this is from david galland of casey research. anecdotal evidence aside, he makes the point that 90% of the major mining companies will be making an acquisition in the next two years, as they have plenty of cash and nowhere else to go to find more reserves.

As I have reported here, the larger producing companies, desperately needing to replenish their falling reserves and finding few new deposits on their own, need the quality exploration and development projects now in the possession of the micro-cap juniors such as we follow in our International Speculator service.

A study by Ernst & Young as reported by Peter Cooper’s Weblog confirms the point…

A study published yesterday by top accountants Ernst and Young reported that almost half of the large mining companies interviewed need to make acquisitions to meet aggressive growth targets and a thumping 90 per cent said they will make an acquisition in the next two years.

Undervalued junior gold explorers and small producers are likely targets and the big mining companies are by contrast well capitalized and ready for assimilating takeover targets.

”The global mining sector is flush with cash right now, and there’s a strong appetite for more transactions,” Tom Whelan, Ernst and Young’s Canadian mining leader told The Canadian Press. “Companies in Canada and the U.S. are attractive targets because most companies in North America have a single metal focus. This makes them neat strategic acquisitions.”

Underscoring the point, Casey Research Senior Analyst Louis James wrote this week about a conversation he just had with the head of a well-endowed junior (they are sitting on 8 million ounces of gold and counting) currently being followed in the Casey Investment Alert. According to Louis? email?

[The executive]… said that even though the majors still talk about not being interested in anything less than 5 million ounces, they are, in fact, looking at anything over 2 million ounces (which fits with Barrick backing into Atna's Pinson project).

They aren't buying yet, but they are looking hard, getting ready. He says the technical people from the majors aren't just looking at data; they are in the field, doing preliminary engineering guesswork. The majors' boards are full of bankers, not miners, and they are willing to pay more to reduce risk.

While it may seem to some that the majors are absent from the market, they aren’t. It is just that they had to get their own financial houses in order before they could begin to internalize the idea of regrowing their businesses after the devastating 20-year bear market in gold.

When they start to act, which we suspect will be soon, on the higher-quality plays we regularly recommend in our services, it will be like a piñata party, with everyone scrambling to pick up the best candies, applying a little elbow work if necessary to win out.

http://caseyresearch.com/drpRoom.php...