TORONTO ( – While Aurizon Mines, which reported a 211% increase in fourth-quarter net profit to C$21.8-million on Thursday, and has five or six companies it is considering buying, it has itself received informal approaches regarding potential mergers, CEO George Paspalas said in an interview.

If due diligence and valuation negotiations were successful, the TSX-listed miner could close an acquisition in the short term, he told Mining Weekly Online.

Aurizon has been hunting for acquisitions since at least 2009 under previous CEO David Hall, who became chairperson in October last year, but has struggled to find anything that fits its picky criteria. To receive the company’s interest, a target would have to be producing around 120 000 oz/y, and at similar profit margins to Aurizon’s flagship Casa Berardi mine in Quebec.

“We’ve looked hard, I can tell you that,” Paspalas said, speaking in a telephone interview from the firm’s Vancouver headquarters.

But finding a company that meets its criteria and is also a willing seller with reasonable price expectations has been difficult.

This has prompted Aurizon to shift its focus from producing mines to near-term projects.

“There are a lot of companies out there...that are at a point where they have a pretty good project, but they don’t have any cash – and the shareholders are saying ‘enough’s enough’ in terms of dilution,” commented Paspalas.

That is where Aurizon’s cash flow, a C$213-million treasury, and mine-building experience can potentially step in.

“We have five or six opportunities in our grade one category,” he said, adding that one of these could close in the near-term if there weren’t any pitfalls in the technical due diligence or price negotiations process.

“We’ve got a team of people working on it all the time, and they’re churning through a number of opportunities.”

While gold prices have climbed for 11 years in a row, market volatility and new banking legislation has dried up a lot of traditional funding for juniors hoping to build mines.

Earlier this month, speaking at the Prospectors and Developers Association of Canada 2012 convention, Franco-Nevada CEO David Harquail said “pretty much all the European banks have now dropped out of mining finance, in terms of project loans”.

Volatile equity markets and a flight from risk have also made equity financing prohibitively dilutive.

While Aurizon combs the North American gold junior landscape for possible deals, the company itself has been on others’ radar screens too.

“Some people have talked to us about getting together...but we’re very conscious of not destroying quality,” said Paspalas.

“We keep a pretty well-oiled valuation model of ourselves in our back pocket all the time so we are aware of what our value is.”

Again, Aurizon is loath to dilute its high-margin production at Casa Berardi – which produced gold at $498/oz in the fourth quarter – with gold being mined at above $1 000/oz at another company’s operations.

Aurizon has been an analysts’ darling in the past for keeping costs so low at Casa Berardi, where the miner last year managed to reduce total cash costs gradually in each of 2011’s quarters.

Costs are likely to rise in 2012, though, as the company expects to develop smaller stopes – which comes at a relatively fixed cost, regardless of the size.

The Casa Berardi operation, Aurizon’s only producing asset, is set to produce 155 000 oz to 160 000 oz this year, at total cash costs of around $600/oz. That compares with 163 845 oz at $537/oz in 2011.

The company expects to publish a feasibility study at its Joanna project, also in Quebec, during the second quarter, and Paspalas flagged the likelihood of significant increases in capital and operating costs from the 2009 prefeasibility study.

While it was too early to make projections as to how much costs might increase, the change would largely be owing to a new project scope.

For example, Aurizon has about-doubled resources at Joanna since the prefeasibility study, allowing for a longer-life mine, and has also decided to mill the ore at the property and install an autoclave.