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 today. 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.

Regarding development and exploration spending, 100% of senior gold companies used cash for such activities and they plan to do the same for the upcoming year. Meanwhile, 89% of mid-tier gold companies will use cash for project development and 83% will use cash to fund exploration activity in 2013.

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%).

While Canada tops the list with the most active gold buys in 2012 with 243 transactions worth $4.8 billion, China continues to keep an eye out for gold mines to acquire. In 2011, four of the top gold deals were acquired by Chinese buyers. This year, China was again responsible for four out of the top 10 gold deals announced.