When Gold Standard Ventures announced on February 1 that Goldcorp would be investing CA$16.1 million for 9.9% of the junior’s shares, industry watchers took notice. In this analysis written exclusively for Streetwise Reports, Thibaut Lepouttre, editor of Caesars Report, speculates on why the major acted when and where it did, and what it might mean for the future.
Good news travels fast, and whenever a gold exploration company is able to raise a decent amount of cash in the current market circumstances, the market’s ears usually perk up. Enter Gold Standard Ventures Corp. (GSV:TSX.V; GSV:NYSE). Not only was this Nevada-focused gold explorer able to attract CA$16.1 million (CA$16.1M) in new funding, this placement was also conducted at a premium to the market price (16% above the 20 day Volume Weighted Average Price [VWAP]) and allowed senior producer Goldcorp Inc. (G:TSX; GG:NYSE) to initiate a relatively large stake in Gold Standard.
I would like to take a moment to explain the importance of not just being able to raise cash at a premium, but raising it from one of the industry’s most respected companies. Goldcorp usually has a conservative investment approach and the company most definitely isn’t acquiring stakes in companies on a daily basis. In fact, Goldcorp has been selling some non-core assets in the recent past, but now seems to be in buying mode again.
So what exactly attracted Goldcorp to make this investment?
First, one could immediately point to the flight towards safety-paradigm as several larger producers are falling back on North American assets to reduce the exposure to geopolitical risk. However, those companies usually start by consolidating assets in the regions where they already have a presence, and as Goldcorp has no activities in Nevada, one cannot consider the stake in Gold Standard to …read more