In a moment, I'm going to share with you where I think you can acquire exposure to precious metals essentially for free. But first, let's dive into one new development that yields the first of five opportunities I will outline below.
"We wants it, we needs it. Must have the precious!"
Like Tolkien's gold hoarder Gollum, New Gold
But there's no split personality evident in the management of this golden growth sensation. New Gold has remained intently focused upon accelerated development of the Blackwater deposit in British Columbia from the moment it acquired the asset back in April. The $567 million transaction to acquire prior owner Richfield Ventures gave New Gold a nearly complete stake in the project, but this week the company made it clear it will settle for nothing less than 100% ownership of this rapidly expanding gold zone.
You see, just days before New Gold made its play for the Blackwater project, Richfield inked a joint venture agreement with fellow junior explorer Silver Quest Resources (OTC: SQIFF), granting Silver Quest a 25% stake in the northern portion of the project area. As New Gold's aggressive $20 million drilling program on the project for 2011 yielded substantial expansion of the deposits, Silver Quest saw its share of the resource grow to 0.56 million ounces of gold resource in the indicated category. Likely in anticipation of further expansion to come, New Gold opted to consolidate its interest this week with an all-stock bid for Silver Quest valued at about $121 million. Following this consolidation, New Gold's 30% stake in Goldcorp's
Gold for free?
Incidentally, Fools who enjoy receiving free exposure to gold and silver may wish to take a timely look at Silver Quest. The shares jumped, after Monday's announcement, to roughly the implied value of the assets that will transfer to New Gold (Silver Quest's 25% stake in the northern portion of Blackwater, plus another British Columbia exploration project called Capoose). However, in addition to New Gold shares, Silver Quest shareholders will retain a stake in the company's remaining exploration properties through a newly created "SpinCo." Starting out with roughly $15 million in cash, a 9.9% stake held by New Gold, and an array of promising exploration targets in British Columbia and the Yukon Territories, Silver Quest may yet warrant some attention as a means of acquiring New Gold shares along with what amounts to a free and precious bonus.
Even as folks continue to muse about how expensive gold may seem at prevailing prices, I find it astounding the number of means by which crafty investors can acquire access to gold and silver assets essentially for free.
Paramount Gold & Silver
With Taseko Mines
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of all the companies listed in this article: Brigus Gold, Goldcorp, New Gold, Paramount Gold & Silver, Silver Quest Resources, Taseko Mines, and Thompson Creek Metals. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool's disclosure policy is older and wiser than Gandalf the Grey.