West Australia-based Ramelius Resources is understood to have...

West Australia-based Ramelius Resources is understood to have held takeover talks with fellow gold miner St Barbara.

Mergers and acquisitions have long been mooted in the Australian gold space, as earlier flagged by this column, and St Barbara and Ramelius are known to be obvious candidates for deals.

Gold is expected to be a strong performer in the coming months as investors search for safe havens with a prolonged war unfolding in Europe.

DataRoom recently reported that a number of talks were taking place for deals in the gold space.

While mergers among mid-sized gold players make sense, issues holding back transactions include agreement on valuation and what management teams and boards would remain in the merged entities.

Ramelius and St Barbara are obvious merger candidates, with market values at $1.38bn and $1.12bn respectively.

Analysts say St Barbara’s management has grown increasingly frustrated at the performance of its share price, which has steadily fallen since mid-2020, and would welcome a bid.

Part of the problem for St Barbara is that its main asset – the Gwalia mine in Western Australia – is the deepest underground gold mine in the country, making the process of extracting the metal expensive.

Yet management has not been rewarded by investors for its initiatives to develop the shallow areas on the mine’s edges, which that will extend its life for at least a decade.

The dilemma for St Barbara, run by Craig Jetson, is that the Simberi mine in Papua New Guinea – obtained in its Allied Gold acquisition more than a decade ago – has been plagued with problems, while the $C723m acquisition of Atlantic Gold in Nova Scotia in 2019 has failed to lift its share price.