noted that, although market anxiety led to a decrease in M&A during the first half of 2012, most miners are in better financial shape than during the worldwide financial crisis of 2008-09. As a result, the firm expects lower valuations, higher gold prices, and the hunt for new untapped resources to return the vigor to M&A activity going forward.

The market is pointing toward the accuracy of the prediction. Just in the past few weeks, B2Gold Corp. agreed to buy CGA Mining Ltd. in a deal worth $966 million; Yamana Gold (AUY) announced an agreement to acquire all issued and outstanding shares of Extorre Gold Mines Limited for about $404 million; Eurasian Minerals merged with Bullion Monarch Mining; and China's state-owned miner, China National Gold, entered into preliminary talks to buy a stake in one of Africa's largest gold miners, whose parent company is the world's biggest gold producer. In the largest takeover bid of the year, Glencore International Plc has a pending offer on the table for $35.5 billion for Xstrata Plc.

Particularly among the junior miners, many analysts believe stock valuations have been suppressed and do not reflect fundamental value. With senior miners looking to deploy capital and shore up their precious metals reserves for the future, without the expense and time consumption of exploration, the situation could be promising for the junior set.

Among those that could benefit is a small junior gold exploration firm called Santo Mining Corporation (SANP). The company already counts several of the majors among its neighbors in the Dominican Republic, where it has secured three claims in and around the region that also contains the world-class Pueblo Viejo mine, which has proven and probable reserves of 25.3 million ounces of gold.

All the factors point to promise among the junior golds, with no end in sight to rising gold prices catapulted by a new bout of quantitative easing from the U.S. Federal Reserve, and defensive gold purchases by banks and consumers around the globe. Santo Mining, by digging in at one of the world's prime gold belts, could be in exactly the right place at the right time to be a prime acquisition candidate.

About Santo Mining Corporation

Santo Mining Corporation is an aggressive junior minerals exploration and development company, based in the Dominican Republic. The company is actively acquiring and exploring its properties, which are strategically located in the prolific and highly prospective Hispaniola Gold-Copper Back-Arc area in the Dominican Republic. A detailed description of the Company's activities is available at SantoMining.com.

Further information on the Company and its filings can be found at www.sec.gov

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