TORONTO (miningweekly.com) – Gold junior Castle Gold continues to look for opportunities to grow by merger and acquisition (M&A) activity, CEO Thomas Atkins said on Friday.

Castle owns and operates the El Castillo mine, in Mexico, holds 50% of the El Sastre gold mine in Guatemala, and is exploring at a gold/silver/copper project in Mexico and on properties surrounding the El Sastre mine.

Last year, the Toronto-based company formed a special M&A committee, led by chairperson of the board James Plaxton, and the firm announced in March it had retained Gryphon Partners as its financial advisor to work with the special committee.

Castle is targeting gold companies that produce at least 50 000 oz/y, based in the Americas (and ideally Mexico, with expansion potential.

Options under consideration include mergers, acquisitions and strategic alliances.

Since the appointment of Gryphon, the process has become more defined and structures, and the company has talked to a number of different parties in the last two months, Watkins said.

“We have introduced ourselves to other companies, for them to consider a possible business combination.”

The company has seen some interest, “and hopefully something will come to fruition shortly”, he said.

SWING TO PROFIT

On Friday, Castle reported net earnings for the fourth quarter of C$1,8-million, compared with a C$1,5-million loss a year earlier.

Gold production during the period rose to 6 928 oz, 6% higher than the third quarter, and an increase of 164% compared with the fourth quarter of 2007, which did not include output from El Castillo.

Production at the mine rose 16% during the last three months of 2008, to 5 386 oz, but the gain was offset by a 19% decline in production at El Sastre, where Castle's share amounted to 1 542 oz.

The company reported fourth-quarter production costs of $447/oz, 272% higher than a year earlier, but lower than the $582/oz reported in the third quarter.

Shares in Castle Gold rose 1,45% on Friday, to C$0,70 apiece by 13:40 in Toronto.