There will be an unprecedented wave of merger and acquisition activity in the gold and silver space that will see junior miners and development companies victimized by factors beyond their control snatched up by senior and mid-tier producers making use of their healthy cash flows and stable balance sheets, according to a new report from Blackmont Capital.

"While there remain several junior companies with projects that are expected to ultimately be economic under the current gold price, a significant amount of upcoming mergers and acquisitions are likely to be done under the assumption that the gold price will increase in the longer-term," analyst Richard Gray said in a research note.

He said seniors like Barrick Gold Corp. and Newmont Mining Corp. are likely looking for immediate production, Kinross Gold Corp. is trying to fill in its growth gaps, and names like Goldcorp Inc., Yamana Gold Inc. and Agnico-Eagle Mines Ltd. are seeking to capitalize on strong cash flows.

At the same time, mid-tier gold producers like Eldorado Gold Corp. may be trying to pick off geographically strategic development projects, while names like Iamgold Corp. and New Gold Inc. trying to meet stated goals of growth through acquisition.

Junior producers like Semafo Inc. are also likely seeking more assets, with companies like Jaguar Mining Inc. expected to take advantage of its strong balance sheet and Northgate Minerals Corp. its strong cash flow, Mr. Gray noted.

Continued at Financial Post