THE world’s gold miners are back hunting for deals amid record prices for bullion, but unlike previous bull markets, they won’t overspend buying growth, said Bloomberg News.
It cited gold industry CEOs saying there was more discipline in the sector. “There were some really stupid deals made last time around,” Ross J. Beaty, chairman of Equinox Gold Corp., said in an interview at the Denver Gold Forum this week. “Companies bought dumb stuff and were penalised for it.”
Beaty told Bloomberg News his company was “not for sale” while Clive Johnson, CEO of B2Gold said he would focus on “returning as much as we can to shareholders by increasing cash flow and paying out a decent dividend”.
There has been a flurry of activity in recent months, with Gold Fields’s $1.6bn purchase of Osisko Mining and AngloGold Ashanti’s $2.5bn acquisition of Centamin. The former, concluded at a 67% premium, drew the criticism of Barrick CEO Mark Bristow. Famously reticent to commit to mergers & acquisitions, he described Gold Fields’s deal as “concerning”.
“These are markers of exuberance in the market,” Bristow said, adding that he won’t pay any premiums for acquisitions.
“While consolidation is a good, healthy sign for the industry, you still have to see how the newly formed entity can execute,” said Wasif Latif, a portfolio manager at Sarmaya Partners. “History shows that, generally, mergers and acquisitions aren’t accretive over time,” he told Bloomberg.
