GOLD STOCKS NEWS - Gold stocks fell on Wednesday, with the Market Vectors Gold Miners ETF (GDX) lower by $0.52 at $53.09 in mid-day trading. The S&P/TSX Global Gold Index, a basket of gold stocks traded in Canada, slid 6.91 points to 392.82. The gold stocks sector has been on a tear lately, as the GDX climbed 11.2% in August on the back of resurgence in the yellow metal. Year-to-date the GDX is higher by 14.9%, as gold stocks have continued to outperform the broader market indices.
While the sector as a whole has risen significantly, several individual gold stocks have posted returns far exceeding that of the GDX. One of the most prominent examples is Canaco Resources (CAN.TSXV), which has soared 333.9% year-to-date as it has made considerable progress with the delineation of a substantial gold discovery at its Handeni Gold Project in Tanzania, Africa.
This morning Canaco shares climbed as much as 8.5% to C$2.30 per share after the company announced the closing in escrow of the acquisition of 70% of the outstanding shares of Harvest Mining PLC, a private Ethiopian exploration company from Beijing Donia Resources Co. Ltd. The transaction is valued at C$11.4 million, and includes a combination of cash and stock. Under the terms of the deal, Canaco has issued 3,508,771 common shares and paid C$4 million to Beijing Donia Resources with the consideration held in escrow, pending delivery of closing documents and approvals from the TSX Venture Exchange. Release of the escrow is expected by September 30.
Canaco stated that it is considering its options for the acquisition, including a spin-off of Harvest’s Ethiopian assets, which include mixed mineral resource properties. The Canadian-based gold explorer would subsequently concentrate on the development of Harvest’s Tanzania assets, which include six exploration concessions - Nefasit, Hamlo, Terakimti, Adi Nebrid, Igub and Medri Felasi - covering 468 square kilometers. Each of the concessions is located within a region where several deposits have been previously discovered in central Eritirea, including the Bisha deposit (27M tonnes grading 2.08 grams gold and 1.8% copper per tonne) and the Emba Derho deposit (38M tonnes grading 1.08% copper, 0.18 grams gold and 9.31 grams silver per tonne.)
Commenting on the transaction, Andrew Smith, Canaco’s CEO, stated “The acquisition of Harvest by Canaco is a significant event in the corporate development of the Company and is consistent with the Company’s strategy of acquiring advanced exploration projects poised for discovery programs. Due diligence has confirmed the geological potential for the discovery of gold-enriched, polymetallic VMS deposits on Harvest’s properties is exceptional in the view of Canaco’s technical team.”
Other notable advancers bucking the trend of lower gold stocks included Freeport-McMoRan Copper & Gold (FCX), Gold Fields (GFI), and Yamana Gold (AUY). In mid-day trading shares of FCX, GFI, and AUY were higher by 5.5%, 0.8%, and 0.2%, respectively.
