Polyus predicts ‘wave’ of gold M&A this year
Russia’s largest gold miner says industry ‘clearly open’ for consolidation
The gold mining industry is set for a “wave of M&A” as smaller miners look to consolidate to capitalise on higher prices, according to Russia’s largest gold miner Polyus.
“The space is clearly open to M&A,” Polyus’ 36-year-old chief financial officer Mikhail Stiskin told the FT.
The world’s largest gold companies have been busy acquiring rivals this year, with Barrick Gold buying Randgold Resources in January and Newmont Mining acquiring Goldcorp in April.
But Mr Stiskin, a former investment banker, said that activity would move down to the mid-tier companies following gold’s rise to a six-year high last week of over $1,440 a troy ounce.
“There will be consolidation,” he said. “There are some companies that don’t have the luxury of any projects and they are still driven by egos: this combination will push them towards M&A, especially given the high gold prices. The shareholders will become more supportive.”
Mr Stiskin said Polyus was not looking at any deals since it has over 100 internal projects to work on. In 2017 Polyus bought the rights to develop the giant Sukhoi Log gold deposit from the government. Polyus aims to spend $2bn-$2.5bn developing the mine, Mr Stiskin said.
Polyus is no longer looking for a strategic investor after talks with Chinese conglomerate Fosun collapsed last year, he added.
“We can self-finance it,” Mr Stiskin said. “We may also do project financing, debt financing.”
Investors in Polyus were spooked last year after US sanctions were imposed on Suleiman Kerimov, whose son Said owns a controlling 79 per cent stake in the gold miner.
But London-listed shares in the company have recovered by 40 per cent this year and Mr Stiskin said risks around Russia had been “exaggerated”.
Mr Stiskin said Polyus aims to increase the free float to between 25 to 30 per cent from the current 20 per cent, in a bid to attract larger investors.
In April Mr Kerimov sold a 3.8 per cent stake in the gold miner for $390m, but Mr Stiskin declined to comment on any timetable for future share sales.