Gold’s tumble to the lowest since 2010 promises to prolong a mergers and acquisitions boom that’s seen transactions at a three-year high as weaker prices slash asset valuations.
Deals valued at $9.6 billion were proposed or completed in the six months to June 30, up 7 percent on the previous half, as producers including OceanaGold Corp. agreed acquisitions, according to data complied by Bloomberg. They totaled $22.3 billion last year, the highest since 2011, the data show.
“I’d expect that thematic to continue and the next wave of activity from an M&A point of view might be more mergers,” Reg Spencer, a Sydney-based analyst at Canaccord Genuity Group Inc., said by phone. “Unless the smaller guys get together and get bigger quickly, they’ll find they are less able to compete when assets do become available.”
Gold producers in Australia gathering Monday for a three-day annual conference in outback Kalgoorlie, a key center of output since the 1880s, proposed or completed deals worth $4.5 billion in the past 12 months, according to the data. The nation is the largest producer after China.
OceanaGold agreed Thursday to buy Romarco Minerals Inc. in a deal worth C$856 million ($654 million) to add a South Carolina project, the producer’s second mine deal this year.
Zijin Mining Group Co., which has agreed about $1 billion worth of acquisitions in the past year, and Evolution Mining Ltd. are among attendees in Kalgoorlie seeking further deals.
“It’s at times like these where there are significant, seismic shifts in asset ownership,” Evolution Executive Chairman Jake Klein said in an interview Monday with Bloomberg Television in Kalgoorlie. “That’s what has been occurring in the gold space.”
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