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    Meridian Cold to Yamana’s Bid, What’s Next?

    By Stock Charts | July 3, 2007




    After announcing a three way deal involving Meridian Gold (MDG) and Northern Orion Resources, Inc. (NTO) last Thursday, Yamana Gold Inc.’s (AUY) shares plummeted more than 8% from Wednesday’s close at 12.14 to a close of 11.12 on Thursday. Under Yamana’s proposal, Meridian shareholders would receive 2.235 Yamana shares plus 3.15 Canadian dollars in cash. Meridian’s shares leaped 17% on the news. However, Meridian has recently responded to Yamana’s bid with a cold shoulder, saying:

    Yamana Gold Inc.’s unsolicited proposal to buy the company is not a formal offer and provides no basis for talks.

    Meridian said its board would review any formal offer from Yamana. But Meridian added the complexity of Yamana’s proposed transaction could create more risks and uncertainties.

    Source (Forbes.com)

    A quick look at Yamana’s stock chart shows a pretty bleak picture:

    Yamana Gold AUY Stock Chart

    Here’s a look at the stock chart for the price of gold:

    Gold Market Stock Chart

    In both stock charts it looks like support has become resistance and the upwards trend has been broken. This is especially true in Yamana’s case as the weakening price of gold was further augmented by the negative news. While Yamana may recover in the immediate future, it appears to me that Yamana is not yet poised to make a recovery.

    I have been an investor in AUY for quite some time now but I feel that the weakening stock makes it a difficult position to hold in the short term. Other metals/mining companies that I’ve been watching that have been similarily affected include Tanzanian Royalty Exploration Corp. (TRE), Goldcorp Inc. (GG), and AngloGold Ashanti Ltd. (AU)

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