* Australia tipped for more M&A in gold mining
* Dominates Outback Diggers & Dealers mine meet-up
* In local dollar terms, bullion price holds up
By James Regan
SYDNEY, Aug 4 (Reuters) - Australian gold miners are still
pursuing M&A deals, defying worries that last month's dramatic
slide in bullion prices would extinguish momentum in the
sector.
The triggers are a sliding commodity-weighted currency and a
crumbling iron ore price, which has left that market to
mega-miners such as Rio Tinto (LONDON:RIO) RIO.AX and BHP Billiton (LONDON:BLT)
BHP.AX .
"For some time we have been saying that this is a pivotal
time for the gold industry," said Jake Klein, executive chairman
of Evolution Mining EVN.AX , which has spent close to A$800
million ($584.40 million) buying mines this year.
"Asset values are in the range of 60 to 70 percent below
their peak in 2011 and sentiment, which is set on the basis of
the prevailing U.S. dollar gold price, is poor," said Klein.
Gold in July took its sharpest dive since September 2013,
landing at $1,088 per ounce, a five-year low.
"There's a good balance of willing sellers and ready buyers
again," said Gavin Wendt, an analyst with MineLife consultants.
Sandra Close, a director of gold consultancy Surbiton
Associates, said history also favoured more interest in the gold
sector.
Overseas ownership of Australia's gold mines was around 20
percent until 1997, according to Close.
"This was followed by a period of escalating takeover
activity, when the Australian dollar was weak and overseas
control rose to 30 percent by mid-2001, then up to 60 percent by
early-2002, before reaching a maximum of 70 percent in 2003,"
Close said.
M&As in the sector fizzled after that as iron ore prices
soared and the value of the Australian dollar overtook the U.S.
dollar, sapping interest in gold.
But with iron ore .IO62-CNI=SI recoiling some 70 percent
from its 2012 peak and the Australian dollar fetching only
around 73 U.S. cents gold AUD= is again gaining lustre.
"It's no longer about iron ore, the big boys like Rio Tinto,
BHP and Fortescue have that sewn up," said Morgans Financial
analyst James Wilson. "Gold is very much in favour."
At the annual Diggers and Dealers miners' and bankers'
conference in the Australian town of Kalgoorlie this week, where
many deals are traditionally hatched, 31 of the 46 companies
presenting before some 1,800 attendees mine gold.
The Australian dollar gold price XAUAUD=R has remained
relatively stable averaging more than A$1,500 per ounce since
the beginning of the year, whereas U.S dollar gold XAU= is
down 8 percent.
The S&P/ASX All Ordinaries Gold index .AXGD index tracking
Australian gold producers is up 4 percent this year from early
January versus a decline in the two previous years.
Typically high exploration costs and long gaps between
discovery and production can eat away at a small-capped miner's
cash reserves, a turn off for some investors.
"The current dislocation in the gold equities market,
particularly at the development end of the spectrum, has
provided Oceana with a powerful opportunity to acquire a
tremendous asset at a fair price," said Australia-listed
OceanaGold Chief Executive Mick Wilkes, announcing a $658
million purchase of a gold mine in South Carolina. ID:nASB09YM8
OceanaGold this year also paid $101 million for Newmont
Mining Corp's NEM.N Waihi mine in New Zealand.
Australian gold mining is still dominated by big overseas
companies, such as Barrick Gold ABX.TO and Newmont, but
foreign ownership has slipped below 50 percent as mid-tier local
firms buy mines, said Surbiton Associates' Close.
($1 = 1.3689 Australian dollars)
(Editing by Ed Davies)