Australian Gold Miners Provide M&A Allure


"Junior Aussies are likely takeover targets for larger producers."

Analysts suggest investors seeking exposure to gold to back Australia's junior gold miners on the grounds that they are likely takeover targets for larger producers pushing to expand.

The forecast wave of consolidation in the small end of the sector will likely see more Australian miners tie-up with offshore producers of the precious metal, Martin Place Securities research analyst Warren Kreyzig says.

"There is definitely a trend," Mr. Kreyzig told AAP. "Gold production is diversifying. "It used to be South Africa, Australia and United States that were the big producers, and if you look now, it is more evenly spread among many countries. Australian companies in the future will have a lot more offshore operations than they do now."

Most analysts say there is strong outlook for the gold price, which is currently hovering around the $US1,250 per ounce mark, down slightly from the all-time high of $US1,265 in late June.

Surging investment demand would continue to be driven by concern about currencies, with the U.S. considering quantitative easing, while global supply would stay tight as existing mine production declined and was replaced by fewer discoveries, Mr. Kreyzig said.

However, gold sector consultants Surbiton Associates recently painted a buoyant picture for Australian gold output in the September quarter, when several operations are slated to pour first gold.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe