More merger mania in Canada’s gold mining sector on Monday with two deals that take the value of bids in the past month to well over $C4.5 billion (close to $A5 billion).
Monday saw two deals – Canadian producer SSR Mining announce plans to buy Alacer Gold (listed on the ASX) in an all-share deal valued at more than $C2.41 billion ($A2.6 billion).
Earlier in the day, Gran Colombia revealed a three-way deal to merge with Guyana Goldfields and Gold X in a $C662 million deal (around $A730 million).
That was after last week’s deal which saw Shandong, one of China’s biggest gold producers, said last week it would buy TMAC Resources which operates in the Canadian Arctic for $C150 million (around $A165 million).
The Gran Colombia deal, if successful, will trump Silvercorp Metals $105 million ($A112 million) takeover offer for Guyana Goldfields.
At the same time, Endeavour Mining Corp is pushing its $C1 billion ($A1.1 billion)cash takeover offer for Semafo Inc.
The moves come on the back of a record year of mergers and acquisitions in the sector, including some of the biggest deals in a decade in 2019 when Barrick and Newmont flirted with each other, then found other partners in multi-billion dollar deals.
Gold prices have jumped 12% in a COVID-19 riddled year so far as investors seek safer assets to shield themselves from the growing impact of the coronavirus outbreak on the global economy.
On Comex on Monday, June gold fell $US15.90, or 0.9%, to settle at $US1,698 an ounce, after a near 0.8%rise last week.
The new company to emerge from the SSR-Alacer deal will be headquartered in Denver, Colorado, and will have operational mines in four countries.
It will be led by Alacer Chief Executive Officer Rodney Antal, the two companies said on Monday.
SSR Mining has operations in Nevada, United States, Saskatchewan, Canada, and Jujuy, Argentina, while Alacer is a low-cost gold producer focused on the Çöpler Gold Mine in Turkey.
It’s a “zero-premium” all paper merger and the companies reckon is will generate annual free cash flow of about $US450 million and produce about 780,000 gold equivalent ounces over the next three years.
As part of the deal, Alacer shareholders will receive 0.3246 SSR Mining shares for each share held, implying a value of $C8.19 for each Alacer share.
Shareholders of SSR Mining and Alacer will own about 57% and 43% of the new company, respectively, with the new board consisting of five directors from each of the miners’ existing boards.
