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With Australia’s Newcrest Mining Ltd. set to acquire Canada’s Pretium Resources Ltd., attention is now turning to which gold miner will be next to get scooped up, even as money managers caution that acquirers are likely to tread warily.
The Canadian gold industry is highly fragmented, with many companies chasing a limited pool of capital. Money managers have been pushing single-asset miners – companies that have only one mine or development project – to seek acquirers that are better capitalized than themselves. Inside major producers with large portfolios of mines, single-asset miners are seen as far less risky for investors.
Melbourne-based Newcrest’s pending $3.5-billion acquisition of Vancouver-based Pretium, a single-asset miner, is being pitched as exactly the kind of deal the industry has wished for. Pretium’s Brucejack gold project, its only property, has been a beast to mine, with the company on occasion encountering large swings in grade because of erratic geology.
Newcrest, by comparison, is a well-diversified company with mines in Australia, Canada and Papua New Guinea. With a market value of US$15.4-billion, it is much better positioned to roll with the punches at Brucejack.
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