Adrian Day: We Haven’t Seen the End of Gold M&A

Barrick Gold (TSX:ABX,NYSE:GOLD) and Randgold Resources announced plans to merge this time last year, igniting a trend of mega mergers in the gold space. 

But after the initial wave of deals, gold M&A activity has subsided in recent months, leaving market watchers wondering if it’s finished for the time being.

When asked at the Precious Metals Summit in Beaver Creek, Colorado, if there will be more to come, Adrian Day, president of Adrian Day Asset Management, said he thinks the answer is yes.

While he doesn’t believe another mega merger is in store in the near future, he does think M&A activity will continue, potentially with larger companies taking over second-tier companies, and intermediate companies combining with each other or with juniors.

“There’s a lot of opportunity in the intermediate and junior space for companies to merge,” he said on the sidelines of the show. “I think there’s less real opportunities among the seniors.”

Day also shared an idea about why the gold space hasn’t seen much happen recently in the way of M&A, saying that a lot of intermediate and junior companies are waiting for Barrick and Newmont Goldcorp (TSX:NGT,NYSE:NEM) — also newly combined — to divest non-core assets.

“Rather than look at exploration companies that they can take over, they’re waiting to see what comes out of the big boys that maybe they can pick up there,” he said.

In his opinion, the properties that Barrick and Newmont shed are unlikely to be their “crown jewels” — but some good assets in places the miners no longer want to be involved in may come available.

Listen to the interview above for more from Day on gold, including where the price may be headed and what it will take for juniors to see their share prices move. Our full playlist for the Precious Metals Summit can be found on YouTube.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.