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

First Quantum Minerals saw its first-quarter profit plunge 94 per cent to $10.9 million or $0.16 per share from $182 million or $2.68 per share in the first quarter of 2008. Lower copper prices resulted in a 48 percent drop in revenues to $268.2 million. Copper production came in at 89,440 tonnes, up some 18 percent and gold output hit 50,425 ounces. Cash costs were an enviable $0.97 per pound. First Quantum ended the day down C$4.39 at C$45.11.

Gammon Gold (NYSE:GRS) reported first quarter earnings of $2.6 million, or $0.02 per share, compared with the $8.5 million, or $0.07 per share booked in the same period in 2008. The earnings were hit by one-time charges. Gold production came in at 36,829 ounces and silver output tallied 1,351,300 ounces. Gammon ended the day down C$0.77 at C$8.35.

Every single subsector of the exchange closed in the red suggesting a very broad based selloff. We shall see what Thursday trading has in store.

Source: Resource Stock Roundup:Thursday, May 14th, 2009

In a reversal of fortunes, Western Canadian Coal will loan up to $36 million to its major shareholder to Cambrian Investment Holdings, a wholly owned subsidiary of Cambrian Mining PLC. Cambrian will use the funds to repay its financing facility with Investec Bank. Western ended the day up C$0.17 at C$0.88.

NovaGold Resources (AMEX:NG) wasted little time in raising much needed capital. The cash-starved company inked a deal to sell just over 46.1 million units at $1.30 each for gross proceeds of $60 million. NovaGold ended the session up C$0.13 at C$1.90.

Meanwhile, New Gold (AMEX:NGD) has placed its Amapari mine in Brazil on temporary care and maintenance due to cost factors. New Gold ended the day at C$1.61 for a C$0.16 loss.

Dynamite Resources added C$0.005 to close at C$0.10 after the junior announced that Blue Note Mining acquired an additional 12.5 million shares of the cash-rich company.

Uranium players generally had a good session with junior JNR Resources adding C$0.155 to C$0.445 and Strathmore Minerals adding C$0.15 to close at C$0.44.

As expected Friday marked a slow trading day as most investors do not get back to their computer screens until Monday. That said, the buy side interest is encouraging. We will see what Monday trading has in store.

Source: Resource Stock Roundup: Monday, January 05th, 2009