I've discussed the massive amounts of private equity being raised for natural resources recently. And this week, news suggests these big pools of capital may get a shot at the gold sector.
Reports emerged that major miner Barrick Gold is close to selling a package of U.S. gold operations. Including five mines in key producing district Nevada, and another in Montana.
Barrick officials said on Sunday at the Denver Gold Show that the company is receiving "strong interest" in the asset sale. With analysts having suggested the package could fetch between $500 million and $700 million in bids. Related: Is This The Bottom For Oil Prices?
This makes it sound like a purchase offer could soon emerge for these assets. Which begs the question: who will be buying?
Press in Canada have cited "investment banking sources" as saying that the likely buyers are other gold mining companies. With Newmont Mining and Kinross Gold cited as the most likely bidders.
But here's the thing. This sale represents one of the first major packages of prime mining assets to come available during the current sector downturn -- lying squarely within the world's top gold-producing region. Related: Midweek Sector Update: Iran Holding Up Its End Of The Bargain, So Far
It will thus be indicative to see whether any other bidders step forward for these A-list mines. Especially amongst the cashed-up private equity groups that have largely been waiting in wings over the last few years.
Up until now, those groups have been looking at sales of non-core mining assets. For example, the Cripple Creek gold mine in Colorado sold by AngloGold Ashanti in June.
Lately however, more substantial mining properties have been coming available. Like Anglo American's Mantos Blancos and Mantoverde copper mines in Chile, which were bought by private equity last month. Related: The Best Presidential Candidate For Nuclear Power?
The results of the current Barrick sale will be an interesting gauge of 1) how much fund interest there is in gold (if any), and 2) what price such groups might be willing to pay for good mines. Watch for news on the buyers here.
Here's to jumping on it,
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Dave Forest
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