Premier move

Premier Gold Mines (PG) is a junior gold miner from Northwestern Ontario with assets in Red Lake and Geraldton, they made an interesting move last week by grabbing a slew of properties in the Geraldton area from Lac Properties Inc. (Barrick owned company). They did the deal for about half a million shares and a couple million dollars. Why is this so interesting? Well, besides the fact that it's done right in the middle of a mining crash there are a couple of things to consider.

PG is in a 49-51 joint venture with Goldcorp in Red Lake and are stuck spending million of dollars, whether they like it or not, on the Rahill-Bonanza property. Goldcorp is operator and PG has to pay half the cost of whatever they decide to do, which at this time happens to be quite a bit. That's not necessarily a bad thing, you have a major like Goldcorp doing quality advanced work on your ground, but when financing is tight it can be harder to come up with the capital to fund the work. Now when you forecast financing to be tight in the coming years, the last thing you want to do is throw your money around at new properties, what you're seeing nearly every other junior out there do is hunker down and conserve cash, not spend it by aquiring new stuff. Goldcorp doesn't need to do financing to raise cash, the world's richest gold mine is literally 3 kms from Rahill-Bonanza, it can keep on trucking and charge half the bill to Premier for a long long time if it wants to.

So, what does this all mean? Goldcorp has become very defensive of the Red Lake area, with the recent aquisition of Gold Eagle Mines, Premier is probably looking pretty tasty for them. Goldcorp is probably looking at taking PG's Red Lake assets, this means PG could survive with fresh cash and continue work on it's Geraldton properties, before they only had a bit of land, not enough to prop up a company with, now with the new ones they got last week...they have enough.

Time will tell.