JOHANNESBURG (miningweekly.com) – Gold miners are gradually shifting their focus to growth and renewed investments after years of financial austerity measures and the prioritisation of cost competitiveness and core assets.
While firms will remain committed to lowering costs to improve their competitiveness and reducing debt to better withstand long-term gold price volatility, rising profits on the back of climbing gold prices is encouraging a slow return to deal-making, acquisitions and an increase in spending.
“The improving outlook for gold prices will support merger and acquisition (M&A) and investment activity in the industry, as overleveraged major firms continue to offload assets in an effort to narrow portfolios,” BMI said on Tuesday.
“Senior gold miners will prioritise risk mitigation, in terms of both political and financial risk, resulting in project development in developed markets and joint venture partnerships among top firms.”
BMI pointed out that Chinese firms, in particular, would be the driving force behind more deals, with the Asia-Pacific region having more than doubled gold mining M&A activity to $7.2-billion in 2016.
However, the firm warned that capital expenditure estimates for 2017 indicated that, although gold companies “may have turned a financial corner” in 2016, spending would not return to the heights of the past decade.