Gold Industry Takeovers Climb to Highest in Three Years – by David Stringer (Bloomberg News – August 4, 2014)

There’s no sign of a let up in gold industry takeovers as a surge in acquisitions by producers, led by Agnico Eagle Mines Ltd. (AEM) and Yamana Gold Inc. (YRI), has pushed deals to a three-year high.

Mid-sized and small producers are seizing on assets discarded by larger competitors as they trim portfolios to focus on their most profitable operations after gold last year notched up the biggest annual drop in more than three decades.

“The hunters have feasted for the last six months,” said Raleigh Finlayson, managing director of Saracen Mineral Holdings Ltd. (SAR), which in May completed a deal to buy OAO GMK Norilsk Nickel’s mothballed Thunderbox operations in Australia. “There are projects still out there and the field might have opened up for those that are left, so that’s an opportunity for some.”

Finlayson is among mining executives gathering this week in Kalgoorlie, the Western Australian town 595 kilometers (370 miles) east of Perth, for the annual Diggers & Dealers conference through Aug. 6. Former Bank of England governor Mervyn King addressed the forum ahead of presentations by executives from Fortescue Metals Group Ltd., AngloGold Ashanti Ltd. and Gold Fields Ltd. in coming days.

Deals worth about $14 billion have been announced or completed so far this year, according to data compiled by Bloomberg, the highest annual total in three years and led by Agnico Eagle and Yamana’s $3.44 billion acquisition of Osisko Mining Corp., the industry’s biggest deal since 2010.

Biggest Producers

Newmont Mining Corp. (NEM), the third-biggest producer by market value, sees potential for further asset sales, Chief Executive Officer Gary Goldberg said on a June 30 conference call.

The ten largest producers by market value have proposed or completed sales worth $912 million in the past year, according to data compiled by Bloomberg. Barrick Gold Corp. (ABX) has slimmed its roster of mines to 19, from 27 in 2013, through sales and closures, the company said last week.

Majors seeking to continue divestments may have a narrowing window, as any decline in the gold price would cut mine valuations, according to David Coates, a Sydney-based analyst with CIMB Group Holdings Bhd.

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