If you think consumers are frenzied about turning their gold into cash, consider the ongoing restructuring process at Teck Resources
Faced with few alternatives to reduce the oppressive debt burden incurred through the 2008 Fording Coal acquisition, Teck continues to slough off gold assets like some kind of molting serpent. This week, Alamos Gold announced a deal to acquire two gold-bearing properties in Turkey from joint venture partners Teck Resources (60%) and Fronteer Development Group
The cornerstone asset of Alamos Gold's portfolio is the Mulatos Mine in Mexico, which hosts 1.72 million ounces of proven and probable gold reserves and produced 151,000 ounces of gold in 2008. With the "bolt-on" addition of the two mine development subsidiaries in Turkey, Alamos is targeting near-term production from the more readily accessible oxide resources of 2 million ounces of gold and 13.7 million ounces of silver.
Additional treasure may lie in the sulphide deposits below the near-surface oxides. With Eldorado Gold
At an acquisition cost of about $40 per gold equivalent ounce (GEO) for the oxide resource alone, the deal appears to value known assets similarly to Teck's prior sale of the Lobo Marte mine to Kinross Gold
For Fronteer Development Group shareholders, this deal provides a welcome cash infusion to promote the company's development of America's next top gold mine: the Long Canyon project with its estimated 64% internal rate of return. While Fronteer's outlook has improved dramatically since I spoke to CEO Mark O'Dea in September 2008, the share price has lagged the sector's recovery to a surprising degree.
Stay tuned, Fools. Consolidation activity continues to heat up within the precious-metals sector, signaling that industry participants may be keen to pounce upon growth during any pauses, like the one under way in gold's recently relentless climb.
