Douglas C. Pizac, Associated Press
Shawn Snell runs detonation lines at Barrick Gold Corp.'s Ruby Hill gold mine in Eureka, Nev., in February 2006.

DENVER — A little more than two years ago, the co-founders of a small Canadian mining company unearthed a gold and silver deposit in southeastern Ecuador that industry experts believe is the most significant discovery in at least a decade.

That find has turned into a $1.2 billion bid for Aurelian Resources Inc. by Kinross Gold Corp., part of an industrywide buying spree that has accelerated as the market value of mining companies has tumbled.

The buyouts are expected to keep coming with major producers looking for new resources and investors seeking shelter from what has become a very volatile market.

Gold has hovered around $900 an ounce, silver around $16.50 an ounce and copper around $3.50 a pound in the past year, but the Toronto Venture Index, which includes mining companies, has fallen 35 percent at the same time, said Canaccord Adams analyst Wendell Zerb.

"Despite what could have been a great commodity price environment for junior mining, credit issues and economic concerns have overwhelmed all else," Zerb said Monday.

Major producers are now window shopping for smaller companies and new exploratory rights. A similar spate of deals has occurred in the coal industry, with a growing string of giant acquisitions centered on coking coal, a key raw material for certain steel mills.

Two banner deals in the precious metals sector include the Kinross-Aurelian Resources' union and Goldcorp Inc.'s $1.46 billion bid for Gold Eagle Mines Ltd., all Canadian companies.

"Both of those have a component of using the major's equity position so they're issuing stock ... an indication that they feel the value of their stock allows them to move in that manner," Zerb said.

Kinross would get control over Aurelian's gold, silver and base metals reserves in Ecuador's Cordillera del Condor region. The deposit, found by Aurelian co-founders Patrick Anderson and Keith Barton, has 13.7 million ounces of gold and 22 million ounces of silver, both inferred resources.

Aurelian's board has recommended shareholders approve the buyout, and Kinross has mailed details of the offer to shareholders. It expires Sept. 3.

But there are risks in the deal for Kinross, which also mines in the United States, Russia, Brazil and Chile.