Barrick Gold Corp’s $18 billion (£13.6 billion) hostile bid for rival Newmont Mining Corp last week came shortly after the former’s acquisition of Randgold Resources and the latter’s friendly offer for Goldcorp Inc.
These deals, their expected outcomes and the impact on the broader gold mining industry are expected to dominate the conversation at the annual conference of the Prospectors and Developers Association of Canada, when tens of thousands of participants from around the world – from executives to investors to regulators – descend on Toronto.
But given questions over which Newmont deal will proceed, and which assets the final combinations could shed, investors and analysts see other miners waiting out the uncertainties before making any moves for rivals.
“The M&A activity with Barrick and Newmont is overshadowing everything, but it’s also creating a vacuum,” said Kai Hoffmann, chief executive officer of Oreninc, a provider of deals information about junior miners. “Low-cost, mid-tier producers … are going to get bought regardless of what’s happening in the big ones.”
Deals hashed out before Barrick’s surprise offer for Newmont are still likely to go ahead, Hoffmann added. Lingering financing constraints, as well as memories of earlier consolidations that have failed to yield the expected returns, are also likely to keep companies and investors cautious.