Industry Trend Analysis - Canadian Gold Miners To Ramp Up M&A Activity - MAR 2016

BMI View: Canada ' s gold mining industry will see increased consolidation and acquisition activity, as well-performing mid - tier miners take advantage of low-cost assets over the next year.

Canadian gold miners will ramp up consolidation and merger and acquisition (M&A) activity, as firms seek to shed high-cost assets or form joint-ventures to better withstand the low price environment over the coming quarters. We forecast gold prices to bottom out in 2016, averaging USD1,000/oz. Given the weak price environment, the wide range of performances across the gold mining sector provides opportunities for well-positioned firms. For instance, as of February 10, 2016, gold mining M&A and investment in Canada over the past 12 months totalled USD4.2bn, of which USD624mn occurred in 2016. This supports our view that Canada will be a key market in which miners look to offload high-cost assets ( see: Americas Mining - The Four Key Themes ' , January 8 , 2016). Overall, as of February 3, 2016, mining M&A and investment activity in North America reached USD1.9bn, signalling a 196% y-o-y increase. Most notably, in February, Tahoe Resources acquired Lake Shore Gold Corp for USD515mn. Other major Canadian gold deals include Eldorado Gold's USD1.8mn purchase of a minority stake in Integra Gold, Goldcorp's USD11.5mn investment in Gold Standard Ventures Corp , and Oban Mining's USD41.9mn acquisition of Niogold Mining.

Mid-Tier Projects To Support Modest Production Growth

Mid-Size Firms Outperform Larger Peers
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Note: February 2015 = 100. Source: Bloomberg

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