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Cherry Donney

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Gold Mining Deals Seen Rebounding on Price Discount: Comm
Jan 8, 2014

Gold Mining Deals Seen Rebounding on Price Discount: Comm

Investment bankers see gold-mining deals rebounding this year from a near-decade low as producers target assets at fire-sale prices after the metal plunged.

Gold-mining companies are close to their cheapest relative to book value in at least two decades, according to data compiled by Bloomberg. Meanwhile producers will be enticed to replace some of the output lost when they sold or curtailed less-profitable mines, said Barclays Plc’s Paul Knight.

“Majors who have done portfolio optimization will look at some of the juniors and say, ‘Here’s a chance for us to acquire a potentially better asset than we’ve sold and to mitigate the loss of production,’” Knight, a Barclays vice chairman and co-head of global metals and mining, said Jan. 6 by telephone.

There were $10.1 billion of deals involving gold producers last year, according to data compiled by Bloomberg. That’s 4.4 percent less than in 2012 and the smallest since 2004.

While gold deals declined, there were signs of a resurgence of activity in December as the value of transactions reached the highest monthly level since February. Goldcorp Inc. (G) and Newmont Mining Corp. (NEM), the second- and third-largest producers by market value, said in September they were evaluating the potential for deals to add low-cost operations.

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