RE: The Gold Rush & Other Serendipitous Signs!18 Apr 2023 10:53
Hi Speedy ,
I know it’s not news to you , and much of what you’ve been saying for a long time is maybe playing out now and the headlines are reflecting the power of gold.
Here is just a small extract re the merger talks that is in this morning s Telegraph.
It’s all relevant. We will just need to wait and see which way we as a company are able to maximise our progress. Fingers crossed.
ATB
“But Newmont Corporation’s decision to increase the value of its offer for fellow gold digger Newcrest Mining does catch the eye and suggest that some UK-listed precious metal producers could yet represent some value for patient portfolio builders.
Whenever a major piece of merger and acquisition activity is announced, the single most important items of information are the price paid and the valuation implied. This is because they can determine whether the buyers or potential sellers are getting the better part of the deal and also whether the shares of peers in the same industry or sector are looking cheap or not.
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The gold mining industry has been busy in this respect. Barrick Gold swallowed up Randgold Resources and Newmont snapped up GoldCorp in 2019, while Agnico-Eagle and Kirkland Lake Gold merged in 2021 and Agnico-Eagle and Pan American Silver have just finished buying and divvying up Yamana Gold.
Among the few remaining UK gold miners, Chaarat Gold took a look at Shanta Gold last autumn, and although nothing came of that it did suggest that someone, somewhere thought there was value on offer.
Sceptics will dismiss this as an attempt to manufacture growth and momentum where little or none exists, since gold output grows only slowly and the all-in sustained cost (AISC) of producing gold is rising, in no small part due to surging energy and staff costs (trends that rather dent gold miners’ perceived status as a hedge against inflation). Gold bugs, however, will argue that the proposed Newmont-Newcrest deal is simply further evidence that gold company executives see value that the stock market is overlooking.
The price of gold is up by 32pc since the start of 2020, but the NYSE Arca Gold Bugs index, known as the HUI, is up by just 12pc over the same period – and all of that gain (and more) from the index hails from the rally seen since Jan 1 this year.
American gold miner Newmont is now getting busy again. It first bid for Australia’s Newcrest in February in an all-stock deal that valued the target at $17bn (£13.6bn). The would-be buyer has now increased its all-paper offer to $19.5bn. That price tag puts Newcrest on almost 1.7 times historic book, or net asset value. The major, US-listed producers trade on 1.5 times and London market’s gold diggers at 1.1 times”
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