Gold M&A Spree Is All About Companies With One Big Deposit
Comment of the Day

December 16 2019

Commentary by Eoin Treacy

Gold M&A Spree Is All About Companies With One Big Deposit

This article by Elena Mazneva and Thomas Biesheuvel for Bloomberg may be of interest to subscribers. Here is a section:

“If there were no issues with these mines they probably would have been taken out a long time ago, or even before they came into production,” said James Bell, an analyst at RBC Capital Markets. “It gives the mid-tier miners an opportunity to get hold of large assets.”

There has been constant talk about more deals in the past year after Newmont Mining Corp.’s $10 billion acquisition of Goldcorp Inc. and Barrick Gold Corp.’s $5.4 billion takeover of Randgold Resources Ltd.

Takeover targets being mentioned include Pretium Resources Inc. and TMAC Resources Inc., which mine in Canada, said Peter Grosskopf, chief executive officer of money manager Sprott Inc. Torex Gold Resources Inc., which operates in Mexico, has also been touted as a potential target, he said.

Eoin Treacy's view

Gold miners are still shy about spending money on speculative greenfield projects and perhaps more importantly banks are not exactly enthused at the prospect of funding commodity speculation after their experience of the last few years. That means acquisitions are the only way right now to boost supply meaningfully for individual miners and the reasonable valuations still present in the sector lends some urgency to decisions.

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