Gold Mine M&As Will Likely Have to Wait Until Market Volatility Subsides

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"The market's got to settle, and I think it will, and once everyone gets comfortable with the resulting valuations I think you will see more M&A activity between cash-rich companies and project-rich companies," said Alex Davidson, executive vice president of exploration and corporate development with Barrick Gold Corp.

Small gold firms hit by the credit crisis and weak gold prices are keen for mergers with bigger rivals, but consolidation will likely have to wait until volatile share prices stabilise, company officials said on Thursday.

"It's hard to convince someone to accept a 30 percent premium when their stock price is 90 percent down," Alex Davidson, an official with Barrick Gold Corp., told the RBC gold conference in London.

"The market's got to settle, and I think it will, and once everyone gets comfortable with the resulting valuations I think you will see more M&A activity between cash-rich companies and project-rich companies," said Davidson, executive vice president of exploration and corporate development...

The downturn has opened up potential takeover opportunities, but not many are top quality, said Chief Executive Kevin McArthur of Goldcorp. "A lot of companies have come knocking because a lot of juniors are in tough shape right now," he said.

Goldcorp will be very disciplined on takeovers since it also has new mines it would like to develop. "I kind of look at it as a pool with 100 drowning men in it and we're going to be very careful where we're going to stick out our hand there," McArthur said. "In that pool I can't see very many mines that can be built at this time."

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