Gold mining companies that entered into preliminary talks on takeover deals but stalled due to the COVID-19 pandemic, will pick up where they left off. Executives of acquiring companies, potential investors and fund managers are already making plans for onsite visits as governments are starting to ease down on travel bans.
Merger and acquisition (M&A) deals are common among gold mining companies, especially when there is uncertainty in economic outlook and when prices of commodities are unstable. .
M&A deals this year have been spurred by the continuing drop in number of gold transactions, to which the current year has closed only 275 deals worth $6.9 billion. According to mining industry data provider, Refinitiv, the figure reflects a substantial decline when compared to the six-months figure recorded as of June 2019, which showed 329 transactions amounting to a total of $26.8-billion.
Now more than ever, gold is said to be trading at its peak since 2013 at a price value of $1 700 per ounce, largely owing to its safe-haven appeal. However, there are speculations that gold prices could go lower, down to $1,500
According to Bert Monro, the Chief Executive of West Africa-facing Cora Gold:
“Operating with due diligence when not based near the site and on the ground during ongoing coronavirus pandemic is tricky, hobbling us from closing the deals presented to us.”
The forthcoming ease in lockdown measures paves the way for prospecting buyers, fund managers and mining industry executives to resume completion of transactions stalled by the global pandemic.
Mining Companies Expected to Finalize M&A Deals in the Coming Months
The following M&A gold mining deals took shape before the COVID-19 crisis, which makes finalisation of agreements imminent as soon as lockdown and travel ban measures have been lifted;
Endeavour Mining offered C$1-billion for SEMAFO, a Toronto-listed intermediate gold producer that has more than 20 years track record of building and operating mine in West Africa.
Silvercorp Metals is set to close a deal to acquire Guyana Goldfields for $75 million.
Shandong Gold Mining is offering C$230-million to financially-strapped TMAC.
Canadian SSR Mining has agreed to buy Alacer Gold via an all-stock deal valued at C$2.41 billion or US$1.72 billion.
