When Acquisition Candidates Become Acquirers

Things are heating up

Normally, when you buy shares of a gold explorer, you hope for the following: The explorer keeps finding more gold and eventually publishes a maiden resource that attracts the attention of big miners in need of high-quality reserves. One of the latter then buys your explorer for a serious multiple of what you originally paid.

But sometimes it goes a different way, as when explorers leverage their growing but as yet unconfirmed resource to buy other properties. Because this involves the dreaded “dilutive financing” it risks spooking existing investors and (at least temporarily) tanking the stock. But not always.

In just the past week, two of our most successful explorers announced acquisitions. But instead of tanking, both stocks jumped. The implications are very interesting.