C$550 Million Deal Unable to Lift Gold, Silver Shares

Gold and silver stocks remained in negative territory on Monday afternoon as precious metals turned modestly lower.  After opening near unchanged, the Philadelphia Gold & Silver Index (XAU) fell by 1.3% to end the day at 178.71.

COMEX gold futures settled unchanged at $1,730.90 per ounce, but subsequently dipped to as low as $1,726.00 in electronic trading.  Silver futures ended with a loss of $0.09, or 0.2%, at $32.52 per ounce at the COMEX and later retreated to $32.25 per ounce.

The slight weakness in precious metals came as the U.S. dollar inched higher against a basket of the world’s most traded currencies.

Notable XAU components in the red included Eldorado Gold (EGO) and Silver Standard Resources (SSRI) – which slid by 2.3% to $14.57 and by 2.6% to $14.45 per share, respectively.

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(Rankings and analysis of every XAU component available at GoldAlert Pro – http://pro.goldalert.com)

Gold and silver equities were unable to rally in spite of the latest multi-million dollar acquisition in the sector.  Osisko Mining (OSK.TSX) announced that it has come to an agreement to purchase of Queenston Mining (QMI.TSX) for approximately C$550 million.  Queenston owns one of the largest land areas in the Kirkland Lake region of Ontario, Canada – including stakes in ten gold deposits that contain current and historic mineral resources.

The friendly acquisition is an all-stock transaction whereby Osisko will offer 0.611 shares of OSK.TSX for each share of QMI.TSX – which represents a price of C$6.00 per share and a 45% premium to the volume-weighted average price of QMI.TSX over the past 30 days.

On Monday afternoon, shares of Queenston Mining climbed by 13.0% to C$5.66 while OSK.TSX dropped by 7.9% to C$9.04 per share.

While the deal has been approved by both companies’ boards of directors, due to the location of Queenston’s assets being in a relatively-high politically safe region, several analysts noted that a rival bidder could emerge.  Stifel Nicolaus analyst Craig Stanley cited Agnico-Eagle Mines (AEM), AuRico Gold (AUQ), Gold Fields (GFI) as possible suitors.