Gold mines go on a takeover spree

The gold mining sector willing are preparing for a new round of acquisitions. Due to the huge drop in the price of gold over the past two years, many mines have run into problems. Many projects that were profitable at a price of $1,500 or $1,600 are no longer profitable now that the gold price has fallen below $1,200 per troy ounce. The industry as a whole has accumulated $30 billion in debt over the 12-year bull market in gold.

The result of the falling gold price is a dichotomy in the sector. Some mines are deeply in debt and running losses, while other mines have been more cautious about scaling up their production and have hardly any debt on their balance sheets.

The latter group includes Randgold Resources, the best-performing gold mine of the past decade. Mark Bristow, the director of this gold mine, told Bloomberg that his company is getting ready to go on an acquisition spree. Randgold has no debt and a war chest of $500 to $700 million. With that money, the mine can make acquisitions in a sector that has not been in as bad a state since the late 1990s as it is today.

Randgold ready for acquisitions

"We already have the right facilities available. If you look at our history, you will see that we have never come to a gunfight with the proverbial knife. We're getting ready to go to the gunfight with a bazooka," Bristow told Bloomberg.

Randgold tries to do as much exploration as possible himself. For example, it is active in countries such as Mali, Senegal and Côte d'Ivoire. In 2009, the company acquired Moto Goldmines together with AngloGold Ashanti for approximately $500 million.

"Without debt and with healthy margins, even at an even lower gold price, Randgold is well positioned to go on the acquisition path", Invester Plc stated in an update to investors. Randgold may be waiting for a further decline in the gold price before making its move.

Bristow is willing to make another acquisition together with another mine, so that gold mines of more than $1 billion can also become prey for a takeover. The candidates for takeover are the mines that are under severe pressure due to excessive production costs and/or excessive debt.

Healthy mines invest again

Barrick Gold, which recently became known as Acacia Mining, See Interesting acquisition opportunities in the sector at the moment. "Now is the time to be contrarian and buy up the best places in Africa. If you're looking for producing mines, they've never been as cheap as they are today," said Brad Gordon, Director of African Barrick Gold.

China's Shandong Gold was sold this week Rewarded by investors for its decision to invest more in the discovery of new gold reserves. At the end of last year, this mine put its investment plans on hold due to a sharp drop in the gold price. The share of this mine increased by 10%.

Gold mines go on a takeover spree