Gold & Silver Mining Sector M&A To Increase - Blackmont
By Daniel at 30 September, 2008, 9:55 am
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SINGAPORE (Dow Jones)–Canadian brokerage Blackmont Capital says the gold and
silver mining sectors are set for a busy period of merger and acquisition
activity as larger mining companies buy their junior peers.
“While the volatile markets and global financial crisis are deservedly dominating
discussions these days, we believe the stage is set for an unprecedented increase
in merger and acquisition activity in the precious metals sector,” Blackmont
analyst Richard Gray said in a report dated Monday.
Gold producers including Barrick Gold Corp. (ABX), Newmont Mining Corp. (NEM) and
Kinross Corp. (KGC) are seeking acquisitions to maintain current levels of
production, the report said.
Other likely acquirers are Goldcorp Inc. (GG), Yamana Gold Inc. (AUY) and
Agnico-Eagle Mines Ltd. (AEM), which Blackmont says have the strong cashflow
necessary to fund potential deals.
The report, which only refers to companies listed in the U.S. or Canada,
describes junior producers as “stretched for cash, personnel and relevance,” and
argues that they are not well-placed to fund expansion due to weakness in equity
markets, leaving them vulnerable to takeover.
“Exacerbating the problem for both gold and silver junior stocks, which typically
rely on the equity markets to fund exploration and development, is the
nonreceptive mood of the equity market to buy junior equity deals, as well as the
reluctance on the companies’ part to issue equity at the current depressed
levels.” said the report.
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