Gold sector M&A spree continues with SSR’s $1.72 billion deal for Alacer Gold

Canada’s SSR Mining has confirmed it will buy Alacer Gold in an all-stock deal valued at US$1.72 billion, in a sign of the growing appetite for consolidation among the upper echelons of the gold mining sector.

In the wake of the COVID-19 outbreak gold prices have increased 12% in 2020, and analysts have predicted a return to the record volume of mergers and acquisitions (M&A) seen in the sector last year as producers look to reinforce balance sheets.

The SSR-Alacer merger will create a new company headquartered in Denver, Colorado that will have operational mines in the US, Canada, Argentina and Turkey. Alacer CEO Rodney Antal will head up the combined gold outfit.

The companies said the ‘zero-premium’ merger is expected to generate annual free cash flow of about $450 million and will produce about 780,000 gold equivalent ounces over the next three years based on analysts’ estimates.

Shareholders of SSR Mining and Alacer will own about 57% and 43% of the new company, respectively, with the new board consisting of five directors from each of their existing boards.

The deal follows an announcement by fellow Canadian miner Gran Colombia yesterday proposing a merger with Guyana Goldfields and Gold X, and Chinese giant Shandong Gold Group’s notice last week that it would acquire TMAC Resources.

Meanwhile, AngloGold Ashanti CEO Kelvin Dushnisky said yesterday he wouldn’t be surprised if the gold price reached $2,000 per ounce, echoing a prediction made by Bank of America last month. Gold is currently trading on the brink of $1,700 per ounce.