This Mega-Deal Reveals 2 Critical Points On The Gold Sector
As I’ve said before, one of the things I love most about writing Pierce Points is: the letter keeps me in touch with some of the best professionals going in the global resource business.
That point was driven home again late last week. When the Pierce Points network proved extremely informed on one of the biggest deals we’ve seen for years in the gold space.
In late September when I wrote about rumours that Barrick Gold was selling its Nevada mines, my inbox lit up with suggestions on the likely buyer. Below is my September 23 post from my Twitter account:
Last week Waterton Global did indeed step forward to buy Barrick’s Spring Valley and Ruby Hill mines in Nevada. With the investment fund bidding a significant $110 million for these assets.
That’s yet another sign that private funds are the biggest story going today in mining M&A. With some of the industry’s best assets continuing to pass from major miners into the hands of investment firms.
But there was another part to Barrick’s asset sale. Showing an interesting twist on this theme.
Barrick also said it will sell two additional mines — Round Mountain and Bald Mountain — to fellow gold major, Kinross Gold. For a hefty $610 million in cash.
That’s a very significant move from Kinross. The major has been sitting on over $1 billion in cash for years now, as assets have been getting cheaper. Up until now however, Kinross had made no moves at all in the M&A space.
But the new Nevada deal shows that cashed-up companies like Kinross haven’t gone into “turtle mode”. Rather, they were simply waiting for the right mines and the right prices — and today, they feel assets and costs have finally become attractive.
That’s a signal for investors to pay attention too. If the world’s top gold firms feel it’s time to buy, maybe it is.
Here’s to seeing it coming,
The information provided in this newsletter is based on the independent research of Dave Forest and is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade any securities or commodities named herein. Information contained in this newsletter is obtained from sources believed to be reliable, but is in no way assured. All materials and related graphics provided in this newsletter and any other materials which are referenced herein are provided “as is” without warranty of any kind, either express or implied. No assurance of any kind is implied or possible where projections of future conditions are attempted. Readers using the information contained herein are solely responsible for verifying the accuracy thereof and for their own actions and investment decisions. Dave Forest does not make any representations about the suitability of the information delivered in this newsletter or any other materials that are referenced herein for any purpose whatsoever. The information contained in this newsletter does not constitute investment advice and Dave Forest is not registered with any securities regulatory authority to provide investment advice. Readers are cautioned to consult with a qualified registered securities adviser prior to making any investment decisions. The information contained in this newsletter has not been reviewed or authorized by any of the companies mentioned herein.
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