PwC: Gold miners look to the bottom line

By Rob Starr, Content Manager, Big4.com

Gold is the favoured commodity of 2013 with more than 80% of gold executives expecting to see a rise in the price of gold, according to the latest PwC Gold Price Report released recently. An analysis of the 46 largest TSX- listed gold mining companies showed that more than 20 of these gold companies have cash reserves greater than $500 million.

Some senior gold miners may also use their cash for strategic M&A activity. Twenty per cent of senior gold companies plan to spend their money on acquisition related activities in 2013, while 33% of junior/mid-tier companies expect to spend their cash on acquisitions — this is double the number of companies that spent money on M&A activity in 2012 (14%).

“Gold miners are adamant about proving to the market that they’re once again a good investment — not just for the interim, but for the long-term,” says John Gravelle, Mining Leader for Canada and the Americas, PwC. “Receiving investors’ approval will involve establishing cost effective management strategies, increasing dividend payments and responsibly investing in production growth — all on the back of a strong gold price.”

“The equity market for junior gold companies appears to have finally reached the point where there is more upside than downside. Junior gold miners should therefore anticipate increased M&As,” says Gravelle.