Raymond James analyst Phil Russo has reviewed 67 mergers and acquisitions (M&A) in the gold space since 2010 to determine how many are viable producing, developing and streaming deals. He has found that 40% of transactions would not recoup their total costs, based on current reserves and resources at today’s gold prices.
In an emailed response to The Northern Miner
, Russo concedes that he expected the negative outcome, given the number of bad deals, but not the magnitude of the loss, or the pricing environment those transactions need to become “better or break-even deals.”
He says that “the gold space needs higher prices to rationalize deals, or there needs to be incremental reserve and resource growth shown post-transaction.”
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