The ASX-listed gold sector has seen a surge in takeover activities this year, notably with Newmont Corporation's acquisition of Newcrest Mining (OTC:NCMGF) Ltd. This uptick coincides with a 21% rise in gold prices over the past year to $1,984.18 per ounce, which has rekindled investor interest.
Newcrest Mining Ltd , following a 35% annual rise, ceased trading on the ASX on October 26. The World Gold Council's Q3 report further underscored the bullish trend, revealing an 8% increase in global demand for gold to 1,147 tonnes over the five-year average. Central banks have also played a significant role, purchasing a record 800 tonnes of gold this year.
In light of these developments, industry observers are turning their attention to De Grey Mining Ltd (ASX: DEG). Despite lagging the broader rally among gold miners, De Grey has been developing its Hemi gold mine for first production in H2 2026. The Hemi Definitive Feasibility Study (DFS) displayed promising metrics, projecting an all-in sustaining cost (AISC) of $1,229 per ounce and an annual production of 530,000 ounces.
As of September 30, De Grey had $83 million in cash and no debt. The company's robust financial health and the potential of the Hemi project have led some experts to view De Grey as an attractive takeover target. Romano Sala Tenna of Katana Asset Management singled out De Grey as undervalued and a standout choice for acquisition by cash-rich global producers.
Goldman Sachs (NYSE:GS) echoes this optimistic outlook by maintaining a buy rating on De Grey Mining. The investment bank has set a price target of $1.40 per share for De Grey, indicating substantial potential upside. Goldman Sachs' endorsement comes as no surprise given that Hemi is the third-largest undeveloped gold project globally, with significant potential upside from further drilling.
InvestingPro Insights
In the context of the recent surge in takeover activities within the gold sector, it's important to consider some key data and tips from InvestingPro.
InvestingPro's real-time data for Newmont Corporation (NEM) shows an adjusted market cap of $30.17 billion and a P/E ratio of -37.07. Over the last twelve months as of Q3 2023, the company reported a revenue of $11.05B, representing a decline of 8.67%. Despite a challenging year, the company's dividend yield stands at 4.21%.
Two noteworthy InvestingPro Tips for Newmont Corporation include the expectation of net income growth this year and the company's impressive track record of maintaining dividend payments for 53 consecutive years.
These insights provide a deeper understanding of the financial health and future potential of both companies, crucial factors to consider in the current climate of increased merger and acquisition activity in the gold sector. For more detailed insights and tips, consider exploring the full range of data available through InvestingPro.
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