Two of Canada's biggest mining companies are locked in a battle to buy Andean Resources, the Australia-listed gold specialist with valuable development interests in Argentina.
The takeover race officially began yesterday with Canada's Eldorado making a C$3.4bn (£2.1bn) offer for the company, only to find itself trumped within hours by compatriot Goldcorp. It said its C$3.6bn bid for Andean had been accepted by the Australian company's board, which was planning to recommend the deal to shareholders.
Andean, which owns the Cerro Negro gold project, where reserves of 3.1 billion ounces have already been identified, saw its shares rise by a third following Eldorado's bid before trading was suspended. Though Goldcorp said its takeover could be completed by early next year, Andean's share price increase reflects market speculation that Eldorado will raise its bid, with both companies desperate to get their hands on Cerro Negro. The project has yet to be fully explored, with some analysts predicting it could eventually yield 10 billion ounces of gold.
Whoever clinches Andean in the end – and it is possible that another bidder may yet emerge – the deal is the latest in a string of mergers and acquisitions in the gold sector this year.
There have been some 290 gold-related deals already this year, data from Bloomberg reveals, collectively worth more than $38bn. The precious metal has become ever-more attractive as its price has risen, reflecting its status as a safe-haven asset during periods of economic uncertainty and financial market volatility.
Having hit an all-time high earlier this year of $1,266 an ounce, the gold price is now on target to record its 10th positive year in a row, the longest period of price rises for 90 years. The asset, trading at around $1,248 an ounce yesterday, has been targeted by high-profile fund managers including George Soros and John Paulson.Reuse content