‘I don’t see a wave of M&A’: Gold miners eye partnerships to boost growth amid spending slump – by Sunny Freeman (Financial Post – January 19, 2017)

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The world’s largest gold mining companies expect more consolidation in the sector ahead — even if their own companies are more interested in partnerships, top executives at the TD Securities Mining Conference said Wednesday.

For years, miners have been focused on slashing capital costs, many aiming to bring down all-in sustaining costs — the industry benchmark — to about US$700 an ounce.

But after years of declining reserves and with the gold price expected to fare better in 2017, many C-suite executives speaking at the conference said they expect a pick up in exploration and consolidation in the industry. However, many of the majors said they were more focused on partnering on projects rather than outright acquisitions.

“There are too many players for fewer and fewer resources,” said Agnico Eagle CEO Sean Boyd, adding that industry consolidation could be necessary to eliminate overhead costs such as head offices.

The past few years of underinvestment have led to weak project pipelines and limited merger and acquisition activity, Boyd said. He expects to see more activity in the next few years in order to offset the industry’s excessively cautious behaviour, which he attributed to the cyclical nature of the business, he added.

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