Is This Rumoured Buy Showing A Major Gold M&A Rush Coming?

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Is This Rumoured Buy Showing A Major Gold M&A Rush Coming?

Very interesting note buried within a report this weekend from the Wall Street Journal on gold M&A from Chinese mining firms.

Suggesting that a big rush for gold projects may be about to kick off in one particular part of the world.

That’s South America. Where the Journal reported that an up-and-coming Chinese gold miner is on the verge of a significant project acquisition.

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The company is Zhaojin Mining — a relatively unknown gold player outside of China right now. Which appears to be about to make strides in expanding across the international mining industry.

The Journal quoted Zhaojin’s investment director, Chen He, as saying that the company has “nearly completed all the formalities” of its first major overseas acquisition. Which He said is located somewhere in South America.

Such a South American asset purchase would be a significant event — given there’s been relatively little involvement by China in the gold sector on the continent up until now.

But with Chinese investment in the copper mining industry of countries like Peru increasing fast of late, a jump into gold makes a lot of sense. And the Journal suggested that the time is now ripe for Chinese buys in the gold space worldwide — quoting officials at Toronto-based advisors Sprott Asset Management as saying they have been in touch with as many as six major Chinese gold companies that “all have plans for increasing assets overseas.”

A step-out by Chinese miners into South America would be especially interesting given the growing interest here from other parts of the world. India, for example, where investors have been increasingly looking to South American gold projects as a source of supply.

Officials at Zhaojin also said they are considering asset buys in Australia and Canada — either through direct purchase or buying equity in the local owners. Watch for an announcement on the apparent South American deal, as well as knock-on transactions globally.

Here’s to going for gold,

Updated on

Dave Forest writes Pierce Points Free Daily E-Letter, an advisory on mining and energy read every day by BP, Rio Tinto, JPMorgan, BNP Paribas, Repsol, GDF Suez, GE, Platts, Warburg Pincus, and the UN. Sign up for free at www.piercepoints.com. Mr. Forest has funded and managed over $80 million in global exploration and development in natural resources, and continues to design and develop projects globally. He is a professional geologist.
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