Dubai PR Network, Online Press Release from Dubai and Middle East
 
Business, Banking and Investments(Banking & Investments)
Filter PR by
  
BofA - Global Gold & Precious Metals: A Buyer's Market in Q2'20; Rising Bullion & Reserve Depletion to Drive M&A in H2'20
 

Global gold M&A heats up in Q2'20


Dubai, United Arab Emirates, July 13, 2020:  Merger and acquisition (M&A) activity in the global gold sector 'heated' up in Q2'20 with twelve transactions announced (highest quarterly total since Q4'12) with a total transaction value of $2.86 billion, nearly double that in Q1'20. Historically global gold sector M&A activity heats up during times of buoyant gold prices. The 'elephant-in-the-room' was SSR Mining's friendly $1.71 billion all share merger with Alacer Gold on May 11 2020. The remaining eleven transactions ranged in size from $27mn to $238mn. 


Trends in global gold M&A: A buyer's market in Q2'20


1) Chinese companies becoming aggressive for global gold assets. Shandong Gold and Zijin Mining were buyers for three companies (with assets in Canada, Guyana and Ghana) in Q2'20, two involving bidding wars; 2) Senior gold producers not active (unless one counts buying debt on a gold mine). The global senior gold producers were absent from the M&A circus in Q2'20. Newcrest Mining did purchase the gold prepay and stream facilities and an offtake agreement on the Fruta Del Norte (FDN) mine for $460mn. 3) Rise of the mid-tier producers continued. Two new mid-tier gold producers were created through the merger of SSR Mining and Alacer Gold and Kopy Goldfields acquiring Amur Gold; 4) Bias to in (or near) production assets. Six of the twelve transactions in Q2'20 were for assets currently in production. Within a year or two, this total could rise to nine as Perseus, Polymetal and West African Resources develop newly acquired satellite orebodies; 5) It's a buyer's market for companies. The five company transactions with reserves in Q2'20 were priced at a 23% discount to the prevailing gold price, below the historical range of -20% to +10%; and 6) Mega projects back in vogue. The acquisition of the Blackwater project has added over $200mn of new market value to buyer Artemis Gold. This may put the spotlight back on companies sitting on multi-million ounce low grade gold megaprojects. 


M&A in H2'20: The race to replace gold reserves mined


After years of underinvestment, we see production profiles under pressure and reserves in decline. The evidence is too obvious to ignore. As per Chart 5 on page 10, at year-end 2019 total gold reserves for the global gold producers amounted to 612 Moz, down 30% from the peak 875 Moz at year end 2012, equating to declining reserve life indexes. For H2'20, we see the surging gold price and further consolidation creating new mid-tier producers as catalysts/drivers for global gold M&A. Bullion's recent surge over $1,750/oz is forecast to lead to windfall free cash flows and expanding valuation multiples for our coverage universe, mirroring the 2010-13 period marked by record breaking M&A activity (see Chart 8 on page 11). Mid-tier producers not involved in M&A risk being 'left behind' by their rapidly growing peers. A potential headwind could be reduced due diligence site visits due to cutbacks on business travel due to COVID-19. Acquirers excelling at 'desktop' analysis of assets could find an 'edge' over their competitors. Table 4 on page 12 sets out our list of companies with intriguing assets. 

 


Posted by : Dubai PR Network Editorial Team
Viewed 4532 times
PR Category : Banking & Investments
Posted on : Monday, July 13, 2020  10:55:00 AM UAE local time (GMT+4)
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of DubaiPRNetwork.com.
Previous Story : Tata International Concludes a Securitization Transaction fo...
Next Story : Skycap's Flagship Program of Us$150 M Global Fintech Investm...
Email this article Print this article

Share this article with your friends and followers
NewsVine
Back to Section Home

Related Stories



 
 
Most Viewed Press Release posted in the last 7 days
Herbal Essences Taps into Nature's most Powerful Ingredients with the new Potent Aloe Vera... [10750-Views]
Hello 2021, HELLO, GOOD STUFF! with Essence [7892-Views]
Middle East Hotels Ready to Capitalise on Workation Trend, says ATM [7487-Views]
IRENA's World Energy Transition Day Kick-Starts Crucial Assembly Meeting [6892-Views]
Latest PGA Tour Winner Kevin Na Joins Strong American Contingent vying for 2021 Saudi Inte... [5523-Views]
How Small Travel & Tourism Business can Overcome COVID-19 Pandemic [5367-Views]
Join the A-Beauty Revolution with Sukin's Buy 2 Get 2 Limited Time Offer [4079-Views]
Danube Group Launches World's First Civil Defence Approved Alucopanel A1 Aluminium Composi... [3768-Views]
Pampers Introduces the First Diaper Designed for Nighttime Wetness Protection and Un-inter... [3592-Views]
Jaguar Land Rover Mena Offers Customers Warranty Extension Lasting Up to 10 Years [3542-Views]
A New Wave of Coffee has Arrived at AlBarari [3378-Views]
Sony Middle East & Africa Launches Newest Addition to G Master™ Full-Frame Lens Series wit... [3292-Views]
Henrik Stenson Leads Past Winners' Delight for Omega Dubai Desert Classic Return [3149-Views]
Icon Racing Sport Collection [3128-Views]
Etihad Airways to Recommence Flights to Doha [3116-Views]
Dubai Sports Council Launch Dubai's First All-Schools Sports Tournament Series [2948-Views]
Abu Dhabi Delivers Knockout Opportunity for UFC Fight Island Triple Header Spectators to A... [2940-Views]
Statements of Love [2927-Views]
Take Special Care of your Skin with Martiderm [2886-Views]
Ericsson: Smart Home Privacy: How to avoid ‘Data Paparazzi' [2800-Views]
Jalabiyas – Epitome of Grandeur, Grace and Elegance [2567-Views]
Two Proven Solutions to Instantly Revive Your Skin [2542-Views]
Samsung Introduces a One-Stop Shop that Curates Every Step of Your Cooking Journey [2398-Views]
Red, Blush and Black - Steve Madden Is Ready to Celebrate Valentine's Day With the Quintes... [2321-Views]
Tondagraph GT Rose Gold Blue [2222-Views]
 
RSS Facebook Twitter LinkedDin
 
Top Sections
 
Top Stories