Q: There are some rumours ABX will step in with a bid to takeover FM. I understand ABX has experience taking over mining companies shut down by 3rd World Governments. Then smoothing things over with the government leading to a re-start. FM certainly seems to be a candidate with their big debt. Not sure if the rumour is going to come true so I would take a pass for now. “Buy on Rumour, Sell on News” seems in this instance to be bad advice. However governments need some money coming in and their people need income too.
5i Research Answer:
ABX smells opportunity, for sure, and does have some experience in the area of smoothing problems over. In Panama's case, it is riskier. The people clearly do not want this mine operating. But, there is an election this year and anything might happen. Certainly the mine is very important to the country. But, based on events, we would not see a ABX takeover rumour (it is our understanding ABX has only spoken to FM investors so far) as reason enough to buy, after the recent price spike on the news.