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Eyes on Newcrest as gold dealmaking heats up

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TORONTO (Reuters) – Two recent large M&A deals in the gold sector have prompted speculation that Newcrest Mining (NCM.AX), Kinross Gold Corp (K.TO) and B2Gold Corp (BTO.TO) may be among the next gold companies to combine with a rival, bankers and analysts said.

FILE PHOTO: Senior refinery technician Vincente Sandoval puts a gold “button” into a furnace to be further refined to form gold dore bars at Newmont Mining’s Carlin gold mine operation near Elko, Nevada, U.S., May 21, 2014. REUTERS/Rick Wilking/File Photo

On Monday, Newmont Mining (NEM.N) announced a $10 billion takeover of Goldcorp Inc (G.TO), close on the heels of Barrick Gold’s (ABX.TO) purchase of Randgold Resources.

Deal-making had largely been dormant in the gold sector in recent years, as companies focused on cutting costs amid investor criticism of inadequate management of capital. But the need to bolster shrinking gold reserves to boost growth and take advantage of rising gold prices are now providing the impetus for consolidation.

“There are potential benefits to consolidation and gold miners that can generate returns above cost of capital will likely be rewarded over time,” Chris LaFemina, an equity analyst at Jefferies, wrote in a note on Monday.

Gold producers who have good assets but face stagnant growth are seeking to partner with well-run companies, according to bankers and analysts.

Eyes are on Australia’s Newcrest, capitalized at around 18 billion Australian dollars ($13 billion), a banker close to the Newmont-Goldcorp deal said.

A buyout of a North American miner could improve Newcrest’s valuation by offering a dual listing, said Andy Forster, portfolio manager at Argo Investments in Sydney.

“They have got some organic growth, but … being listed out here they are probably overlooked a little bit by North American (investors).”

Brenton Saunders, an analyst with Sydney-based fund manager Pendal Group, said Newcrest was more likely a buyer than a target.

“My sense is they want to buy something – not small, but manageable – more of a single asset somewhere in the Americas.”

Newcrest spokesman Chris Maitland told Reuters, “If we can see an asset where we can … use one of our competitive advantages to increase the value of that asset, that’s how we’d approach M&A.”

Newcrest, which has expertise in a type of mining called blockcaving, is vying with BHP Group (BHP.AX) (BHPB.L) as major stakeholders in Ecuador’s SolGold (SOLG.L).

TIE-UP POTENTIAL

Canadian miner Kinross and AngloGold Ashanti (ANGJ.J), based in South Africa, are among the gold producers that could combine with other companies, analysts and bankers said.

“If you do a list of who has high-cost assets, those are the guys who have to make deals,” another person close to the Newmont-Goldcorp deal said.

Kinross did not immediately respond to a request for comment. AngloGold Ashanti could not be reached outside business hours.

Kinross needs to focus on replacing depleted assets, and would likely hone in on North America if it were to do a deal, analysts at Scotiabank wrote in November.

FILE PHOTO: Water pours out as an electric jumbo drill operates at Goldcorp Inc’s Borden all-electric underground gold mine near Chapleau, Ontario, Canada, June 13, 2018. REUTERS/Chris Wattie/File Photo

Vancouver-based B2Gold, which has operations in Africa, South America and the Philippines, could be a target because of its strong growth profile, said sector watchers, including PI Financial’s Chris Thompson, who has a “buy” rating on the stock.

B2Gold did not immediately respond to a request for comment.

The acquirer would likely be a company that has operational expertise in the jurisdictions B2Gold operates in, particularly West Africa, which offers the best growth prospects for the company, Thompson said.

Reporting by Nichola Saminather; additional reporting by Clara Denina in LONDON John Tilak in TORONTO, Harry Brumpton in NEW YORK and Melanie Burton in MELBOURNE; Editing by Rosalba O’Brien and Richard Pullin

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Canadian Tire and NuPort Robotics to commercialize Canada’s first automated heavy duty trucks

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Canadian Tire Corporation and Toronto based start-up NuPort Robotics, Canada’s first autonomous trucking company, are partnering with the Ontario government to invest $3 million to undertake an automated heavy duty trucking project to test a “first-of-its-kind-in-the-world” technology. 

The breakthrough technology provides a transportation solution for the middle mile, the short-haul shuttle runs that semi-tractor trailers make between distribution centres, warehouses and terminals each day.

It is designed to enable next-generation automated trucks that are more fuel efficient, safer to operate, and provide an enhanced driver experience.

Backed by $1 million in support from the Ontario government through Ontario’s Autonomous Vehicle Innovation Network and matched by $1 million investments from Canadian Tire and NuPort Robotics, respectively, the two-year project is applying proprietary, artificial intelligence technology from NuPort Robotics to retrofit two conventional semi-tractor trailers – which will always be attended by a driver – with high-tech sensors and controls, a touchscreen navigation system, and other advanced features such as obstacle and collision avoidance.

Caroline Mulroney, Minister of Transportation, says: “Ontario is proud to be a global leader in automated and connected vehicle technology and this innovative project is an exciting milestone toward automated vehicle tech in the trucking industry.

“Ontarians rely on goods being delivered by trucks across the province every day and projects like this are demonstrating the ways that automated truck technology could help businesses meet delivery demands more efficiently while supporting a strong supply chain in Ontario.”

Vic Fedeli, Ontario Minister of Economic Development, Job Creation and Trade, says: “This project applies unique and made-in-Ontario Artificial Intelligence technology that offers increased safety and efficiency, with a reduced carbon footprint, to the goods supply chains on which we all rely.

“This is the latest example of how Ontario’s Autonomous Vehicle Innovation Network acts as a catalyst, fostering partnerships between ambitious technology start-ups and industry to develop and commercialize next generation transportation technologies that strengthen our economy and benefit society.”

Raghavender Sahdev, CEO of NuPort Robotics, says: “The trucks are currently transporting goods between a Canadian Tire distribution centre in the Greater Toronto Area and nearby rail terminals within a 12.5 mile radius, and early results are promising.

“The aim of the project is to develop a system that incorporates an autopilot feature for conventional trucks with a driver, leading to the most efficient way to drive and increase safety.

“The sensors work as a ‘safety cocoon’ to cover blind spots and prevent accidents and the end result is peak fuel efficiency, meaning lower carbon emissions, and peak driving performance for an overall more optimal transportation experience.”

NuPort Robotic’s approach to autonomous trucking is unique in the industry because it focuses only on solving the middle mile challenge, using a known set of predetermined trucking routes that are repetitive and high frequency as opposed to general highway driving.

Ultimately, when implemented on fixed routes in the future, Canadian Tire will benefit from faster commercial deployments and improvements in supply chain sustainability.

Gary Fast, vice-president of transportation, Canadian Tire, says: “Canadian Tire embraces innovation and is always testing new technologies to improve our operational efficiency and safety.

“As proud Canadian companies, the safety of all stakeholders, including drivers, employees, customers, and public will be the top priority as we work together towards deployment of this technology.”

Cari Covent, vice president of intelligent automation, Canadian Tire, says: “Over the last three years, Canadian Tire has made a significant effort to solve complex business problems by using the Canadian start-up Artificial Intelligence ecosystem, and NuPort Robotics exemplifies what we look for in a start-up with a focus on innovation, automation and artificial intelligence.”

Sahdev says: “As NuPort Robotics continues to develop new technologies to overcome middle mile supply chain problems and advance autonomous trucking, I am extremely grateful for the support of the Ontario Government through AVIN and the Ontario Centre of Innovation.

“With their continued support, we are striving to position Canada as the leader in autonomous transportation.”

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Constellation Software is money in the bank, this fund manager says

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If you’re looking for a long-term hold in Canadian tech then Constellation Software (Constellation Software Stock Quote, Chart, News, Analysts, Financials TSX:CSU) should definitely be on your radar. So says Jason Del Vicario of Hillside Wealth Management who likes not only Constellation but its recent spin-off Topicus (Topicus Stock Quote, Chart, News, Analysts, Financials TSXV:TOI) which Del Vicario says could do even better than CSU over the next ten years.

Software consolidator Constellation has been running on the same game plan for years, buying small vertical market software companies providing so-called mission critical software solutions globally. Over the years CSU has completed over 500 such acquisitions, buying the top names in their respective niche verticals and then using its clout and breadth to grow the business and expand into new markets. The resulting cash flow is then plowed back into more acquisitions and the cycle repeats.

The strategy has worked wonders for Constellation, which has grown its revenue from $631 million in 2010 to almost $4 billion for 2020 while taking earnings from $4.12 per share in 2010 to $20.59 per share this past year.

Shareholders were given a special treat last month when Constellation spun out recently acquired Topicus, giving CSU owners about 1.9 Topicus shares for every Constellation share as a dividend-in-kind. Constellation bought Netherlands-based software company Total Specific Solutions BV (or TSS) in 2013 and that subsidiary recently acquired Topicus BV, a Dutch information service company focusing on sectors such as healthcare, education and finance.

Topicus was singled out by Constellation founder Mark Leonard for its ability to grow without using outside shareholder funding. Leonard said the spin-out was part of the intention since a purchase agreement was struck last year.

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Nuvei wins price target raise from National Bank

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Strong quarterly results and an even brighter outlook for 2021 are reasons to celebrate for Canadian payments company Nuvei (Nuvei Stock Quote, Chart, News, Analysts, Financials TSX:NVEI), according to National Bank Financial analyst Richard Tse. In an update to clients on Wednesday, Tse left his rating unchanged at “Outperform” while raising his price target from C$85.00 to C$100.00.

Montreal-headquartered Nuvei is a provider of payment technology solutions to merchants and partners around the world, with a platform geared for high-growth mobile commerce and e-commerce markets. Nuvei’s solutions include a fully integrated payments engine with global processing capabilities, a turnkey checkout solution and a suite of data-driven business intelligence and risk management tools and services.

The company released its fourth quarter and full year 2020 financials on Wednesday, showing Q4 revenue of $115.9 million, up 46 per cent year-over-year, and adjusted EBITDA of $51.3 million, up 61 per cent year-over-year. Total dollar value of transactions processed by merchants (‘total volume’) with Nuvei rose by 53 per cent to $13.9 billion. (All figures in US dollars except where noted otherwise.)

The 2020 year featured revenue up 53 per cent to $375.0 million and adjusted EBITDA up 87 per cent to $163.0 million, with total volume rising a full 76 per cent year-over-year to $43.2 billion.

“Our performance continues to be driven by strong momentum in the high-growth verticals we serve, as well as by our customizable, scalable and feature-rich technology platform which provides one of the industry’s most complete payment technology solutions going well beyond merchant acquiring,” said Philip Fayer, chairman and CEO, in a press release.

The company said the fourth quarter represented the strongest growth yet experienced by Nuvei, driven by wallet share expansion from current merchants along with accelerated uptake of new merchants. New e-commerce business almost tripled compared to a year earlier, Nuvei said, while the company expanded its connectivity coverage over the quarter, introduced new product innovations on its platform and continued to execute on M&A.

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