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Gold Miners Are on the Hunt for Assets as Prices Climb

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    (Bloomberg) -- Gold producers with cash on hand are on the hunt for cheap mining assets as rising prices drive shares higher.
    During a 12-year bull run that ended last year, about $30 billion in debt was racked up by companies that mine gold. Those that minimized borrowing then are in the best position now to scoop up mines from rivals with weaker balance sheets, said executives at the Investing in African Mining Indaba conference in South Africa, the biggest such gathering on the continent.
    Already, $2.7 billion in deals have been announced or completed this year within the industry, including Monday’s $1.1 billion offer for Rio Alto Mining Ltd. by Tahoe Resources Inc. It’s an early leg-up on the $10.5 billion in deals last year.

    “Gold is one of the brighter spots out there in the commodities space today,” said Rajat Kohli, head of metals and mining at Standard Bank Group Ltd., Africa’s largest lender. “I would expect corporate activity to be reasonably pronounced in gold, not just in Africa but globally. We will see a few transactions, definitely.”
    The price of gold jumped 8.1 percent last month in the biggest rally since January 2012. Currencies in Europe and Asia are sliding, and as policy makers introduce stimulus packages to battle cooling growth, investors are flocking to the metal.
    Randgold Resources Ltd., the best-performing gold-mining company in the past decade, has been “flat out” besieged with offers to buy assets, Chief Executive Officer Mark Bristow said in an interview.
    ‘Bidding Process’

    “People are a bit more confident to move from the sidelines into a bidding process,” Srinivasan Venkatakrishnan, CEO of AngloGold Ashanti Ltd., said in an interview today. The world’s third-largest gold miner is looking to sell assets or form joint ventures to reduce debt, he said.
    Kinross Gold Corp., Canada’s third-biggest producer, is also optimistic about the opportunity for deals.
    “As the clock ticks on with this gold environment, balance sheets, access to capital, those all sometimes become catalysts for M&A,” CEO Paul Rollinson said Dec. 10. “Our strategy has positioned us well to perhaps be opportunistic in that regard.”
    For signs that the gold M&A market is recovering, look at Tahoe Resource’s $1.1 billion cash-and-stock offer Monday for Rio Alto, the largest gold deal in almost 10 months.
    Acacia Mining Plc has said it’s looking to do a transformational deal this year, and the best ground in Africa has never been cheaper."

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