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What’s Next for Gold after the Newmont-Goldcorp Merger?

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Jan. 16 2019, Updated 5:00 p.m. ET

Agnico Eagle Mines

Whereas several gold (GLD) mining companies are likely to see M&As (mergers and acquisitions), Agnico Eagle Mines (AEM) may not be one of them. While talking to BNN Bloomberg, AEM vice chairman and CEO Sean Boyd said, “Our story continues to grow, our output continues to grow.” He added, “We’ve built this on smaller M&A. That strategy continues to work for us. What the big guys do we don’t really pay attention to.”

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Gold companies to watch

After the entities formed by Newmont Mining (NEM) and Goldcorp’s (GG) merger and Barrick Gold (GOLD) and Randgold Resources’ merger, AngloGold Ashanti (AU) is set to be the third-largest miner. AU may also consider M&A activity—it is currently looking at a London listing and exiting its South African business.

Kinross Gold (KGC) and Yamana Gold (AUY), whose stock prices fell 25% and 24% last year, respectively, could be targeted. Gold’s weakness and a lack of major catalysts led to the stocks’ decline. As both are trading at deep discounts to peers and their own historical valuation, they could be attractive targets.

Asset divestitures may create opportunities

Senior (GDX) and intermediate gold miners (NUGT) (GDXJ) could have another opportunity to acquire assets, as Barrick Group and the Newmont-Goldcorp combined company have indicated that they are willing to sell non-core assets in the next few years.

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