Newmont, the world’s largest gold producer, has made an all-share offer of $16.9bn for its Australian rival Newcrest. If successful, the deal would be the largest mining takeover ever and the third-largest corporate buyout in Australian history.
These days, Australia is one of the largest gold-producing nations on Earth, thanks in part to some extremely low-cost mines, including those owned by Newcrest. Indeed, in the last few decades the gold-mining industry has changed dramatically, with deposits increasingly hard to find — of the 341 major deposits discovered since 1990, only 8% were found in the past decade.
As recently as 1970, South Africa represented in excess of 70% of the world's gold production, with Johannesburg’s lucrative economy borne out of the Witwatersrand Gold Rush, after some of the largest natural gold deposits in history were discovered there. Today, South Africa is no longer the gold mine that it was, losing its place as the world's top producer in 2007 to China.
As we’ve discussed before, the last few years have been pretty good for everyone in the business of selling stuff-that-comes-out-of-the-ground — and gold miners have been no exception. Prices for the rare metal have risen ~20% in the last 3 years and gold maintains its place as the safe-haven asset of choice for many global investors.