Newcrest Mining Ltd., the fourth-largest gold producer by market value, ruled out making a large acquisition in Africa as Kinross Gold Corp. emerged as the cheapest target in the sector.
“I don’t think we’ll be doing anything on the M&A side other than the small strategic land positions that we need to drill out,” Greg Robinson, chief executive officer of Melbourne-based Newcrest said today on an analyst call. “We do see some very good exploration upside in our land tenements in Cote d’Ivoire.”
Kinross, with operations in Ghana and Mauritania, became a takeover target after saying it will write down the value of its Tasiast mine and a record share slump. The Toronto-based miner’s market value plunged 21 percent to C$12.3 billion ($12.2 billion), and it may attract interest from Newmont Mining Corp. or Polyus Gold International Ltd., said Stifel Nicolaus & Co.
Newcrest’s Bonikro mine “is a fairly safe way of keeping a window on that part of the world without taking on the risk of buying another company,” Peter Arden, a Melbourne-based senior research analyst at Ord Minnett Ltd. said by phone.
Newcrest, Australia’s largest producer, acquired the Bonikro mine and surrounding exploration ground with the A$11.4 billion ($12 billion) takeover of Lihir Gold Ltd. in 2010. The company, whose other producing gold mines are located in the Asia-Pacific region, has sought to boost output at Bonikro and is exploring for other ore bodies in the area.
Newcrest rose 2 percent to A$32.84 at the close in Sydney trading, paring losses in the past year to 13 percent. Gold for immediate delivery has climbed 26 percent over the same period.
After a price slump, Kinross traded on Jan. 19 at a 24 percent discount to its assets minus liabilities, the lowest of any gold mining company with at least $1 billion in value.