Goldcorp (GG), Kinross (KGC), Newmont Mining (NEM) and the Gold Industry Consolidation

Unable to grow organically at a pace to meed gold market demand, big gold miners like Goldcorp (NYSE:GG), Kinross (NYSE:KGC) and Newmont Mining (NYSE:NEM) have been leading the way in acquisitions, and we should see a lot more of them going forward.

As gold prices rise, the spate of gold company acquisitions is bound to increase. 2010 was tumultuous with three major multi-billion gold acquisitions: the $ 10 billion acquisition of Australian Lihir Gold by fellow Newcrest Mining (NCMGY.PK), the $7.1 billion combination of Canada's giant Kinross and fellow Red Back, and the $3.5 billion Canadian giant Goldcorp buy-out of Australian Andean Resources.

More recently, there is the announced $2.3 billion acquisition of Canada's Fronteer Gold by American giant Newmont Mining (NEM).

Smaller deals include the $830 million Franco-Nevada (FNV) pending purchase of Gold Wheaton, the $700 million American Thompson Creek Metals (TCM) takeover of Canadian Terrane Metals and the previous $140 million Kinross takeover of Underworld Resources.

The larger gold miners are just not able to succeed at their own organic gold exploration programs and need to acquire the smaller more capable exploration companies to replenish their mining reserves, as detailed here in a previous posting. This sets the stage up nicely for the smaller companies that are geologically competent and are busy drilling and proving up their resources and reserves.





Source: Seeking Alpha