Small cap resource stocks have been absolutely trashed over the last 12 months. Many companies are running out of cash as well as credit and some are closing their doors. It’s Darwinism at its’ finest. The strongest companies, those with world-class management, strong balance sheets, and access to capital will survive and prosper. Those with little cash on hand, shaky prospects, and inexperienced management will disappear.  And now is the time to take positions in the most promising leaders who are positioned to directly benefit from the ongoing financial chaos.

A merger and acquisition mania is now underway. Take a quick look at some recent announcements:

• Canadian Gold Hunter (CGH:Toronto) is taking over Sanu Gold (SNU:Toronto).
• ATW Gold (ATW:Toronto) is merging with Kinbauri Gold (KNB:Toronto).
• New Gold (NGD:US) is combining their business with Western Goldfields (WGW:AMEX).
• IMA Exploration (IMR:AMEX), Kobex Resources (KBX:Toronto) and International Barytex (IBX:Toronto) are working on a merger.
• Linear Gold (LRR:Toronto) recently acquired GLR Resources (GLR:Toronto) Goldfields Project.
• Geoinformatics Exploration (GXL:toronto) is acquiring Rimfire Minerals (RFM:Toronto).

This is just for starters. The primary point I’m making is that M & A activity is on a massive upswing. This is rapidly changing the complexion of the sector and creating fabulous opportunities for investors.

This environment is ideal for selecting and riding the best run companies as the precious metal bull market continues to unfold. The companies leading the charge in this consolidation will emerge from this process stronger than ever. There are numerous advantages for shareholders:

• A superior management team typically results.
• Synergies are created.
• Overhead costs are lowered.
• The portfolio of properties and projects are increased which improves company diversification.
• More dollars are allocated for the most promising exploration targets.
• Larger companies attract the buying power of heavyweight financial institutions.

“Super Juniors” are being created. Companies with cash are marrying companies with exceptional projects in need of funding for advancement. Producers are gaining access to more reserves. Key technologies are being shared. These are clearly win-win situations.

We have long been acquiring the companies acting as resource consolidators in my Resource Windfall Speculator advisory. They are snapping up distressed bargains across the globe. Cash and connections are tough to beat these days.

Yes, size does matter. So does staying power. Personal fortunes will be made by savvy investors who now hitch their wagons to the talented and aggressive management teams constructing companies that will grow and dominate in the coming years and decades.

There is nothing quite like owning an un-expiring lottery ticket!

Source:  M & A: Resource Style

IMA Exploration (AMEX:IMR), Kobex Resources and International Barytex Resources are looking to do a three-way deal that would create a mineral exploration company with around C$44 million in cash. The merger value will be based on each company’s working capital. A rough calculation shows that IMA is worth C$0.40 per share, Kobex is worth C$0.53 per share and International Barytex about C$0.09 per share. Interestingly, IMA closed down C$0.015 at C$0.32, Kobex closed up C$0.06 at C$0.445 and Barytex closed up C$0.045 at C$0.0115.

Fancamp Exploration tabled an indicated resource of 84,000 metric tons grading 42.4% iron, 10.7% titanium dioxide, 1.6% chromium and an inferred resource of 201,000 metric tons running 42.1% iron, 10.6% titanium dioxide, 1.5% chromium on its 48.64% owned Magpie titaniferous magnetite deposit in Quebec. Fancamp closed up C$0.19 at C$0.85.

Given that it’s past the middle of July and the junior board has not rolled over, the summer trading action looks rather favorable. We shall see what Monday trading has in store.

Source: Resource Stock Roundup:Monday, July 20th, 2009

Southwestern Resources and Geoinformatics Exploration are looking to merge in a deal that would see Geoinformatics get 0.6 of a Southwestern share for each Geoinformatics share held. Southwestern ended the session down C$0.015 at C$0.235, while Geoinformatics closed unchanged at C$0.18.

On the drill front, cash rich IMA Exploration (AMEX:IMR) tabled the results from the Island Copper project in British Columbia. Highlights included 238 metres running 0.61 gram gold and 0.08% copper. IMA ended the day down C$0.02 at C$0.30.

North American Tungsten added C$0.03 to close at C$0.175 after the company announced that a bankable feasibility study over its MacTung deposit in the Yukon generates an internal rate of return of 23.5% and has a pretax net present value at an 8% discount of $277 million.

Eldorado Gold (AMEX:EGO) is a company to watch, having its shares halted from trading at C$11.64 pending news. Financing or takeover?

Hold onto your hat because it looks like the next leg down has started and the bottom appears to be nowhere in sight. We will see what Tuesday trading has in store.

Source: Resource Stock Roundup: Tuesday, February 24th, 2009