Gold rally spurs industry M&A deals in first quarter as unprofitable, marginal mines become viable again
- Global M&As involving gold miners jumped five-fold in the first six months to 279 from a year earlier, according to data compiled by Refinitiv
- Political tensions with western governments are forcing Chinese miners to look at targets in Africa, Central Asia and South America, law firm says
The number of global M&As involving gold miners jumped five-fold in the first six months to 279 from a year earlier, according to data compiled by Refinitiv. The value, however, shrunk by two-thirds to US$6.3 billion, as the prior-year sum was skewed by the US$10 billion Goldcorp-Newmont merger that created the world’s largest producer.
“The surge in deal flow was a better indicator of this year’s industry sentiment,” said Samson Li, a senior precious metal analyst at Refinitiv. “Many industry executives are bullish on gold prices and have been eager to do acquisitions.”
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Many of the M&A deals in the first quarter involved mines with high operating costs, preceding a bullish run on the yellow metal. That suggests investors were betting on higher selling prices to allow them to run profitably again, Li noted.
South Africa’s Harmony Gold, which February agreed to buy all of AngloGold Ashanti’s mines – including one of the world’s deepest and most challenging – for US$300 million, saw its share price jump 75 per cent in the past month.
