Junior Gold Producers May Get Boost from M&A Activity

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...with valuation levels so much lower, investors are surely hopeful that the bottom has arrived. One factor that could provide a boost is increased M&A activity

The average value of non-producing gold companies relative to their resources fell to a new low last week when gold dipped to $772 per ounce, but this could prove to be a “low water mark” for the group.

For the 40 or 50 junior gold miners RBC Capital Markets has tracked for the past couple of years, the average adjusted market capitalization per total resource ounce has fallen to $26 per ounce from $43 in early June, and declined as low as $24 last week. The group average has typically fallen in the range of $50 to $75, analyst Michael Curran told clients.

So with valuation levels so much lower, investors are surely hopeful that the bottom has arrived. One factor that could provide a boost is increased M&A activity...

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