Friday, December 29, 2006

Gold Miners could be takeover targets

The acquisition of Newcrest Mining Limited (ASX:NCM) by an overseas party in 2007 would mean that 80% of Australia's gold industry would be foreign-owned. Surbiton Associates estimates that the industry is currently 66% foreign-owned.

Analysts believe that Newcrest has a gold resource and reserve base that is too substantial not to come to the attention of US-based Newmont Mining and Canada's Barrick Gold.

John Quinn, a former MD of Newcrest, believes that a takeover of Newcrest by Newmont is inevitable. Quinn says the world's largest gold miners are under pressure to maintain production in an environment of low rates of discovery, diminishing reserves and rising costs. There was significant mergers and acquisitions activity in the mining sector in 2006. The 12 biggest deals worldwide were worth a combined $A145bn.

It is believed that potential takeover targets in Australia could include Newcrest, Oxiana and Zinifex, while offshore targets may include Anglo American, Teck Cominco or Alcan.

It is not surprising with resources rapidly declining that companies are having to merge to keep up production rates. I beleive this will be a continuing trend and unfrotunately for us there is only a limited supply of reosurces in the world. I wonder when they will all be gone ?

Good Luck Investing

No comments: