RANDGOLD Resources “went close” to a large corporate deal with another large gold company last year as company valuations plummeted, said the UK-listed gold firm’s CEO, Mark Bristow.
Asked to clarify what he meant in an article published in The Telegraph that he couldn’t “break down the door” of “really big fish”, Bristow said his company examined “corporate opportunities” with large gold companies because his firm’s market capitalisation was nearly the same as potential targets.
“It made sense with the value of our paper,” he said in an interview. “Remember, all the big guys were only a few billion dollars ahead of us at that stage. It was a very stressed environment.
“There was a lot of aggression among shareholders and also there were some big institutions, financial institutions like pension funds … and they were looking for big projects to get involved in,” he said.
“It made sense for us to go and have a dialogue or two … In a stressed market everyone gets focused. But it just didn’t get too stressed. It was close,” he said, adding that Randgold was “entertained” by potential partners.
Shares in Newmont Mining fell 68% between the beginning of 2014 and the end of 2015; whilst AngloGold Ashanti was down 79% over the same period. The shares in almost every other gold company were heavily sold as the gold price edged towards $1,000/oz.
The gold price fell to about $1,040/oz at the end of 2015 from just below $1,400/oz in April 2014. The price of bullion has since recovered to $1,242/oz today.
“The frustration for me is that there were still premiums in the market,” said Bristow. “There was not one thing we looked at that didn’t have a premium, except some of the big guns who got close or below their real value. And it made sense for us,” he said.
Bristow’s comments come against a backdrop of growing interest in the African gold market, especially in West African countries such as Ghana, Burkina Faso, Ivory Coast and Sierra Leone.
Harmony Gold CEO, Peter Steenkamp, told Miningmx last month that his company was considering investing in African (non-south African) gold whilst Neal Froneman, CEO of Sibanye Resources, said his firm was chasing down an African gold producer with some 200,000 to 300,000 ounces in production.
The growing interest in potential acquisitions is partly fuelled by the improvement in the gold price which Bristow said would remain volatile this year, but which showed a certain “alignment of the planets” owing to geopolitical developments.
“You’ve got the Americans who have poked the Saudi’s in the eye … the Western world has screwed up the whole balance in the Arab world and North Africa. We’ve got China and Russia which is now everyone’s enemy.
“Everything that came together after the collapse of the Berlin Wall is all going back to where it was and … we’ve seen an enormous amount of evaporation of wealth,” he said.
“I say it [wealth] wasn’t there in the first place because it was created. There are big bubbles and perceived value. But it’s all got to come back to market and so people have to worry about their children.
“What’s the world going to look like? If you believe these politicians, that they’re going to look after you, you’ve got to be joking. That’s not going to happen,” he said.
