The Backdoor Entry: Why Majors Buy 10% Stakes Years Before 100% Takeovers

Alright, the usual disclaimer: no one can predict with absolute certainty that a junior miner will be acquired.

But as I’ve highlighted over the last few editions, there are ways to put the odds in your favour.

And, not surprisingly, I think the best place to start is the geology!

In our last edition, I highlighted the deposit size as the #1 factor to look for in a potential acquisition target.

So, what comes next in my acquisition checklist?

Selection Criteria #2: Strategic Purchase

The next item to look at is the company’s share registry. Does the junior have a big-name miner on the list?

In other words, has a larger mining outfit purchased a ‘strategic’ 5%,10%, or even 15% stake in the company?

Strategic purchases often occur years before a takeover bid. But these little bites clearly signal an interest in the company.

While it’s not always possible to find stocks hitting this criterion, you’ll have tangible evidence that the junior holds a sought-after asset when you do.

A project being closely examined by a larger player.

So, when does a strategic purchase turn into a full-blown takeover deal?

Typically, it’s rising commodity prices that prompt strategic bites to become takeover deals.

As commodity prices rise, the risk of another player entering the market increases. That also means the premium required to secure an offer will also increase.

Rising commodity prices are the spark that ignites mergers and acquisition deals.

This is something to be aware of in today’s market, which is why I’m profiling this special series ahead of 2026.

So, why do the majors take these strategic purchases before a full-blown takeover?

From my experience as a geologist, I’ve seen a few of these deals take place; strategic investments from a major often start a line of communication between the bigger and smaller companies.

Major mining firms hold large teams of technical experts… They possess vast technical resources that aren’t available to junior miners.

I’ve found that geologists working at these smaller companies tend to collaborate closely with the technical teams, which means sharing vital data.

But it’s not a one-way relationship…

Through collaboration and sharing of expertise, the major gains a greater insight into the project and whether a future acquisition makes sense.

In other words, it offers a backdoor entry into understanding the project held by the junior mining company.

It allows the bigger firm to identify any risks that weren’t apparent ‘from the outside.’

Of course, any strategic purchase from a major company must come with a carefully worded agreement that permits the sharing of company-sensitive data…

This is all the fine print of these deals.

This is something I look for when I do my own due diligence.

Stay tuned for more junior investment strategies next week!

Until then.