Fool's Gold Report: Goldcorp Keeps Pursuing Osisko Despite Rival Yamana Bid

Thursday's action in precious metals markets looked eerily familiar to bullish investors, as yesterday's gains gave way to pullbacks for gold and silver prices. Although platinum-group metals gained ground, SPDR Gold Shares (GLD 0.52%) and iShares Silver Trust (SLV 0.98%) both followed their respective metals downward, as SPDR Gold Shares fell 0.25%, while iShares Silver Trust declined a more dramatic 0.6%. Miners dropped, as well, but that didn't stop Goldcorp (GG) from continuing to seek its acquisition of Osisko even as Yamana Gold (AUY) stepped in to buy a 50% stake in Osisko's lucrative mining assets.

How metals moved today
June gold futures fell more than $6 per ounce Thursday to settle at $1,284.60, performing worse than SPDR Gold Shares and its spot-price focus. Silver's drop was also more extensive on the futures markets than in iShares Silver Trust's drop, with May silver down $0.245 to settle at $19.805 per ounce, giving up the $20 level, once again.

Source: Kitco. As of 4 p.m. EDT.

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

Macroeconomic factors have been the primary focus for gold traders this week, and today was no exception. Even as investors look forward to Friday's report on U.S. employment in March, economic conditions overseas have had a somewhat negative impact on the yellow metal in world markets. Specifically, the European Central Bank has appeared increasingly worried about the sluggishness of the eurozone economy, with particular emphasis on the lack of inflation in the figures the ECB tracks. Expectations of a period of low interest rates for the Eurozone pressured the euro against the U.S. dollar, in turn making gold more expensive in euro terms, and helping to drive some prices down. Similarly, China's government added new spending on infrastructure projects, emphasizing its own economic troubles.

Absent a big move in spot prices to move shares of bullion ETFs like SPDR Gold Shares or iShares Silver Trust, the latest moves from Goldcorp in its pursuit of Osisko got a lot of attention Thursday. Last night, Yamana agreed to spend $1.24 billion to buy a 50% stake in all of Osisko's assets, including its promising Marlartic mine in Quebec. The deal would involve about $400 million in cash, and 95.7 million Yamana shares, but it would also have Osisko enter into a gold-streaming arrangement with Quebec's main pension fund and get more credit financing from another Canadian pension fund.

Yamana's move will require Goldcorp to consider its next move carefully. On one hand, Osisko shareholders might prefer a deal that would allow the company to retain its exploratory assets, which the Yamana asset sale is more likely to accomplish. Yet, other factors have come into play, including the political consideration of Goldcorp's British Columbia headquarters versus Osisko's plans to stay in Montreal if the Yamana deal goes through.

What's increasingly clear is that, even with metals prices at low levels, good deals will be hard to come by. That puts Osisko and similarly situated companies in a commanding position to name their terms and try to make would-be acquirers come to them.