Sean Boyd, the head of Agnico Eagle Mines Ltd., predicts there will be more deal-making among the world’s biggest gold companies over the next few years, given the recent rapid-fire increase in the price of bullion.
The price of gold recently hit new all-time highs of more than US$1,960 an ounce after the COVID-19 pandemic caused extraordinary dislocation in financial markets. Historically, investors have sought out gold as a safe haven investment during times of extreme uncertainty.
During the last great bull run in gold that ran from the early 2000s to late 2011, some of the world’s biggest gold miners, including Canada’s Barrick Gold Corp. Goldcorp Inc. and Kinross Gold Corp., struck blockbuster acquisitions – many of which ended up destroying billions in shareholder value.
The latest round of M&A, which kicked off in 2018 with Barrick buying Randgold Resources Ltd. for US$6-billion, has generally been welcomed by investors.
Acquirers, which have also included Newmont Corp. and Kirkland Lake Gold Ltd., have been paying much lower takeover premiums, and using equity rather than cash – thus not putting their balance sheets under extreme duress.
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