Potential Takeover Target

Just read this article about BDC being one of the top 5 standout takeover targets. Any opinons out there?

While Australian gold M&A activity has been subdued so far in 2020, RFC Ambrian predicts it will pick up in the latter part of the year (reports MiningNews).A report from the firm noted there had been plenty of gold M&A activity in the Canadian sector, as well as among offshore Australian gold companies, such as Exore Resources and Cardinal Resources."We believe the conditions are ripening by the day for consolidation among the Australian onshore companies in particular," RFC analysts said.Both gold futures and spot gold hit records this morning, of US$2048 an ounce and $2031, respectively, while Australian dollar gold was trading at a high of A$2822/oz.RFC suggested the Australian gold sector had never been in a stronger position.Australian producers have low levels of debt, high margins and easy access to equity.RFC noted the mid-tier producers were publicly preaching discipline in the deal space, which indicated the most compelling targets would be large, long-life assets which look cheap relative to their peer group.While most developers have risen on the gold price alone, there are clear winners and laggards in terms of how the market is valuing reserves and resources."It is here we see the likeliest takeover targets as groups holding development ounces that can be rapidly put into production and deliver ounces into a high gold price environment where risk may have been overpriced by the market," RFC said.This year has also seen discovery success, with RFC seeing De Grey Mining, Musgrave Minerals and Magnetic Resources as being in the speculation phase of the Lassonde Curve, Pierre Lassonde's graphical representation of the market gyrations of a new discovery.RFC has come up with a list of potential acquirers and targets in the Australian gold space."Given the current environment, we see fairly clear demarcation between potential targets and acquirers with many companies now too big for their peers to comfortably handle unless mergers of equals are pursued, although some scope still exists at the lower value end of the scale for consolidation," analysts said.The most likely acquirers are also the most obvious: Northern Star Resources, Evolution Mining and Saracen Mineral Holdings.While RFC noted all three were bedding down recent acquisitions, the group had shown a willingness to make the right acquisition of scale if the right opportunity presented itself."However, the strategic drivers for these three to transact may not be as strong as for the next tier of companies," RFC said.The four companies seen as most likely to acquire are Silver Lake Resources, Ramelius Resources, Gold Road Resources and Regis Resources.Regis has been the only one of its long-term ASX 200 peers not to do a major transaction.Ramelius Resources and Silver Lake Resources both did deals in FY20, Ramelius acquiring Spectrum Metals and Silver Lake buying EganStreet Resources.Gold Road recently became a producer and joined the ASX 200, and has indicated it is looking for opportunities.RFC believes St Barbara, Westgold Resources and Kirkland Lake Gold are less likely to transact.In the case of St Barbara, it is still bedding down its Atlantic Gold asset in Canada and has internal growth options, while Westgold is likely focused on operations and noted Musgrave could be a stretch due to its growing market capitalisation of close to $350 million."Very simply put, while Kirkland certainly has the firepower to transact upon almost anything within the Australian gold space, we do not see any compelling acquisition opportunities for them either at the project or corporate level at this time," RFC said.
RFC's five standout takeover targets are Musgrave, Bellevue Gold, Pantoro, Red 5 and Bardoc Gold, and it noted M&A competition for development assets was likely to be strong. Source below issued this morning.