I'm not saying this is a given, but as Siren proves up a high grade resource towards 1million Oz at 6-8gt, then above.
You would expect strong level of interest from mid and large cap gold miners, globally, who are looking for low capex high per ounce profit margin gold deposits to add to their dwindling reserves like Siren's Reefton Goldfields deposits at AR BR Lyell etc.Gold Digger: Gold M&A is heating up. Which junior is the next takeover target?
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Investors want to see gold miners wisely grow their production profile.
Not like miners did during the last cycle, when some irrational, highly priced M&A action destroyed significant wealth.
The big gold miners have a “lousy recent history” of buying companies, Barrick Gold (TSX:ABX) executive chairman John Thornton said.
He has called his company’s acquisition of Equinox “if not the worst, one of the five worst acquisitions in [mining] history.”
On April 25, 2011, Barrick Gold Corporation announced the acquisition of Equinox for $US7.69 billion. Just two years later the world’s biggest gold miner copped an embarrassing US$4.2-billion write-down, mostly tied to Equinox’ struggling ‘Lumwana’ mine in Zambia.
While the industry has returned to fundamentals and balance sheet health, over adding ounces at any price, “mining companies are also expected to have cohesive and compelling growth stories”, says junior mining investor David Erfle.
“With ounces controlled by juniors currently on sale, there are significant opportunities being created in a depressed market for mining companies to transform their portfolios through acquisitions or alliances.
“Junior miners have driven a 43% increase in global gold exploration budgets in 2021, bringing total spend to $US6.2 billion – the highest annual figure since 2013, according to data from S&P Global Market Intelligence.”
After years of underinvestment during the previous bear market, global miner production profiles are under pressure which makes further M&A inevitable during the next few years, Erfle says.
“This is a good time for resource stock speculators to take advantage of the current weakness in the mining complex to perform proper due diligence on a carefully selected watch list of quality juniors.”
USD gold price over the past 2 years.
The ASX gold M&A action begins
This week, the WA gold mine developer snubbed a 16c per share takeover offer from miner and major shareholder St Barbara (ASX:SBM), and will instead raise $13m to advance the flagship 1.28moz ‘Cardinia’ gold project on its own.
It was move predicted by the guru himself, Barry Fitzgerald, late last month.
The SBM offer represents a 60% premium to the last closing price but is well below the 23c per share peak hit October last year.
Kin says it rejected the deal after “canvassing the views of its major and substantial shareholders”.
“The Board determined that the proposed NBIO could not progress because the proposed transaction was not acceptable to the major and substantial shareholders other than SBM, and therefore would not have been approved by the requisite 75% voting majority of Kin’s shareholders,” Kin says.
A takeover at the right price is not off the table, though, with “the Kin Board welcome[ing] the continued interest from St Barbara”.
