Gold slump tipped to fuel China's acquisition hunt

Thu Apr 18, 2013 2:54am EDT
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* China's Zijin Mining leads offshore push

* African Barrick, AngloGold Ashanti assets could be targeted

* Sovereign wealth funds seen eyeing company stakes

By Sonali Paul and Sarah Young

MELBOURNE/LONDON, April 18 (Reuters) - The collapse in bullion prices is set to rekindle gold mining takeovers as Chinese companies, sovereign wealth funds and private equity and hedge funds step in to rescue cash-strapped small and mid-sized miners.

Gold miners in China, the world's biggest producer, have been chasing mines and listed companies in a bid to grow and match the largest global producers, like Barrick Gold Corp .

A seven-fold rise in gold prices between 2001 and 2011 spurred a run of gold mergers and acquisitions. Activity fell last year as major miners digested some big buys and smaller players held out for better offers, with global gold M&A tumbling to $14.6 billion from $43.3 billion in 2011, according to Ernst & Young.

But that is expected to pick up again this year as a 15 percent plunge in gold prices this month forces smaller miners, especially those with high-cost production or single assets, to seek partners to stave off a cash crunch.

"This might be the final shoe to drop that makes some people think 'there's no way I'm able to finance myself going forward, so I've got to think more seriously about my investors and give my investors a return by putting things together with people that have ... got the cash'," John McGloin, executive chairman of Africa-focused miner Amara Mining, told Reuters.   Continued...