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Gold's potent mix of low reserves and high prices seen driving M&A

Section: Daily Dispatches

By Vinicy Chan
Bloomberg News
Monday, September 16, 2019

Executives headed to the Denver Gold Forum a year ago were hit with a startling bit of news as they stepped off their planes: A merger made public that afternoon was set to create the world's biggest gold company.

Now, a year after Barrick Gold Corp. agreed to buy Randgold Resources Ltd., and in the wake of a second mega-merger, executives are again traveling to the Denver meeting, which opened Sunday. Only this time the industry will be watching to see if mid-tier miners concerned about losing out to larger rivals are ready to jump into the M&A game.

... Dispatch continues below ...


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Gold is near a six-year high, and industry shares are up about 60% in the past 12 months. Meanwhile, the amount of gold reserves still buried in mines is down by more than half from a 2011 peak. It's a potent mix that may push miners toward consolidation over expansion for growth.

"M&A can trigger a game of musical chairs," said Matthew Hind, global co-head of metals and mining investment banking for Credit Suisse Group AG. "When one transaction happens and is well-received, there is a tendency for others to want to try and find their partner, nobody wants to miss out." ...

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