DAKAR/MELBOURNE – Gold miner Perseus Mining sees strong merger and acquisition activity across the sector but expects dealmaking to remain difficult as companies struggle to agree on valuations amid volatile bullion prices, its chief executive said.

"There’s a lot of activity, but not necessarily a lot of completion," CEO Craig Jones told Reuters late on Tuesday. 

"Companies are trying to work out what gold prices will do before making transaction decisions."

WAVE OF M&A ACTIVITY
Strong gold prices have fuelled a consolidation wave, with Northern Star Resources acquiring De Grey Mining, Ramelius Resources buying Spartan Resources, Equinox Gold purchasing Calibre Mining and AngloGold Ashanti completing its takeover of Centamin. 

But valuation disagreements, competing bidders and regulatory hurdles have complicated dealmaking. Zijin Gold's planned $4-billion acquisition of Allied Gold collapsed before closing, while Gold Fields' approach for Northern Star Resources has been rebuffed. 

Perseus itself allowed its bid for Australian explorer Predictive Discovery to lapse last year after rival suitor Robex Resources improved its offer.

Gold Fields last month pitched its A$38.7-billion ($26.99-billion) proposal as a transformational deal to create the world's No. 2 gold miner, but Northern Star said it was opportunistic and significantly undervalued the company.

Jones said differing assumptions about future gold prices were creating gaps between buyers and sellers.

"Some companies have more aggressive assumptions and some more conservative assumptions," he said. "You’ve got to decide whether the risk-reward makes sense."

Jones, a former Newcrest executive, said Perseus, which operates mines in Ghana and Côte d'Ivoire and is developing a fourth in Tanzania, remains focused on organic growth through extending mine lives and expanding existing operations. 

Despite its African focus, Perseus is prepared to expand elsewhere if it can create value, Jones said. "We look everywhere," he said, adding any move outside Africa would need to fit the company's mine-building and operating expertise.    

Broker Canaccord Genuity said in August Perseus is well positioned to pursue acquisitions should suitable opportunities emerge, forecasting Ebitda of about $2.25-billion in fiscal 2027/28 and cash exceeding $2-billion by the end of 2028.

Jones said higher fiscal costs in Ghana had not materially changed Perseus' plans, with an ongoing $140-million cutback at Edikan and exploration aimed at extending mine life.