UK precious metals giants Fresnillo PLC (LSE:FRES) and Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) have been leading the charge on the FTSE 100 on Tuesday as M&A activity re-ignited interest in the sector.
It’s a sign of just how hot things are getting in the mining world right now.
Take Royal Gold, for example. This mining royalty company just agreed to splash out $3.7 billion on two deals, buying Sandstorm Gold and Horizon Copper.
The Sandstorm deal alone is a hefty $3.5 billion, paid in shares, while Horizon Copper will cost $196 million in cash.
These moves will push Royal Gold up into the big leagues among streaming companies, which basically pay miners upfront for a slice of their future production or profits.
Why all the fuss? Well, gold prices have almost doubled in the last two years and hit a record $3,500 an ounce in April.
That kind of rally always sparks dealmaking as companies scramble to grow or snap up quality projects. One analyst described the current climate as 'exciting the animal spirits'.
Last year saw plenty of big gold deals, like AngloGold Ashanti’s $2.5 billion buyout of Centamin and Northern Star’s $3.3 billion purchase of De Grey.
So, for investors, the message is clear: with gold shining bright, the big players are on the move.
Fresnillo was up 3%, while Endeavour rose 2%.