Australia’s top gold producers are set to take their $5 billion acquisition spree global to secure growth as domestic opportunities fade and bullion’s gains swell their cash piles.
Companies including Evolution Mining Ltd. and Northern Star Resources Ltd., Australia’s No. 2 and No. 3 producers, may be required to look to the U.S. and Canada for acquisitions to add operations of sufficient scale and quality, according to Global Mining Research Ltd.
“You have to improve your portfolio and there’s not a lot here that’s left,” Sydney-based Global Mining executive director David Cotterell said by phone. “If you want to go a bit further afield and want to keep the risk profile similar, then you need to target North America.”
Gold companies based in Australia have proposed or completed acquisitions worth about $4.5 billion since a rebound in deal-making in 2015, though the value of deals so far this year has slowed to just $198 million, according to data complied by Bloomberg. There’s a lack of quality targets and producers have chosen to use cash to fund internal growth options, according to Argonaut Securities Ltd.
Global gold deals have also slowed, declining to $19.8 billion in 2016 from $22.8 billion a year earlier, the data shows, and Australian companies going offshore may help bolster the deal market, according Global Mining’s Cotterell. “North Americans are largely focused on their balance sheets and internal issues — where we are going to see interest is from the Australia space,” he said.
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