Precious Metal Mergers and Acquisitions

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M&A Activity, Precious Metals

During the weeks ahead, analysts expect to see a merger and acquisition pandemic among precious metals companies. As gold regains long-term luster and financial markets experience pandemonium, certain mining companies could experience takeovers, inspiring what Blackmont Capital’s Richard Gray calls “an unprecedented increase in M&A activity.”

Reuters explains, “Gray said the world’s top two gold producers, Barrick Gold and Newmont Mining are likely looking for immediate production. Mid-tier miners like Kinross Gold, Goldcorp, Yamana Gold and Agnico-Eagle Mines are seeking to capitalize on strong cash flows.” The article quotes Gray: “We recommend investing in larger producers such as Kinross Gold and Yamana Gold, which are both potential targets for larger producers, but are also attractively-priced companies with strong cash flow generation.”

Smaller companies, however, should also feel the heat. Given that smaller precious metals producers have more room to rise, larger companies should gravitate towards them. In fact, other investors have recently encouraged all gold prospects, regardless of size.

Yesterday, spot gold went for $888.15 per ounce, increasing since the 11-month low that we reported earlier this month. In addition, the dollar falling against the euro increased precious metal investments, causing platinum and palladium gains. According to Bloomberg, “Platinum futures for October delivery rose $13, or 1.1 percent, to $1,225 an ounce on the New York Mercantile Exchange, the fifth gain in six sessions. On Sept. 22, the metal jumped 7.7 percent, the most since April 2000 … Palladium futures for December delivery gained $2.10, or 0.8 percent, to $252.85 an ounce on the Nymex.”

Despite certain declines during the past year, these gains and M&A rumors suggest an interesting road ahead for precious metals and the precious metals industry.

–Amy Edwards

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