THE world’s gold industry was still ripe for consolidation although the historic price highs in the metal would present some obstacles.“I suspect over the next twelve months, gold is an industry that’s just been screaming out for consolidation,” said Jim Rutherford, a non-executive director for Saudi Arabia’s Manara Minerals at the FT Metals & Mining Summit last month. “There’s been a lot of lifestyle companies in that industry.”One difficulty, however, was how to price reserves and resources given they were valued at more than half the prevailing market price for the metal.“The gap between spot and reserve valuation is actually bigger than the absolute gold price was twelve months ago,” said Rutherford. “So what price do you use in terms of valuing a gold deal in that sort of environment”.This has not stopped dealmaking in the sector. On November 3, Coeur Mining Inc. agreed to acquire New Gold Inc. for about $7bn in an all-stock deal.The deal marks the largest takeover between gold producers in 2025, said Bloomberg News. Shares of precious metals producers have also surged, with Couer’s and New Gold’s stock more than doubling this year.“The move in price, obviously, puts people off to some extent … On the other side, though, if you’re thinking of retiring, it’s maybe not a bad time,” said George Cheveley, a portfolio manager for Ninety One. “Your share price is probably higher than you ever believed it would get to in many cases.”Cheveley added that gold companies that were depleting their reserves rapidly might be forced buyers over the next 12 months, brought into the market for new ounces despite a record gold price.“They are going to start to get desperate next year looking for reserves,” he said. “And obviously the fastest way to get them is to go buy them. It doesn’t necessarily add a lot of value, but I think that could well start to encourage some deal-making next year.”According to S&P Global, gold producers might also seek to allocate record cash flows towards buying copper. The metals have a fit partly because they are occur together in porphyry deposits. South Africa’s Harmony Gold recently finalised the purchase of MAC Copper for $1.03bn, an Australian company listed in New York.“I think copper and gold is going to be the key focus,” said Richard Horrocks-Taylor, global head of metals and mining at Standard Chartered Bank. “I think gold in particular for the next few months.”The post Gold industry “screaming out” for consolidation despite price appeared first on Miningmx.
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