Mergers and Acquisitions- In our December report we discussed merger and acquisition activity and how it had been fairly limited in 2014. This has changed in 2015 with three significant transactions taking place. Evolution Mining’s purchase of the Cowal gold mine from Barrick and the proposed merger with La Mancha Australia will make the company the second largest gold producer on the ASX. Evolution now has the scale, reserves and operational diversity of a true ’mid-tier’ producer, something that was clearly lacking among Australian gold producers. Northern Star successfully made the same transition in 2014. The Cowal gold mine is also interesting because of who didn’t buy it. Various reports suggested that companies such as Regis Resources, OZ Minerals, Northern Star, Independence Group and Zijin Mining were looking to buy Cowal. This significant competition is perhaps demonstrated by the purchase price; a hefty A$455/reserve oz. Similarly Evolution’s merger with La Mancha saw an acquisition price of approximately A$515/reserve oz (EV basis).
