Gold deal rush sweeps by broader mining sector – by Barbara Lewis and Clara Denina (Reuters U.K. – February 5, 2019)

CAPE TOWN/LONDON (Reuters) – The wave of consolidation sweeping the gold mining sector is for now passing the wider sector by as diversified majors have delivered returns to keep shareholders happy and investors are wary of repeating past mistakes, executives said.

Newmont Mining Corp said in January it would buy Goldcorp Inc, for $10 billion, creating the world’s biggest gold producer. The merger following Barrick Gold Corp’s agreement in September to buy Randgold Resources Ltd in a deal valued at $6.1 billion.

In previous cycles, gold industry mergers have paved the way for broader activity, but executives say they expect the focus to stay on mid-tier gold companies and selling off any assets the new merged companies do not want. Mark Bristow, CEO of the new Barrick, said gold had reached a point where action was inevitable.

“The one thing about business is that it eventually kills you. If you don’t perform, the options run out. The gold mining industry is actually at that point and now you’re seeing people making decisions,” he told reporters on the sidelines of a mining conference in Cape Town.

Gold companies also had a need to grow because of a decline in the share of active fund managers that just left the big passive funds, which however only invest in big companies.

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