Junior gold miners listed in London have had a good run since the start of the year, outperforming the bullion comfortably in most cases, notes broker Liberum.
Endeavour is up 22% and Centamin 35%, though Caledonia has disappointed as it hit some unexpected problems at its Blanket mine in Zimbabwe.
After those gains, Liberum says it is time to take some money off the table with Endeavour’s rating downgraded to hold and Centamin to sell.
Caledonia has fallen back but has recovery potential if the problems are one-offs as the company has indicated.
Liberum also said it expects the outbreak of M&A in the gold space to continue following a rash of deals over the past few weeks.
Perseus Mining muscled into the OreCorp deal and Alamos Gold announced its acquisition of Argonaut Gold, while Tietto recommended against a revised offer from Zhaojin.
Capital Karora Resources and Westgold Resources have agreed to merge while Shanta Gold delists next month after the offer from Saturn Resources.
Endeavour is unlikely to be involved at the stage, believes Liberum, though Centamin has a more pressing need given recent exploration results.
Caledonia’s current low rating might attract a bid, adds the broker.