John Rubino – Silver Fundamental Drivers, Multiple Silver And Gold Stock Takeovers, Searching For 10-Bagger Returns
John Rubino, [Follow John on his Substack https://rubino.substack.com/], joins me to discuss the fundamental factors behind physical silver, a few recent silver and gold takeover deals, nuances around M&A transactions for consideration, and speculation on which companies could be bought next.
We start off discussing the news out last week that Russia is adding silver to the metals it will be purchasing in its state precious metals fund, where previously it had only been buying gold, platinum, and palladium. There has also been an increase in silver buying from India, China, and other countries in Asia as an alternative to gold for wedding seasons and gifting, due to the price differential. Also, China also has steadily been buying silver for supplying its growing solar panel industry.
We review that many precious metals producers are quite cashed up, and while we saw very nice margins on their Q2 earnings reports; many market watchers are waiting see the numbers come in on both gold and silver producers Q3 earnings, to see if all their margin expansion will start tracking with generalist investors that filter companies for earnings momentum. Additionally, this may start fueling more of the senior and mid-producers to deploy this cash or their higher-valued paper to begin a bigger wave of merger and acquisition transactions.
We unpack the 2 latest high-profile larger premium silver M&A deals, with the acquisition of Gatos Silver (TSX: GATO) (NYSE: GATO) by First Majestic Silver (TSX: AG) (NYSE: AG), and SilverCrest Metals (TSX: SIL) (NYSE American: SILV) getting bought out by Coeur Mining (NYSE: CDE). This then morphed into a larger discussion on nuances around merger and acquisition transactions, what John looks for in companies that could be acquired. He shares his outlook for more transactions in the smaller producers, developers, advanced explorers, and also royalty companies.
This leads to comments about the recent takeover of Osisko Mining (TSX:OSK) by Gold Fields old Fields Limited (JSE: GFI) (NYSE: GFI) for their gold development project in Canada, and Filo Corp (TSX: FIL) (OTCQX: FLMMF) by both BHP (NYSE: BHP) and Lundin Mining (TSX: LUN) for their large copper project in Chile and Argentina, and if we’ll see more development-stage projects acquired by producers in the near-term. We both offer up speculations in which developers could be next, with our rationale for both Skeena Resources Limited (TSX:SKE)(NYSE:SKE) and Dolly Varden Silver Corporation (TSXV: DV) (OTCQX: DOLLF) as potential takeover candidates.
Wrapping up, John outlines why he is less concerned with a specific exit strategy or operational outcome, and why he is more concerned about seeking 10-bagger returns.
* In full disclosure, Shad is a shareholder Silvercrest Metals, Coeur Mining, Skeena Resources, and Dolly Varden Silver at the time of this recording.
Click here to visit John’s Substack to keep up to date on his market and economic commentary.
